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America’s Real China Problem

Although everyone is supposed to benefit when individual countries leverage their comparative advantages, this canonical economic theory can run into problems when blindly applied to the real world. In the case of China, American leaders failed to consider why the country exhibits the strengths that it does.

BOSTON – Instead of assuming that more international trade is always good for American workers and national security, US President Joe Biden’s administration wants to invest in domestic industrial capacity and strengthen supply-chain relationships with friendly countries. But as welcome as such a reframing is, the new policy may not go far enough, especially when it comes to addressing the problem posed by China.

The status quo of the last eight decades was schizophrenic. While the United States pursued an aggressive – and at times cynical – foreign policy of supporting dictators and sometimes engineering CIA-inspired coups, it also embraced globalization, international trade, and economic integration in the name of delivering prosperity and making the world friendlier to US interests.

Now that this status quo has effectively collapsed, policymakers need to articulate a coherent replacement. To that end, two new principles can form the basis of US policy. First, international trade should be structured in a way to encourage a stable world order. If expanding trade puts more money into the hands of religious extremists or authoritarian revanchists, global stability and US interests will suffer. Just as President Franklin D. Roosevelt put it in 1936, “autocracy in world affairs endangers peace.”