The Rise of China and the Fall of the ‘Free Trade’ Myth- Lessons for Pakistan

There is little doubt that Beijing is presenting itself as a benign alternative to the United States. In a speech just before his second term as the party’s general secretary, Xi claimed that there were more takers internationally for Chinese “values.” China, he said, offers “a new option for other countries and nations who want to speed up their development while preserving their independence.”

It was always wildly optimistic to suppose that China would eventually be integrated into an American-dominated order and persuaded, if not forced, to adopt its norms. A postcolonial Indian like myself, who traveled to China and read in its modern history and literature over the last decade and half, could only be skeptical of such claims. It was never less than clear to me, whether in the suburbs of Lhasa, Tibet (demographically altered by Han immigration), or in the bookstores of Shanghai (stacked with best sellers with titles like “China Can Say No”), that the quest for national sovereignty and regained strength defines China’s party state and its economic policies.

Belying predictions of doom, China has again demonstrated the power of what Dower, speaking of Japan, called “national pride — acute, wounded, wedded to a profound sense of vulnerability.” The United States never knew this single-minded ambition of the historical loser to avenge his losses; American leaders now reckon with it at home, in the wake of a nationalistic backlash against free trade and globalization. Some confused policies and mixed signals have accordingly defined the American position on China. During the American presidential campaign in 2016, all the main candidates, Bernie Sanders and Hillary Clinton as well as Trump, opposed the TPP, which was intended to contain China in its own region. Then, in Trump’s chaotic first year, the United States seemed to be forced back by Hamilton’s shrewd East Asian disciples into its historical role as the mother country of protectionism. Trump now says that America first does not mean America alone, and he is open to rejoining the TPP. There may be more such reversals ahead. For Trump is only just beginning to acknowledge, after a year of bluster, the formidable challenge of China and the arduous effort needed for the United States to match its most determined and resourceful rival yet.

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Pakistan – Only Option … Trade for development

The trade tensions with US allies generated by Trump’s steel and aluminium tariffs are likely to be resolved through cosmetic concessions. The focus of future trade friction will be China. India and other developing countries which are seen to be ‘taking away’ US jobs may also feel some ‘heat’.

Pakistan is unlikely to figure in this trade turbulence. It is a puny trader, exporting $20 bill and importing $45 bill annually; as compared to the $375 bill and $380 bill which Mexico, a country of comparable size, exports and imports. Pakistan’s failure to produce and trade deserves a separate analysis.

The interests of the developing countries would be best served if they are able to act collectively. They could take advantage of Trump’s challenge to the global trading system and revive the proposal for an international trade organisation that is more efficient (in the application of capital and technology); more advanced (eg encompassing digital trade) and more equitable (embracing full employment and the SDGs). Today, the developing countries possess the collective economic and political power to construct a trading system that serves development.

As Deng Tsiao Ping remarked at the outset of China’s rise:

“Development is the only truth. If we don’t develop, we will be bullied.”

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