Our China problem has been developing for decades. President Nixon opened relations with the communist government in 1972, to a large extent as a counterbalance to the Soviet Union. Thereafter it was the common wisdom that, as their contact with the free world increased, they would eventually fall into line with the behavior of the rest of the developed nations. Indeed, this seemed to be coming true in the 1980's when Deng Xiaoping liberalized their economy, opening it up to the outside world. Nevertheless, their leadership has remained steadfastly Communist and, instead of accommodating, is ominously determined to become the world's prime super-power. To this end they are steadily expanding their military and have established a strong presence in the developing countries of Africa, Latin America and Asia. The main engine of this activity has been their dramatically expanding economy, fueled by an almost limitless number of formerly impoverished peasants turned into new diligent factory workers but in addition more traditional Communist tactics of stealing secrets and prohibiting outside competition.
Previous U.S. administrations, from Nixon on down, have largely ignored this developing situation but Mr. Trump campaigned on the idea that it is critical to our country's welfare to at last confront China's expansionism and in his can-do manner he is attempting to carry out his promise. The major weapon he is using is the strength of the U.S. consumer economy, which has in the past been providing the largest portion of the increasing Chinese wealth.
I am not an economist, but I have read a lot of the works of the traditional liberal economists and strongly accept the great importance of the traditional liberal idea of the free market and free trade, as does I believe Mr. Trump. However even Adam Smith, the great founder of the modern economic ideas of the Enlightenment period, who pointed out the bad economic effects of trade interference by the English government of his time, admitted that tariffs are sometimes necessary for public protection in times of potential conflict. So, for now, I have bought into Mr. Trump's use of tariffs as a weapon and, as he frequently comments, will wait and see what happens. Because of the large imbalance of trade between our countries, largely the result of their restrictive policies, it seems that the tariffs should have a great deal more impact on them than us. Indeed, this seems to be playing out in a declining Chinese economy and their recent tactic of currency devaluation, which maintains the competitive price of their exports but at the same time reduces the buying power of their own citizens. Furthermore, China has, in the many emerging economies of the world, competitors for the U.S. market which have started to replace it as a source of low-priced consumer goods.
Nevertheless, some fear that China's unitary, authoritarian government, which allows for more long-term planning, must inevitably be the winner. But herein I believe lies our greatest and most potent weapon, that of individual freedom. China has for millennia been, and continues to be, an authoritarian country. Their government has allowed a measure of economic freedom, with good results, but it remains oppressive, both in the political area and even in its economic structure. Major businesses continue to be subject to Party observers and regulators. There are secret police, control of the news media and internet, as well as suppression of religion, minority groups and political dissent. Our country was founded on the principles of individual rights and a government that exists and operates by the consent of the people rather than the other way around. It is the resulting vitality and innovativeness of our citizens that has produced our economic success, and not the control and planning of a central authority.
The ongoing unrest in Hong Kong is an interesting test of the Chinese Communist party. How will they handle the demands of the Hong Kong people to maintain their political sovereignty? If too lenient, there is risk, as happened with the Soviet Union, of incentivizing other dissidents. If too severe, they will demonstrate to the rest of the world, and especially to the developing countries with which they have made inroads, what they are really made of.
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