Photo: VCG

Editor's Note:

In terms of economic and trade relations between China and the US, while both sides have, at times, expressed a willingness to resolve disputes through dialogue and cooperation, efforts toward stable consultation mechanisms have often been overshadowed by policy reversals and trust deficits - particularly on the US side, with a long-term hostility toward China. As history shows that shifts in Washington's stance have cast doubt on the sustainability of any progress, the world is once again watching closely to see if the US will keep its word after the recent London negotiations with China.

In the 16th piece of the "Wisdom on China&US" series, James K. Galbraith (Galbraith), the Lloyd M. Bentsen Jr chair in government and business relations at the University of Texas at Austin's Lyndon B. Johnson School of Public Affairs, shared with Global Times (GT) reporter Xia Wenxin his expectations of further trade negotiations between China and the US as well as viewpoints on the prospects of the bilateral relationship and the China narratives in the US.

GT: Before the June trade negotiations in London, China and the US reached a consensus during the Geneva talks in May, which was later "seriously undermined" by the US, according to China's Ministry of Commerce. Some experts also criticized Washington's "repeated and unpredictable policy shifts" after the Geneva talks. How do you see the criticism of the US' policy shifts? Are you optimistic about where the trade negotiations might head next, as well as the future of bilateral trade and economic relations?

Galbraith: Shifts in US policy are certainly repeated but the fact that the policy shifts on short notice and in a zigzag pattern is not itself unpredictable. It is entirely to be expected from the observation of how policies are arrived at within the American government, as the product of conflicting internal agendas, priorities and interest-group pressures. However, I don't wish to be glib. I have only hope that further talks may defuse some of these issues for at least a short time.

One may hope that the China-US trade talks will defuse the hostility that has been fueled, in part, by domestic politics in the US in recent years. It also may serve to bring attention to the fact that underlying problems of the US economic structure require a more serious, carefully planned and executed set of policies - they cannot be resolved by tax incentives (as the previous administration hoped) or tariffs alone (as we have just seen). I am only modestly optimistic about the possible reduction in hostility, and not at all about the capacity of the US political system to move from short-term gestures toward gradual and systematic long-term changes.

GT: The current China-US relationship faces unprecedented complexity and uncertainty. What do you think is the biggest risk facing the relationship?

Galbraith: There are so many risks at the moment that I'm unable to pick out the biggest one. In general, the official and media hostility toward China in this country is at levels I can only remember from my childhood in the early 1960s. It's as though there was never a Kissinger initiative or a Nixon visit, as though there had never been a normalization of diplomatic relations, as though China were not by far the largest overseas trading partner of the US.

GT: You pointed out in January that tariffs on China will not stop the country's "march to the front ranks of world technology and industry." How do you evaluate China's strategic choices in responding to US trade pressure and promoting high-quality development?

Galbraith: In my experience, China always faces problems as they arise, and proceeds deliberately in most circumstances. This was true of agricultural reform, of urbanization and infrastructure policy, of the opening-up policy, of the response to the world financial crisis and of recent problems in the real estate sector. I do not see signs that the basic character of China's response to new problems and pressures has changed.

James K. Galbraith. Photo: Courtesy of Galbraith

GT: One of the purposes of Washington's tariffs on its trading partners is to bring manufacturing back to the US. Do you think tariffs can make American manufacturing great again?

Galbraith: By themselves, no. Some facilities will be set up in the US to avoid the tariffs, and some firms (notably European) may move manufacturing to the US for the same reason and for other advantages, such as energy costs. But the main effect will be to protect existing domestic-oriented manufacturing - for example, in the automotive sector - from competition, allowing higher prices and profits but not fostering the technological transformations required to regain international markets. Meanwhile, existing export-oriented sectors - for example, Boeing - face new obstacles in some of their largest markets.

GT: In your 2023 Project Syndicate article, you discussed the core of the US' "new China narrative." How has this new narrative shaped US policy toward China and how has it affected the bilateral relationship? You have argued that tariffs on China are more of a political statement that will make "China hawks in Washington happy." Are the current tariffs on China a product of this narrative?

Galbraith: As I wrote in that essay, American (and more generally, Western) narratives about China are a product of local political needs and the preconceptions of mainstream economists, few of whom possess a deep knowledge of Chinese realities. These narratives can change quickly. The prevailing narrative in 2023 was of "China in decline" - with the implication that tough measures emanating from the Biden administration were responsible for bringing China to heel. It seems unlikely that this narrative had any substantial political benefit, given the election result; of course, many other factors were at play.

I doubt that the tariffs under the Trump administration are a product of the Biden political narrative. Currently, the White House is filled with aggressive trade strategists, and it appears preoccupied with the trade deficit as though the US were a business, needing to make a dollar-profit on its international trade. This view is clearly framed by China's strengths, not its alleged decline. What it does not acknowledge is that the sources of China's strengths lie in technical, engineering and production competence, augmented by good infrastructure and stable finance. This explains the confused references to "cheating," "subsidies," "dumping" and, of course, to the role of the Communist Party of China - which, if taken seriously, would amount to conceding that communism is innately superior to capitalism.

GT: You mentioned in an interview that you are skeptical of most of the research you have read on China. Can you elaborate on this?

Galbraith: Excellent research on China exists, but it is rare - it requires deep familiarity with the history of the country and, usually, knowledge of the language, as well as extensive time in China. Isabella Weber's book How China Escaped Shock Therapy is a fine example. But much of what is published on China in American journals is affected by a degree of self-censorship - necessary to align with prevailing narratives and to get published in the first place - or by the apparent ambition of the writer to rise in the China-watcher milieu. This imposes a requirement to frame the discussion in terms of China's "threat" to the US, to the "Indo-Pacific," to the world order, to the island of Taiwan and so forth. I suppose some echoes of the "Who Lost China?" debates and associated purges in the 1950s remain as part of the culture.

That said, and to be fair, China is not an easy country for an outsider to study. I do not count my own experiences as dispositive, and I'm very careful about what I write for public consumption so as not to claim more expertise than I possess.