Beyond tariffs, US economic strength is key to containing China
![Beyond tariffs, US economic strength is key to containing China](https://thehill.com/wp-content/uploads/sites/2/2024/05/biden_joe_china_tariff_ev_05142024_GettyImages-2152480644.jpg?w=900)
On Tuesday, President Biden announced that the U.S. will increase tariffs on Chinese electric vehicles (EVs) from 25 percent to 100 percent, along with higher tariffs on semiconductors, solar panels and batteries. This move targets China’s “Three New Things” strategy, which relies on EVs, lithium batteries and solar panels to replace its struggling real estate sector and boost its economy.
The timing and strategic significance of these tariffs are critical. To address U.S.-China relations effectively, the U.S. needs to shift from a reactive to a proactive approach, leveraging its strengths creatively.
China’s comprehensive strategy spans issues from Taiwan to global competition with the U.S. While Beijing is proactive, the U.S. has often been reactive, focusing mainly on preventing escalation. Recent examples include responses to conflicts in Ukraine, Israel and the Taiwan Strait.
During a recent Beijing visit, Secretary of State Antony Blinken warned China about supplying critical components to Russia for weapons production, saying that if China doesn’t stop, the U.S. will act. This message underscores the U.S. challenges in addressing China’s provocations, as the Chinese Communist Party (CCP) often avoids significant retaliation by calibrating its actions.
For instance, China refrains from directly supplying arms to Russia to avoid strong diplomatic and military responses. Despite Xi Jinping’s promises to curb civil-military exports to Russia, it is doubtful this will be enforced sincerely. China excels at finding loopholes. Beijing views its support for Russia in the Russia-Ukraine conflict as a means to exhaust U.S. resources, diverting attention from the Taiwan Strait.
In the Taiwan Strait, China’s gradual expansion of maritime patrols and military airspace violations steadily assert control. The U.S. has been largely reactive, reluctant to escalate tensions to a direct confrontation, which does not effectively deter Beijing.
While Beijing aims to annex Taiwan without open conflict, it has contingency plans. Over the past two years, China has fortified its economy against potential Western sanctions by strengthening partnerships with Global South allies, securing oil and gas reserves from Russia and amassing gold. China's foreign currency reserves have reached $3.22 trillion, the highest of any country.
In a recent congressional testimony, Director of National Intelligence Avril Haines noted the first-time joint military exercises between China and Russia in relation to Taiwan. This collaboration likely aims to deter the U.S., as engaging with two nuclear powers simultaneously would be challenging.
Beijing is aware of the U.S. dilemma. On one hand, de-escalation could be seen as weak, potentially inviting further aggression. On the other hand, the U.S. cannot act as the global police force, engaging in multiple conflicts at once
Former Assistant Defense Minister Bridge Colby said the U.S. might struggle to fight one war, let alone multiple. The U.S. must choose between Taiwan, Israel and Ukraine if it has to, but cannot afford to let Ukraine fall, as this could embolden Xi Jinping regarding Taiwan.
Traditional diplomatic and military means offer no good options for the U.S. Instead, it should leverage its strengths to target its opponents’ weaknesses, breaking the balance of power and forcing a change in strategy.
The U.S.'s biggest advantage over China is its economy. While the U.S. economy is strong, China’s domestic demand is weak, with minimal consumption and investment. The only bright spot in China’s economy is the "Three New Things," with EV exports leading. These exports have contributed more to GDP growth than real estate, and China needs to maintain this momentum.
China also needs foreign investment for capital, as domestic confidence is low, and much state-issued money remains idle in banks. Foreign investment not only provides financial capital but also boosts confidence in China’s economy.
China needs foreign technology, with Tesla’s success in China serving as a model for the CCP. Advanced Western technology is essential for China's industrial upgrading.
Moreover, China needs foreign markets due to weak domestic demand. Without strong exports, China’s economy is at risk of collapse. Xi Jinping denied China has an overcapacity problem and will continue to flood global markets because exports are crucial to China’s economy.
If the U.S. targets China's economic advantages, such as government subsidies, it could significantly impact China’s economy, forcing Beijing to reconsider its strategies. Therefore, Biden’s decision to raise tariffs on the "Three New Things" is strategically sound.
Additionally, U.S. and European carbon neutrality goals underpin China’s growth in photovoltaic products. Most of the world's solar panels are produced in Xinjiang due to the polluting production process, which is too dirty for the U.S. and Europe. A change in carbon-neutral goals would devastate the “Three New Things” supporting China’s economy.
Finally, the U.S. must rebuild its manufacturing base to outcompete China. Over recent decades, America’s manufacturing sector has declined while China developed a complete industrial chain. For example, China’s shipbuilding capacity is vastly superior to the U.S., representing almost 50 percent of global shipbuilding capacity. This must change for the U.S. to remain competitive.
President Reagan famously stated during the Cold War that the U.S. goal was: "We win, they lose." Today’s American leaders hesitate to make such bold statements. However, the United States cannot prevail without this resolve.
U.S. leaders must boldly declare that the goal is to win. By leveraging its economic strength and showing unwavering determination, the U.S. can reestablish its prestige, deterring and inhibiting the CCP from challenging Taiwan or the global order.
Simone Gao is a journalist and her website is zoomingin.tv.
Date: | |
Tag: | China |
Topics
Filter
-
Renewables chief says Biden’s China tariffs risk slowing green transition
NextEra’s Rebecca Kujawa warns clean energy duties are raising costs for US consumersFinancial Times - Business - China -
Renewables chief says Biden’s China tariffs risk slowing green transition
NextEra’s Rebecca Kujawa warns clean energy duties are raising costs for US consumersFinancial Times - World - China -
UK expats throw shade on the Tories under the Spanish sun
Anger over impact of Brexit has turned overseas supporters against the partyFinancial Times - Business - United Kingdom -
Hollywood on Thames is a prize for the UK economy
The rejection of a film studio scheme near Marlow bodes ill for the future of creative industriesFinancial Times - Business - United Kingdom -
Stellantis will shift production of some electric vehicles away from China in response to higher EU tariffs on Chinese-made EVs.
Stellantis will shift production of some electric vehicles away from China in response to higher EU tariffs on Chinese-made EVs.The Wall Street Journal - World - China -
Xi Jinping claimed US wants China to attack Taiwan
Chinese president told European Commission president that Washington was trying to goad Beijing into warFinancial Times - Business - China -
Tatum's strength is Luka's weakness, and it's deciding the NBA Finals
Jayson Tatum and Luka Doncic have vastly different on-court demeanors that were on full display in Game 3, writes John Tomase.Yahoo Sports - Sports - NBA -
How the US supreme court could be a key election issue: ‘They’ve grown too powerful’
Grassroots Democrats seek to make ‘judicial activism’ a driving voting issue, but swing voters have other priorities. “Look at me, look at me,” said Martha-Ann Alito. “I’m German, from Germany. My heritage is German. You come after me, I’m gonna ...The Guardian - World -
Beyond the Trevi: a guide to Rome’s other fascinating fountains
Away from the obvious crowd-pullers are a host of watery wonders where you may even find yourself alone . . .Financial Times - World -
Harris discusses economic development in Atlanta
Vice President Kamala Harris attended the 100 Black Men of America conference in Atlanta Friday to discuss the Biden administration's economic policies. CBS News campaign reporter Shawna Mizelle reports.CBS News - Top stories
More from The Hill
-
Watch live: Trump gives keynote at 'The People's Convention' in Detroit
Former President Trump is set to headline Turning Point USA's "The People's Convention" Saturday in Detroit. Trump, the presumptive GOP nominee for the White House, is also expected to use the trip to key battleground state Michigan as a way to ...The Hill - Politics - Donald Trump -
Crockett calls Thomas 'corrupt' after Supreme Court decision to upend bump stocks ban
Rep. Jasmine Crockett (D-Texas) slammed Supreme Court Justice Clarence Thomas as “corrupt” during an interview with MSNBC on the court’s recent decision to overturn a Trump-era bump stock ban. Thomas has come under increasing scrutiny for gifts he ...The Hill - Politics -
Eyeing Trump presidency, conservatives want to delay funding fight
Bullish of former President Trump’s chances of winning back the White House in November, some conservatives are pitching a funding stopgap that would extend into next year rather than expire during a lame duck session when President Biden would ...The Hill - Politics - Donald Trump -
Iran and Sweden to swap prisoners, including convicted war criminal
Iran agreed Saturday to release two Swedish nationals held in Tehran for over two years in exchange for a convicted Iranian war criminal tied to the 1988 mass killing of protestors critical of the Islamic Republic in the capital city. While ...The Hill - Politics - Iran -
Raskin hits Republicans for bowing to 'sugar daddy' Trump after Capitol visit
Rep. Jamie Raskin (D-Md.) criticized his Republican colleagues in Congress Saturday after they met with former President Trump in closed-door meetings earlier this week, calling the positivity around the visit "a scandal and a disgrace." The ...The Hill - Politics - Donald Trump