China is not an Enemy: U.S. economist

China Plus Published: 2019-05-22 21:38:01
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The US move against Huawei is "a dangerous escalation of the US attempt to weaken China's economy", Columbia University economics professor Jeffrey D. Sachs has said in a recent interview with Chinese media.

File photo of Jeffrey Sachs. [Photo: AFP]

File photo of Jeffrey Sachs. [Photo: AFP]

Sachs says China is not an enemy. It is a nation trying to raise its living standards through education, international trade, infrastructure investment, and improved technologies. It is doing in short what any country should do when confronted with the historical reality of being poor and far behind more powerful countries. Yet the Trump Administration is now aiming to stop China's development. This could prove to be disastrous for the US and for the entire world.

Sachs points out that China has roughly followed the same development strategy as Japan, Korea, and Singapore before it. It is doing nothing very unusual or unprincipled for a country that is catching up. It is trying to copy, buy, imitate, reverse engineer, and improve upon the technologies of the US and Europe through domestic innovation. The constant US refrain that China "steals" technologies is highly simplistic. Technologies flow in many ways from those who have them to those who don't yet have them. Technology leaders can't keep their lead through protection, but only through continued innovation.

All laggard countries copy the leaders, throughout all of economic history. That's how the US progressively caught up with Britain in the 19th century. And when any country wants to close a technology gap, it recruits know-how from abroad. The US missile program, as is well known, was built by former Nazi rocket scientists recruited to the US after World War II.

Sachs adds China's only "mistake" is that it has 1.4 billion people. If it were Korea, with 50 million people, it would merely be hailed by the US as a great development success story, which it is. By being so big, China refutes America's pretention to run the world. The US, after all, is a mere 4.2 percent of the world's population while China is 18 percent of the world population. Neither country is in a position, in fact, to dominate the world today, as technologies and know-how are spreading worldwide faster and deeper than ever before.

Sachs says the most basic lesson of trade theory, practice, and policy is not to stop trade – that is the route to falling living standards, economic crisis, and eventually a hot conflict – but to share the benefits of economic growth so that the winners from trade in effect compensate the losers. The reason that American politics are so fraught with conflict over trade is that the US political system, in the hands of the winners, flat out rejects sharing the winnings with the losers. Greed comprehensively dominates Washington policies. This allows demagogues like Trump to point the finger at China for causing America's ills, and has many Democrats also attacking China.

America's real battle is not with China but with America's own giant companies, which have raked in a fortune and yet resist sharing it with their own workers. America's business leaders and mega-rich push for tax cuts, more monopoly power, offshoring, anything to make a bigger profit, while rejecting any policies to make American society fairer. China has made American richer overall, but the gains have gone to the top – not because of China’s misdeeds but because of the corruption of American politics.

Sachs emphasizes that unless some greater wisdom prevails, we could spin towards conflict with China, first economically, then geopolitically, and finally militarily, with utter disaster for all. There could be no winners in such a conflict. Yet such is the profound shallowness and corruption of US politics today that we are on such a path.

A trade war with China won't solve our economic problems, but affordable healthcare, better schools, a Green New Deal, higher minimum wages, and a crackdown on corporate greed would do so. In the process, we'd also learn that we have far more to gain through cooperation with China than through any cold war. Most importantly, we'd gain peace and the chance to work together with China and other countries on solving many of humanity's great challenges.

(Jeffrey Sachs is a professor in economics at Columbia University. His article entitled "The War on Huawei", which was published after the arrest in Canada of the company's vice chair and chief financial officer, Meng Wanzhou, gained widespread attention. Jeffrey Sachs was named "most important economist in the world" by Time Magazine. He played a role in the transformation of Russia's market economy, and is called the "Father of Shock Therapy")

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