Donald Trump’s least appreciated quality is his lack of martial instincts towards China. This puts him in a minority in Washington DC, including in his own administration. Whatever Trump’s faults, toying with a third world war is not among them. The same does not apply to his approach to trade, where he embraces perpetual warfare. If he could extend his grasp of mutual assured destruction to trade, he might be on a better path.
As I wrote recently, Trump is a gift that keeps on giving to China, and his latest trade brinkmanship is likely to end in another climbdown. But we should not forget how frequently non-Maga Washington has misread Beijing. When China joined the World Trade Organization in 2001, the consensus was that it would inevitably liberalise as it climbed the value-added chain. The more China’s economy shifted to services, the more it would need democracy to enable its creative classes.
This proved 100 per cent wrong. China under Jiang Zemin at the start of this century was far less unfree than it is today under Xi Jinping. Yet its economy is more than 15 times larger today. The second Washington mistake as the aughts progressed was to assume that China could not innovate. This was an offshoot of the first error. Since China was autocratic, the reasoning went, the free spirit of commercial research and experimentation would be lacking. The most China could do would be to rip off western companies by leveraging its vast market to coerce them into transferring technology.