On Saturday, US president-elect Donald Trump said, “The idea that the BRICS countries are trying to move away from the dollar while we stand by and watch is over.” He promised to impose 100 percent tariffs on imports from any country that attempts to create a new BRICS currency or “any other currency to replace the mighty US dollar”. Such unruly countries “should expect to say goodbye to selling into the wonderful US economy,” he added.
There is absolutely no problem in a US president putting America first. However, pursuing the best interests of America still must be within the framework of the international order. According to the Oxford Research Encyclopedia on International Studies, “At the most general level, international order entails some level of regularity, predictability, and stability in the ways that actors interact with one another.” Since the establishment of the United Nations in 1945, “some level of regularity, predictability, and stability in the ways that actors interact with one another” has long been assumed to mean that, in matters relating to trade and development and international relations, all members of the UN are to be respected as sovereign actors. Multilateralism, not unilateralism, is supposed to prevail. American political philosopher John Rawls proposed understanding “justice as fairness”. Thus, fair competition following the laws of the market must be part of the international order. Coercion is not liberal and certainly out of sync with America’s self-proclaimed commitment to the international order. The blatant use of threats to protect “the mighty US dollar” is not fair and amounts to admitting that the US dollar is not that mighty after all, because it requires tariff protection to retain its “mightiness”.
According to the Peterson Institute for International Economics, “Numerous economic studies have documented that the effect of the tariffs (following Trump’s raising tariffs against China in his first term as US president) was to raise prices, and hurt American consumers and companies buying imported inputs, harming American competitiveness by reducing employment and sales.” Donald Trump wanted China to buy more from the United States but would not sell products in which America enjoys a comparative advantage, namely technology-intensive goods, in the name of national security. The Joe Biden administration continued on the same path, and further promoted the “small yard, high fence” approach, defying the laws of economics. The idea is to place strict restrictions on advanced technologies while maintaining normal economic exchange in other areas. Jake Sullivan, the national security advisor to Biden, alleged that China “subsidizes at a massive scale both traditional industrial sectors, like steel, as well as key industries of the future, like clean energy, digital infrastructure, and advanced biotechnologies,” and that America saw industrial hollowing out and lost “competitiveness in critical technologies that would define the future”.
The US economy will do much better and will be truly wonderful if it is better integrated into the world and plays fair. Defying the laws of the market and attempting to play unfairly to hang on to its hegemony will only end up isolating the US and will never succeed
If “massive subsidization” is the trick to China’s industrial success, is it not easy for other countries to follow suit? It would have been particularly easy for the US, since it does not have to earn its foreign exchange reserves. The Fed can print US dollars, which is “foreign exchange” that will be accepted everywhere. China does subsidize the development of green energy heavily. This makes economic sense because green energy is essential for dealing with the challenge of global climate change, and fighting climate change is a public good for the whole world. We need to be reminded that for China, just like all other countries, subsidies come at a cost and must be paid for by raising taxes or trimming public services.
China is the only country in the world that has hosted an international import exposition. The 2024 China International Import Expo, held from Nov 5 to 10, was the seventh so far, and China runs many other expos, including the China International Fair for Trade in Services, the Canton Fair, the World Manufacturing Convention, and the second China International Supply Chain Expo that just ended on Nov 30, in Beijing.
Thus, China practices what it preaches. It is fully committed to multilateralism and the international economic order as it has been understood since the establishment of the UN. None of China’s initiatives exclude anyone. The Belt and Road Initiative welcomes any country on board. The Asian Infrastructure Investment Bank has 96 full members and 14 prospective members — and is open to accepting additional members. China is not competing for supremacy with the US, but always wants to play fair. The idea of trading without relying on the US dollar is a matter every sovereign country should have the prerogative to decide for itself.
The “wonderful US economy” must earn its reputation as such on its own account by playing fair. After the Chinese mainland opened up, Hong Kong’s manufacturing sector moved its production lines to the mainland, as that is what the laws of the market dictate. As China develops, labor-intensive industries have been moving to Southeast Asia, and former manufacturing workers need to find jobs in the services sector. We all play fair and adapt. The US economy will do much better and will be truly wonderful if it is better integrated into the world and plays fair. Defying the laws of the market and attempting to play unfairly to hang on to its hegemony will only end up isolating the US and will never succeed.
The author is an adjunct research professor at Pan Sutong Shanghai-Hong Kong Economic Policy Research Institute and Economics Department, Lingnan University.
The views do not necessarily reflect those of China Daily.
