Economic negotiations with China must be a component of a consistent overall strategy to promote US interests, rather than one element of a menu of mutually inconsistent and constantly changing initiatives. The foundation of this strategy should be a comprehensive program of US economic renewal that maintains American technological leadership, rather than a defensive strategy that seeks to slow China’s technological and economic rise. This strategy of addressing problems at home must include the rebuilding of crumbling infrastructure, reversing recent cuts in federal support for research and development (R&D), and a smarter immigration policy that brings to the United States talented science and technology specialists who will strengthen the US economy.
The overall strategy must recognize that regime change from the Chinese Communist Party, a crisis of the Chinese economy or even a sharp decline in its growth trajectory are all unlikely over the time horizon of this administration. The incoming administration should assume that China’s economy and its influence on the overall world economy will continue to expand.
Neither a general decoupling from China nor the promotion of regime change should be an element of this overall strategy.lardy-2020-10-rtge-memo
Nicholas R. Lardy is the Anthony M. Solomon Senior Fellow at the Peterson Institute for International Economics and an expert on the Chinese economy.
To read the full memorandum, click here.