It took the United States 53 years between the 19th and 20th centuries to double its per capita GDP, taking it from $1,300 to $2,600. It only took China 12 years to duplicate the same results. The period fell between Deng Xiao Ping’s “reform and opening” policy and the end of the last century. For now, the third millennium has validated this powerful acceleration. In 1980—the year the US reestablished diplomatic relations with China—the US’ trade deficit with China was $500 million; this number grew to $80 billion in 2000, and to the astronomical sum of $315 billion in 2012. During the same time period, China has accumulated about $4 trillion in foreign reserves, much of which is denominated in US currency. There’s enough to justify the intense debate between politicians, companies, universities, and think tanks. One recurring questions is particularly harsh: did the United States help China, which is to say, a potential enemy? Consequently, should the US continue to help them? Even the international situation—in particular Obama’s initiative to create a pivot toward Asia—raises some doubts: the US is working in favor of Southeast Asian countries that are worried about China’s expansion. Political support, weapons, and resources are being offered to face a power—China—that the United States is helping to grow. In hindsight, it’s impossible to deny Washington’s participation in Beijing’s evolution. The normalization Nixon and Mao initiated found comfort in a multipolar world and then in the advent of modern globalization. Investments, machinery, know-how, and a modern industrial mentality undoubtedly arrived in China from the United States—in a not quite belligerent framework, but still not friendly. It was exactly what a developing country wanted. To reach an acceptable level of prosperity and power, growth was necessary. Albeit with many contradictions, the US essentially indulged this tendency. Important events demonstrate this, like the extension of MFN status to China (most favored nation). Without the reduction of duties, Chinese goods would not have been able to inundate the American market. Surely, these concessions were not free. China offered a solution to growing costs, allowed low-cost delocalization, protected investments, and exported at paltry prices. This exchange worked relatively well, but now that China’s power appears menacing, delayed doubts are surfacing. Did the interests of multinationals coincide with the country’s interests? Outsourcing caused factories to close and the abandonment of entire manufacturing sectors. Purchasing power increased, but did it compensate for the loss of millions of jobs? Furthermore, was the attempt to conform China to international business regulations a failure or an illusion long before? Patrick Mulloy, head of the US-China Economic and Security Review Commission, provides a profound answer in his latest essay, where he sustains that the crucial juncture took place in the 1980s. With the affirmation of liberal theories based on Milton Friedman and the University of Chicago, multinationals were pushed to focus on short-term profits, denying an entrepreneurial vision geared more toward society than a single corporation. Very lucidly, Mulloy baptizes this change as the passage to capitalism that favors the shareholders compared to all of the company’s components. Shareholders have immediate interests, independent of the repercussions. Stakeholders found companies, gave them life, and are inspired by more integral values. If this was the prevalent philosophy, there couldn’t be a better partner than China. If the purpose was to create immediate value, at times without splitting hairs with respect to the rules, China was ready to indulge. It seemed like a perfect union, until we realized that China isn’t the inviting partner it made us believe 30 years ago.
