Story Stream
recent articles

It’s popular today to say that “big business” is in bed with China or the “Chi-Coms.” Well, yes. Businesses are generally big because they’ve not just met and led the needs of individuals in the country where they’re headquartered, but also because the quality of their goods and services has been met with consumer applause overseas.

China’s economy is large, and it’s growing. One certain piece of evidence that China’s economy is growing has to do with the ubiquity of U.S. businesses over in China. To deplane in China is to see Americana all over the airport, and then it’s to be overwhelmed with American businesses and signage advertising same in any major Chinese city.

In which case it’s not surprising that American businesses are “in bed” with China. There’s a lot of money to be made there.

It’s also not surprising that U.S. businesses want open trade with China. It’s not just about getting “cheap goods” or inputs as confused skeptics say. It’s more about the simple truth that without imports, there are fewer exports. Big businesses wants openness to Chinese goods given the obvious recognition that underlying the Chinese desire to meet the needs of the American people is a powerful desire to purchase American goods and services.

What’s apparent is that as evidenced by the aforementioned ubiquity of American businesses in China, the U.S. has been wisely open to Chinese plenty stateside. Big business once again supports this. Good. Imports don’t just open markets for us overseas, they relentlessly push Americans into higher and higher forms of specialization that yield huge productivity surges. The genius of labor division doesn’t stop at our borders.

All of this came to mind while reading Walter Russell Mead’s latest column. Mead indicated that government officials and “think tankers” around the world recently alerted him to the reality that “war over Taiwan would be far more serious for the world economy than war in Ukraine or even a wider regional war in the Middle East.” Mead needed scholarly types to tell him this? He could have saved himself a global meeting schedule by simply flying to Shanghai, cabbing it to city center, and then cabbing it back for a flight home.

A trip like the one described would have opened his eyes to the presence of the biggest of big U.S. businesses in China. War with China over Taiwan would be devastating for the U.S. economy and every American simply because it would compromise the trade that always lifts the liberal country the most, plus it would devastate Americans working for myriad U.S. companies increasingly reliant on a voracious and growing Chinese market.

Of course, by the above description it can also be said that war with the U.S. would be devastating for China. Americans are the biggest, baddest consumers on earth. War would compromise this. It’s bad for business. Which is why “big business” aims to avoid it.

Mead and his more hawkish colleagues would be wise to listen to big business with the above in mind. The more that Americans are free to trade with China, the more expensive (and thus unlikely) war with China becomes. Good.

Added to this, China and Taiwan are very much interconnected economically. Which means war of the shooting kind between them would similarly be very costly. It calls for the U.S. to stay out. Precisely because China and Taiwan are so invested in the economic health of one another, the odds of a shooting war ahead of reunification shrink all the time. One can only hope.

Mead contends that the “the most important international development on President Biden’s watch has been the erosion of America’s deterrence.” The view here is that Mead misses. Trade is the ultimate the war deterrent simply because trade binds countries in peaceful fashion. 

Which means the most important international development on President Biden’s watch has been the growing realization that Democrats are as dangerously confused about trade as the Republicans who came before them. If the goal truly is to avoid war and the catastrophe that Mead acknowledges awaits us if there’s war, let’s unilaterally erase all tariffs on all Chinese goods with an eye on raising the cost of war with China as much as possible. Big business would likely agree.

John Tamny is editor of RealClearMarkets, President of the Parkview Institute, a senior fellow at the Market Institute, and a senior economic adviser to Applied Finance Advisors (www.appliedfinance.com). His latest book is The Money Confusion: How Illiteracy About Currencies and Inflation Sets the Stage For the Crypto Revolution.

Show comments Hide Comments