Why and Whither the US-China Trade War?: Not Realist ‘Traps’ but Political Geography ‘Capture’ as Explanation
23 Mar., 2021  |  Source:Journal of World Trade  |  Hits:4306

1 INTRODUCTION


As his Presidency progressed it became clear that President Trump was full of dissatisfaction with the existing international trade order and aimed to readjust and comprehensively revisit the pattern of international trade (Trump, 2019). Underlying the focus on trade was the Trump Administration’s determination to strengthen the technological superiority of the US, increase US exports, and improve market access to other countries (Trump, 2020). Under the slogan‘Make America Great Again’, President Trump aimed to return manufacturing jobs to the US, to invigorate the domestic economy (The White House, 2019).


The aim to readjust the international trade order was not entirely unreasonable. In fact the two previous Presidents (George W. Bush and Barack Obama) had similar aims and were also critical of China’s trading practices (United States Trade Representative (USTR) 2015). After all, the international trade order had experienced seventy years since its establishment after World War Two, and had always been subject to dynamic adjustments. In the eyes of US policy elites, the most important economic and trade interest of the US is to maintain its primacy in the world-economy. President Trump focused upon restructuring the trade order to achieve this goal. However, it is very uncertain that the US efforts to readjust the international trade order and maintain its global economic primacy can succeed.


Trade is the manifestation of underlying dynamics of production in the world-economy. The essence of the US-China trade war and the root cause of Trump’s trade policy ‘revolution’ is a shift in the nature of cutting edge, and most profitable, forms of economic production. It is this shift that drives thegradual fading of US hegemony and the severe decline of its ability and willingness to maintain the current liberal international trade order (Flint and Taylor 2018, pages 59–61). The British Empire also experienced this process as US and Germany became the centres of new forms of manufacturing. The result was a shift from the creation of the ‘era of free trade’ in 1860, to the establishment of protectionist regimes, called ‘Imperial System of Preferences’ in 1932. After World War One, the free international trade order collapsed; after World War Two, the US took over the baton of championing a free international trade order.


This article attempts to understand the profound political-economic, geographic, and historical force behind the Trump trade policy ‘revolution’ from the perspective of world-systems analysis (Wallerstein 1983). The trade war launched by the United States against China is essentially motivated by a profound political-economic and geographic logic: the US and China are competing to ‘capture’ core processes in the world-economy. The real imminent challenge facing the US-China relations and the rest of the world is actually not the so-called ‘Thucydides Trap’ (China challenges American global power), or ‘the Kindleberger Trap’ (America gives up global economic leadership while China is not ready to take over American role) (Allison 2017; Nye 2017). The underlying economic driver of the trade war is the emergence of new core processes in the capitalist world-economy and the attempts by governments to ‘capture’ those processes within cities within their country (Arrighi 1990; Flint and Dezzani 2018).


2 AVOIDING TWO TRAPS


The idea of two separate but related ‘traps’ dominates the discourse about USChina tensions and even the possibility of war between the two countries (Allison 2017; Nye 2017). The Thucydides Trap is a realist argument based on a premodern analogy; arguing that the processes and imperatives of power politics are immutable rather than context-specific (Morgenthau 1967). In essence, the argument states that an exiting, though waning, great power will have no choice but to fight a perceived rising power, unquestionably defined as a ‘challenger’, before it becomes strong enough to defeat the existing power (Allison 2017). The theory rests on a limited sense of power and processes: Power is defined as the possession of military might and inter-state relations are understood to be a zero-sum game.


The Thucydides Trap is a realist discourse that feeds into US commentaries that it only acts militarily for defensive reasons, and exists in a world where it is constantly threatened, despite its military superiority, and force is the inevitable way to resolve conflicts and maintain its position as ‘number one’ (Agnew 2003; Morgenthau, 1967). Despite the resonance of the message, the Thucydides Trap lacks a complex understanding of the processes of the modern world, and its premodern analogy ignores more recent historical examples of the transfer of power as a hegemonic power declines. The Thucydides Trap is a simplified example of the broader hegemonic transition theory that is strengthened by the idea of relative power shifts, but does not theorize the underlying dynamics of economic shifts.


The second ‘trap’ that is being applied to interpret US-China relations is the Kindleberger Trap (Nye, 2017). American economic historian Charles Kindleberger once proposed the ‘Hegemonic Stability Theory’, which attributes the stability of the international system to the hegemon. Otherwise, there may be a ‘Kindleberger Trap’, that is, although the US replaced Britain as the world’s largest economy, it failed to take over the corresponding role, resulting in a recession, genocide, and world war in the global economic system. According to Nye (2017), both China and the US, as well as international society have a responsibility to avoid the ‘Kindleberger Trap’. Historical comparison with the US after World War One highlights that power transitions are a process that extends across decades, and involve much more than military power and victory. The strengths of the Kindleberger Trap thesis is its understanding of economic processes as the driver of inter-state change and tensions. However, it misreads those processes. The emphasis upon trade and the institutions designed to manage global trade ignores the antecedent economic processes of the innovation of new products and production processes.


Including economic processes in the analysis of hegemonic power shifts helps identify the global shifts in production and trade that underlie and drive tensions between a declining power and those gaining a greater share of global economic production andtrade (Arrighi 1990; Flint and Taylor 2018, pages57–59; Flint and Dezzani 2018). For example, Stein (1984) defined a ‘hegemon dilemma’ for the hegemonic power. That is, the hegemon must maintain a hegemonic power, and it needs to be taken advantage of, and allow a certain degree of unfair trade behaviour against the hegemonic power in exchange for other countries willing to join the hegemonic system and accept the leadership of the hegemonic power. However, this will lead to emerging economic powers to ‘catch-up’. If the hegemon is no longer willing to suffer losses, the loyalty of these countries will decline. In turn, the international trade order created by the hegemon (i.e. the Breton Woods agreements) will be weakened. In other words, the liberalism promoted by the hegemonic power enables its economic growth up to a point, and then provides the seeds of its own relative economic decline as others emulate its success and improve upon its economic practices (Taylor, 1999).


The dilemma identified by Stein will ultimately lead to the decline of the hegemon sooner or later, and the root cause of its decline is that it cannot maintain its leadership and maintain the loyalty of its followers forever. In the process of the decline there will be repeated struggles and bargains between challengers and the hegemonic power for decades or even hundreds of years. In the history of the liberal trade orders established by the British Empire and the US, with the development of globalization, the spread of democracy will inevitably bring about the spread of knowledge and technology, which will lead to the catch-up of other countries (Taylor 1999). The hegemon is therefore always in a state of restlessness.


We agree with Stein (1984) that the hegemonic power is required to maintain a liberal economic world order that demands an openness that enables other states to emulate its behaviour and, in turn, surpass its economic prowess. We also agree with some of the Kindleberger Trap thesis; namely that hegemony requires the desire and ability to establish institutionalized practices and norms to manage the world-economy. However, our argument is different in that it sees conflict over trade, and the establishment of institutional regimes, as being driven by underlying shifts in production within the capitalist world economy and the imperative of states to ‘capture’ emerging and cutting-edge economic activities (Flint and Dezzani 2018). Hence, the tensions between the US and China are misunderstood if the starting point of the explanation is trade. In fact, the term US-China trade war is a misnomer.

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