Nearly 30 years ago, Donald Trump complained on a US chat show about the trade practices of Japan. This was during Japan’s boom of the 1980s, which propelled it to become the world’s second largest economy. Now, China has taken that spot – and Trump is using the same rhetoric to attack it.
China is the bugbear of Trumpian foreign policy. According to one Wall Street Journal commentator, the US president is seeking to unify the world against China just as Reagan sought to isolate the Soviet Union.
Today’s China, as America’s primary economic challenger, can be seen as the latest incarnation of the East Asian model of authoritarian state capitalism. This was pioneered by Japan with its industrialisation and development during the 19th century.
China’s current communist rulers see industrialisation as the “magic key” to Great Power status – made clear from the message behind the Made in China 2025 scheme which asserts:
Since the beginning of industrial civilisation in the middle of the 18th century, it has been proven repeatedly by the rise and fall of world powers that without strong manufacturing, there is no national prosperity. Building internationally competitive manufacturing is the only way China can enhance its strength, protect state security and become a world power.
Ironically, a variant of this approach has been praised by some British MPs, in their suggestion of the Singaporean model as an example for post-Brexit Britain to follow. But they overlook how such a model is one of state capitalism, rather than the free-market nirvana they perceive it to be.
For it is state capitalism which enabled Japan and China to become manufacturing powerhouses. They both started with cheap, poor quality goods, and then created more sophisticated innovations – see, for example, the recent moon landing of a Chinese probe, the Chang’e 4.
The particular nature of China’s challenge is that its authoritarian system undermines the assumption that capitalism and democracy go hand in hand. A capitalist China is not necessarily a democratic China.
The war that never came
The most notable parallel between the rise of Japan in the 1980s, and China today, is the rhetoric used to describe them. While this includes references to seemingly unfair practices alluded to by Trump, it is more drastically articulated in predictions that conflict lies ahead.
This was expressed by Trump’s economic advisor, Peter Navarro, in The Coming China Wars, and followed George Friedman’s 1989 bestseller The Coming War with Japan, which predicted a shooting war between the US and Japan by the turn of the century.
In addition, both today’s China – and Japan three decades ago – have been held up as a cause of economic malaise in the Western world, with politicians promising to “get tough” with these nations. Yet this repeated rhetoric also demonstrates the perils of following such a simplistic vision.
For a start, the predicted Japanese-American conflict was based on the assumption that the end of the Cold War would see a divergence between Japanese and American interests and a dissolution of their alliance. However, rather than falling as the former Soviet communist states did, China went from strength to strength. This served to reaffirm the necessity of America’s alliance with Japan as a counter-balance in Asia.
It was the alliance that granted the US a degree of leverage over Japan, as illustrated by the 1985 Plaza Accord, which, in strengthening the yen, has often been held up as one of the causes of Japan’s subsequent economic slump. Repeating this with China is a far more challenging proposition for Washington.
The similarities in the rhetoric between these periods also illustrate the flaws in placing the blame of current Western economic malaise solely on Japan or China. The former’s economic rise of the 1980s came in the period of deindustrialisation throughout much of the Western world, bringing social dislocation which has not been fully resolved.
Problems and populism
The West’s failure to resolve the transition from manufacturing was amplified by poor global infrastructure and the failure to resolve the causes of the 2008 crisis, which played a significant role in the rise of populism. The impact was palpable in the “Rust Belt” states of the US, and the old factory towns of northern England, focal points for Trump and Brexit respectively.
These had also been among the perceived losers from the rise of Japan and China, with the belief that success in those countries came at the expense of the old industrial heartlands of the West. This is a sentiment which populist movements have been keen to exploit. Yet while the ascendant economic powers may change, the problems remain unsolved.
So while the rhetoric of the Japanese-American economic rivalry has compelling parallels with the current Sino-US trade conflict, it would be a mistake to follow these too closely. The underlying domestic structural factors behind current problems should not be overlooked in favour of externalising the causes.
Even if Trump achieves a perceived “win” over China, as his predecessors did with Japan, it does little to remedy these problems. Instead, it merely furthers temptation to blame an external “other” when the next wave of problems emerges.