CPA Conference Final Day: Clyde Prestowitz: ‘China Coupling Is Not Working’

Clyde Prestowitz, author of the book The World Turned Upside Down: America, China, and the Struggle for Global Leadership, had a front-row seat to China’s rise. It was at the pre-World Trade Organization in 2001. China was a flip-flops wearing, bicycle riding, rural economy. Then the anti-CCP Tiananmen Square protests happened in 1989. George H.W. Bush was in power and. Prestowitz worked as a staffer in his office at the time, having just left a counselor’s role at the Secretary of Commerce under President Reagan.

“One would have thought that Bush would have done something about that, but he didn’t,” Prestowitz recalled on the closing day of CPA’s four- day conference. “Instead he sent Brent Scowcroft to talk with Beijing and the message to Deng Xiaoping was you don’t have a better friend right now than you have in Washington,” he said.

Back then, Washington and the big business lobby were salivating at the prospects of being able to open the Chinese market and sell them everything from cars to telephones. They actually thought that the U.S. would become China-like, a major exporter to mainland consumers but instead, China has become the exporter, and thousands of factories and millions of Americans have lost their jobs as a result.

“This was all led by free world business leaders from America who saw that they could really benefit from, and sought a marriage with China,” he said. “When Tim Cook took over Apple in the 1990s it was mostly a U.S.- based company. The U.S. government gave them funding. Then they moved all of their manufacturing to China.”We were never going to sell Macbooks to China. China was going to sell them to us, and Apple was going to profit off the massive labor, environmental, and tax arbitrage that outsourcing to China gave them and anyone else who wanted to help China grow.

“And where are we are today? After some 40 years it has become clear that what we called coupling with China…is really not going to work,” he said.

Prestowitz is the founder of the Economic Strategy Institute in Washington, a think tank concerned with globalization matters as it relates to China.

Two years ago, The Economist magazine acknowledged that Trump had taken the U.S. into a new Cold War. They bemoaned the shifting sands of globalization, mainly because, as they had written, “the west had made the wrong bet on China.”

President Clinton once laughed at the notion of Beijing controlling the internet, saying it would be like “trying to nail Jello to the wall,” Prestowitz recalled in an op-ed this summer in The American Conservative magazine.

The conclusion of the article in The Economist, now nearly three years old, was that the United States was losing against China. Former U.S. Assistant Secretary of State for East Asia Kurt Campbell wrote a few weeks later in Foreign Affairs magazine that “positive engagement” with China was not working.

We must first recognize that enticing or forcing China to “play by the rules” and to become “a responsible stakeholder in the rules-based, liberal order” is a hopeless task, Prestowitz wrote. The Communist Party does not live by rules written by Western democracies or believe in an open-market economy. It believes its mercantilist strategy is a winner (which it has been so far) and will not abandon it.

Our only alternative is to change our own behavior. It does not necessarily mean complete economic decoupling from China, but it does mean a significant degree of decoupling. If Starbucks wants to establish coffee houses in China, fine, he said. But the U.S. needs to develop reciprocal globalization policies through the close cooperation of business and government, “as we did during the 19th century, two world wars, the Space Race, and the first Cold War.”