Rebecca Blumenstein and Elizabeth Economy debate who’s at fault in the US-China trade war, what the consequences may be, and what it means for globalism in the long term:

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  Rebecca Blumenstein: I think we’re at a worrisome point. The whole notion of globalization and engagement is coming undone between the US and China. We are actually in the middle of a trade war with China, which is shocking. You see the business community, which has supported the Trump administration in many respects, shocked and appalled, because many companies make things that have parts from China and other places, and although the Trump administration is trying to save jobs, there are a lot of fears we could actually lose jobs. We could end up at the end of globalization where you have US goods made in the US and Chinese products made in China. Most people who are realistic about the cost of manufacturing don’t think it’s realistic to bring all these jobs back to the US. I think the Chinese economy can withstand the impact of a trade war much more than the US economy. You see it with soybean farmers in Iowa — other countries, not only China, are being strategic about where they’re placing their tariffs. … China can’t make chips the way the US can now, but I’ll bet in ten years that’s going to change. … You could be seeing with 5G and technology totally separate systems in the US and China. … We have for decades had an assumption that globalization will continue — obviously it is not perfect and people have been left behind — but by targeting China in this way and making it as adversarial as it could be – when they’re the world’s second largest economy and will soon surpass the US – accommodating China is the story of our time, and if globalization is off, there are huge question marks going forward.”

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  Elizabeth Economy: This is not all about the United States in the wrong. Sure, Xi Jinping stands up at Davos and says, ‘we’re a defender of globalization,’ but China does not support either the free flow of capital or certainly the free flow of information. To some extent, I feel like the media has given Xi Jinping a free pass. All it takes is for Trump to say, ‘America first’ and doing all these things, and we’re bad, but it doesn’t mean China is good and that China’s ready to step into the breach. When we look at the measures that the Trump administration is taking right now, I agree that where the tariff wars are going is not clear and it’s not likely going to end well. But, we have been accommodating China for a very long time, and we’ve listened and we’ve waited and we’ve expected they’d do better on things like intellectual property rights protection, subsidies … all these nuanced barriers to entry for American and other countries. At a certain point, when you have the second-largest economy in the world, you have to stand up and say enough is enough. And to that extent I think the Trump administration is right. The end strategy may not be the best, but the point is an important one. And I think we’re not the only ones. All of our allies are concerned with the exact same problems dealing with China that we are. Globalization doesn’t just depend on the United States doing the right thing. It really depends on China doing the right thing, and China hasn’t done the right thing for a very long time.