Stay informed with free updates
Simply sign up to the US trade myFT Digest — delivered directly to your inbox.
Years after 1949, the US was still kicking itself for “losing” China. Had Harry Truman been firmer, the Nationalists better supported, the reconstruction of Europe and Japan less distracting, the largest nation on Earth would not have gone communist, according to this line of self-reproach. That China might have had some say of its own in the matter sometimes got lost in the crossfire of blame.
This century’s version of “who lost China?” is “who empowered China?” (and India, and others). Republicans, plus no few Democrats, increasingly tell themselves a story in which the US opened itself to trade under a series of naive administrations, canny foreigners didn’t, and relative decline ensued. Thus was China “allowed” to become a superpower. As long as this strange account of the recent past survives, so will the protectionist fever in Washington.
It is worth disposing of a few misconceptions, then. There was resistance to China’s admission into the trading world, from the US and other governments. Some cited the country’s protectionism, others human rights. China was denied founding membership of the World Trade Organization in 1995 and wouldn’t join until 2001, on unusually stringent terms, by which time 23 years had passed since Deng Xiaoping’s Open Door speech. The idea that Washington waved a fox into its hen coop in a fit of haste and liberal innocence doesn’t square with the record.
Second, even if the US could have slowed the economic ascent of the “rest” by not trading so much with it, are we to believe there would have been no costs to the US itself? The conquest of inflation in the 1990s and 2000s owed something to shrewd central banking, but also to cheap imports from the new manufacturing centres of Asia. During that Great Moderation, the US enjoyed domestic civic peace and an era of cheap borrowing that enabled great commercial ventures. All but one of the Faangs — the five giant tech groups — were founded in the decades either side of the millennium. Any attempt to conjure a parallel reality in which the US successfully stymied China must reckon with the perverse outcomes for itself.
Also, even if China played a double game on trade, the alternative to letting it in was what, exactly? Were the west and the institutions it sponsored really going to bar a nation that accounted for around a fifth of humankind? One that had spent a generation wrenching itself (however incompletely) from communist economics? To do so would have been to forfeit the legitimacy of the world system.
The truth, both bleak and soothing, is that there isn’t much the US could have done to hang on to its uncontested position. Once China started to reform at the end of the 1970s, the ex-Soviet bloc a decade later, and a semi-closed India just after that, it was likely that America’s share of global output — and therefore its purchase on events — was going to wane. (As it already had since the all-time peak just after the second world war.) Western primacy had depended in part on some of the most populous countries in the world making terrible economic choices at the same time. Once those were corrected, a new balance of power was coming.
A coroner examining the corpse of American unipolarity would return a verdict of death by natural causes, not suicide or misadventure. Even those of us who would take a US-led world over the plausible alternatives must see the intrinsic unlikelihood of a nation with 4 or 5 per cent of the human population commanding the scene. The same force of numbers allowed the US to eclipse Britain as the foremost power a century or so ago. At the time, liberal Brits had their own grievances with the usurper, which had industrialised behind tariff walls. Looking back, who thinks protectionism was the paramount issue? As long as the US didn’t self-harm, its scale was going to tell in the end.
There might be other reasons to favour protectionism. It can coerce countries into giving ground, whether on trade issues themselves or unrelated ones, as Canada and Mexico have shown of late. Some technologies are so strategic as to merit subsidies. (Watch the definition of these expand over time as industrial lobbyists have their charming way with Congress and ultimately with the taxpayer.) It might even make sense to keep non-viable industrial towns going to prevent social decay.
But much of the governing class of the US has talked itself into a separate and less tenable belief: that trade led to America’s reduced status in the world, which is now evident in the bluntness of US sanctions and in the Sputnik-like shock of China’s DeepSeek. From there it follows that the opposite of trade might arrest if not reverse the process. It is an argument that seems self-critical, and therefore admirable. But it is also a comfort blanket, in that it frames relative decline as a choice: as something fixable. True candour would be to accept that other countries have agency, and that their choices in recent decades did more to erode America’s position than anything decided in Washington.
The loss-of-China narrative mangled US politics for decades. It contributed to the rise of McCarthyism and to the disaster in Vietnam, as politicians sought to redeem themselves for a “failure” that was no such thing. If another era of unwarranted recrimination is upon us, hope its consequences are just some expensive tariffs.
Read the full article here
