U.S. trade chief calls trying to change China's economy "crazy"
· Axios
As Europe grapples with its own China shock, the U.S. has largely given up on trying to persuade Beijing to change the export-heavy economic model that's helping fuel it.
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- It's a sharp break from years of U.S. economic diplomacy — including most recently during the Biden administration.
What they're saying: "We did that for 25 years with our best people, and everything got worse," U.S. Trade Representative Jamieson Greer told Axios in an interview this week, referring to efforts to persuade China to shift toward greater consumption.
- "All these things where they say, 'Well, let's do more engagement. Let's talk more about savings and investment,'" Greer said. "That's crazy to me."
- "If we continued to do what they were saying, we would have 0% growth, like Canada, like the U.K., like Germany," Greer said. (Germany barely grew last year, while Canada grew 1.7% and the U.K. 1.3%, compared with 2.1% in the U.S.)
The big picture: The U.S. has spent years building a tariff wall against a slew of Chinese goods.
- Biden officials largely kept those tariffs in place and increased duties on other Chinese products, including electric vehicles.
- President Trump has gone further in his second term, putting greater emphasis on shielding the U.S. from China's economic model, even as Washington continues trying to shape Beijing's behavior in areas like AI and technology.
Between the lines: "When people come and say we should get together with the Europeans, what I say is, there's nothing really different for us to be doing," Greer said. "The question is, why aren't they doing things? Why aren't they taking action?"
- "They should be doing what we're doing, and not the other way around."
The other side: Greer's Obama-era predecessor, Michael Froman, has warned that China's export boom could ultimately set off the next global economic crisis.
- The world's ability to absorb China's excess production "is approaching a breaking point," Froman wrote in Foreign Affairs earlier this month.
- Rather than give up on changing China's model, the U.S. should build a "coalition of the willing" to pressure Beijing to rebalance before the adjustment comes in a far more painful way, he argued.