![]() Global industry tends to stay one step ahead of U.S. companies, and to eliminate channels allowing participants in global value chains to evade sanctions. authorities have struggled to minimize the adverse impact of such restrictions on U.S. Similarly, ever since the Trump administration’s original announcement of export restrictions targeting ZTEĪnd then Huawei, U.S. The recent visit to China by German Chancellor Olaf Scholz and a high-level German business delegation came just days after Germany approved a controversial deal to let the Chinese shipping giant COSCOĪcquire a 25% stake in the Port of Hamburg. Export restrictions, in particular, call for close coordination, and there is already reason to doubt that some countries will go along with the U.S. imposed them unilaterally without consulting its allies. Moreover, it remains to be seen how effective the new sanctions will be, given that the U.S. ![]() But it is wrong to presume that global welfare is a zero-sum game, and that China’s ascent implies America’s decline. If it continues (a big “if”), the impressive progress that China has made over the last three decades could indeed make it the world’s most important economy. In fact, America’s moves against China are less about national security and more about economic domination. may already be moving in that direction with the idea of “friend-shoring.” But history shows that our friends today may not be our friends tomorrow. should stop all trade with unfriendly countries, not just trade in technologically advanced products. It is unfortunate that war has driven so much technological progress.īut if national security is really the concern, the U.S. Soldiers need to be fed and clothed, so should food and clothing also be restricted as dual-use goods? Technology developed for commercial use is often used for military purposes, and the military has always been one of the main clients for modern technologies. Second, the concept of dual-use goods is misguided, considering that every good has the potential for both civilian and military use. Worse, sanctioning China now could backfire, by inducing its leaders to adopt a more aggressive stance than they would have otherwise. It is excessive to impose severe economic sanctions now out of fear of what China might do in Taiwan or the South China Sea. While China has certainly changed over the past 10 years, it is not Russia. Precisely such arguments led to a long and costly war in Iraq, which continued well after the war’s stated rationale-the alleged threat of Iraqi weapons of mass destruction-had been proven to be baseless. Sanctions could backfireįirst, while the national-security argument is easy to make, it is difficult to verify. Nonetheless, the strategy is deeply problematic. economic policies vis-à-vis China have met with bipartisan approval. National security is always an appealing rationale, which is probably why the new U.S. To be sure, the new export restrictions are being justified in the name of national security, to address the military-civilian fusion that China practices and the growing significance of “dual-use goods” (technologies that are designed for commercial purposes but have military applications). It is an admission that policies aimed at increasing America’s own economic competitiveness may have only limited success. Yet this outlook clearly signals weakness. “ it is wrong to presume that global welfare is a zero-sum game, and that China’s ascent implies America’s decline.
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