Last week, I wrote about Sinophobia in certain countries and one reader commented that if those countries were to exercise their foreign policy, towards China in particular, through their commerce or foreign ministries instead of their defence or intelligence departments, the result “may surprise”. An interesting thought, when globalisation – which has brought many economic benefits (and admittedly some banes) in its train – is being eroded by national security concerns. This is nowhere more true than in the case of the United States and its allies vs China. Analysis of the kind that commerce or foreign ministries of leading nations are capable of would reveal the surprisingly complex and often mutually beneficial nature of economic interactions among nations. Analyses that focus on “security” threats often understate the importance of economic factors. They tend to poison relations among nations and in the case of great powers, create tensions that can quickly pass from economic and sectoral to state level, and then threaten ideological or even physical confrontation. This is about where we are with relations between the US (plus allies) and China. The most egregious manifestation of this in recent times occurred under the administration of former US president Donald Trump, whose trade and technology wars against China have since evolved under his successor Joe Biden into policies of entrenched distrust and competition. Trump was not the first US political leader to resort to woefully simplistic remedies for perceived problems of trade imbalances . He applied punitive tariffs to imports of Chinese goods, a policy that economists now agree has hurt US consumers more than those in China. The true reasons China’s foreign trade has exploded since it joined the World Trade Organization in 2001 are often misunderstood or ignored by those (including defence and intelligence analysts) who like to portray China as a threat that needs to be dealt with firmly or even forcefully. As Yuqing Xing, an economics professor at the National Graduate Institute for Policy Studies in Tokyo, notes in his new book Decoding China’s Export Miracle , China has become a global trading giant (rather than the often alleged “threat”) by perfectly legitimate means. By inserting itself in global value chains in manufacturing and assembly, China, through its competitive advantage in labour-intensive goods, gave multinational corporations a low-cost means to massively boost production and sales. But much, if not most, of the benefit from this boost accrues to the global corporations that sell the final product. This, Xing says, has “led to a significant exaggeration of China’s exports to and trade surplus with the US” and to “distortion by conventional trade statistics of the trade imbalance”. Commerce or foreign ministries probably understand such rational explanations but rationalism rarely gets a look in where prejudice is entrenched, and that can often apply to defence or intelligence hawks who wish to build a case for more defence spending and deployment of force. President Biden may not go down the trade war road as far and as fast as Trump did but tech wars (or “ competition ” as Biden prefers to call it) is likely to stay. While competition is said to spur innovation it can also inhibit international cooperation. China’s trying to revive globalisation. It can’t do it on its own As Xing observes in his book, global value chains will almost certainly fall victim to this great power competition between the US and China, and possibly between US alliance partners and China. One might add that globalisation is likely to be another casualty. The reduction of reliance on global value chains through the reshoring of production by multinational corporations in the US and elsewhere, as Xing notes, “may become a new trend”, diminishing China’s importance as a dominant supplier. There are, of course, rational arguments against an over-reliance upon global supply chains, one being the disruptive impact that pandemics, such as of Covid-19, and natural disasters such as Japan’s 2011 Fukushima earthquake and tsunami , can have. In a rational world, where economic reasoning rules rather than security and defence considerations, supply chains could be redesigned on the basis of cooperation and optimum efficiency. But such criteria are unlikely to dictate the architecture that results from US vs China competition. Having opened up its own economy, and to the benefit of multinational corporations eager to enter the world’s biggest consumer market, China is trying to keep globalisation alive with new trade agreements and international infrastructure building. But some foreign policy hawks believe that the theory of the China “threat” should never be ruined by facts. Anthony Rowley is a veteran journalist specialising in Asian economic and financial affairs