Responsible Stakeholders: Why the United States Should Welcome China's Economic Leadership

12 Pages Posted: 7 Feb 2018

Date Written: October 3, 2017

Abstract

The Trump administration’s decision to abandon the Trans-Pacific Partnership (TPP) coincides with China’s interest in playing a more prominent role in advancing trade and economic integration in the Asia-Pacific region. Beijing’s willingness to leverage its growing clout to underwrite a number of high-profile economic initiatives in the region, however, has raised concerns in Washington that such efforts will come at U.S. expense.

Such worries are overwrought. Rather than sound the alarm over China’s latest moves, policymakers should be open to the possibility that Beijing is finally becoming the responsible stakeholder that many have long urged it to be. On the trade front, encouragement is to be found in senior Chinese officials’ rhetorical support for free trade and its institutions, while Chinese leadership’s support for the Regional Comprehensive Economic Partnership (RCEP) is a key steppingstone toward eventual realization of a Free Trade Area of the Asia-Pacific. Although in many ways inferior to the TPP, the RCEP’s standards could yet be improved, and even if left unchanged they still represent forward progress for free trade in the region.

Meanwhile, China’s backing of both the Asian Infrastructure Investment Bank and the One Belt, One Road (OBOR) initiative holds the possibility of much-needed improvements in infrastructure and connectivity that could bolster regional and global trade. With none of its own resources or prestige at stake, the United States stands to benefit considerably, and at little cost, from China’s efforts in this regard.

Moreover, zero-sum fears that China’s increasing prosperity and commensurate growth in its regional influence come at U.S. expense should be balanced against the dangers presented by a country that is, alternatively, isolated and economically flailing. Mired in its economic failures before opening up to reform in the late 1970s, China was dangerous to both its neighbors and itself, with the country engaging in several border wars as well as the disastrous Great Leap Forward and Cultural Revolution.

Rather than reflexively viewing China’s economic initiatives as an affront to U.S. interests, the Trump administration should attempt to harness China’s emerging taste for global economic leadership. Instead of focusing so intently on the trade disputes that divide us, the Trump administration should seek to conclude the bilateral investment treaty negotiation and consider the merits of initiating negotiations for a bilateral free trade agreement with China. Through such cooperation, the United States and China could become successful partners in the promotion of trade and prosperity in the increasingly vital Asia-Pacific region.

Keywords: China, Economic Integration, Trans-Pacific Partnership

JEL Classification: F10, F13, F15

Suggested Citation

Grabow, Colin, Responsible Stakeholders: Why the United States Should Welcome China's Economic Leadership (October 3, 2017). Cato Institute Policy Analysis No. 821, Available at SSRN: https://ssrn.com/abstract=3112822

Colin Grabow (Contact Author)

Cato Institute ( email )

1000 Massachusetts Avenue, N.W.
Washington, DC 20001-5403
United States

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