On Tuesday morning, you may have seen my piece on Commerce Secretary Gina Raimondo’s meetings with CCP officials in China this week as both the American and Chinese domestic economies are currently experiencing some turbulence.
Meanwhile, the White House refuses to deviate from Bidenomics and swears its working. The current administration seems to have few plans to resuscitate the economy, and even fewer with respect to a long term China strategy. American Affairs Editor Julius Krein, Author David Goldman, and the Marathon Initiative’s Christopher Vassallo all spoke to The American Conservative about what they thought of Raimondo’s trip, the Biden administration’s China strategy, and China’s economic difficulties. As did President of the American Institute for Economic Research, William Ruger. His comments were submitted later, but I wanted to share his insights with TAC readers.
“The Biden administration seems to want to have it both ways—to follow Trump in being tougher with China and advancing a more protectionist approach while also making sure not to seriously harm the trading relationship,” Ruger told TAC via email when asked what kind of relationship the Biden administration is pursuing with China. “I’m sure they are worried about the latter given all the negative ramifications that would have on the American and global economy, especially with our economy so fragile right now and Biden heading into an election year.”
“But they are also worried about limiting national security-related economic relations too, especially as ‘great power competition’ heats up,” Ruger added. “Getting the balance right between national security concerns and economic interests in trade is a tough challenge.”
As for the meetings, Ruger said, “Talking is good, as is toning down some of the rhetoric we’ve witnessed. So I don’t think it is unwise to be keeping up diplomatic engagement.” Whether or not they properly serve a long-term strategy that protects the interest of the United States remains to be seen. “The Biden administration needs to avoid papering over serious problems we have with China. Still, it would be unwise for the United States’ long-term economic health to critically harm our on-net productive trading relationship with China.”
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“China’s malinvestment is undermining their economy, something that was entirely predictable given the historically poor record for government economic planning and intervention,” Ruger explained when asked about China’s economic struggles. “For example, look at how the artificial boom in real estate and electric vehicles has been popping and eroding China’s economic performance.”
“Xi has been moving for some time in the direction of greater control, and we are seeing the results – and this should give us some pause about Bidenomics and other efforts at industrial policy,” Ruger claimed of Xi’s strategy to revive the economy. “Xi’s moves away from more market-friendly approaches isn’t exactly helpful internationally either as it alienates long term foreign investment because of concerns about the security of property rights and the rule of law.”
When it comes to China, it’s all about balance—trade balances, power balances, balance sheets. That’s a difficult task for a president who can’t find his footing, metaphorically and literally.