China’s trade has polarised U.S. politics
The Covid Crisis has catalysed strategic competition between the United States and China across an array of fronts recently — technology, military, and diplomatic. U.S. Secretary of State Mike Pompeo hinted at banning TikTok, the popular China-based online platform after India banned the app. The Commerce Department escalated opposition to Huawei in May, banning U.S. supply to the company in a significant setback to Huawei’s supply chain. Following this, Boris Johnson announced a reversal of his government’s 5G policy, banning Huawei hardware from the country’s future 5G network. And this week, the State Department formally opposed most of China’s maritime claims in the South China Sea as unlawful.
When thinking about the devolving U.S.-China relationship, it’s essential to assess the international drivers — the action and re-action between both powers at the country level — and the domestic drivers that shape the interests and attitudes of voters and their elected leaders.
Recent research by David Autor highlights the role that China’s U.S.-bound exports have had in driving domestic political polarisation and hostility towards China. Using data from 2000 to 2016, traditional manufacturing regions throughout the country with majority white populations grew more likely to elect Republicans into Congress, while more mixed populations with a greater minority population tended to elect liberal (ie. further to the left) Democrats. These shifts to the polarised edges of the political spectrum are at the expense of moderate Democrats, as more Republicans are elected to Congress.
While technological changes have hurt the U.S. manufacturing industry more in absolute terms than trade competition from China, technology has impacted the entire labour market, while trade competition hurt U.S. manufacturers more exclusively. Competition from China isn’t the dominant factor impacting adjustments to the American economy, but it has a disproportionately negative effect in areas particularly reliant on trade. These voters have stronger views, and they express them more vehemently at the ballot box, to the detriment of moderate political candidates.
As discussed in editions nine and ten of Mundo, Trump has leveraged the Chinese origins of the coronavirus and Beijing’s early mismanagement to further stir the feelings of voters who have long felt the cost of China’s economic competition. Joe Biden is also eager to capture votes from marginalised manufacturing communities, launching an economic strategy in rural Pennsylvania to “buy American”. Although Biden currently leads national polls by a double digit margin, he polls weakest on economic issues. The Trump campaign is using this to attack Biden’s economic record, especially on China, highlighting his historical support for deeper trade ties with China.
Laid back Australians
In Australia, political polarisation is less intense. Australia’s trading relationship with China differs. Australia has a large trade surplus (exports > imports). Over 75% of Australia’s China-bound exports are natural resources. According to David Uren who summarised the above U.S. and Australian cases, Australia’s manufacturing sector avoided direct competition with Chinese imports, and as a consequence China hasn’t historically been a sour economic issue at the ballot box.
Australian manufacturing suffered from international competition as the economy opened through the 1980s and 90s. Yet as China entered the World Trade Organisation and rapidly expanded its exports in the 2000s, Australian manufacturers were highly specialised or naturally protected. As the resources export boom soared from 2011, China was viewed as a buyer of Australian goods, not as a competitor to Australian industry.
The China strategy of Australian governments always sought to balance the interests of Australian resource exporters against China’s growing assertiveness in the region and in Australia’s own politics. They’ve also had to manage their relationship with the United States, Australia’s chief military ally, as their posture hardened.
It’s counter-intuitive for Beijing to levy trade restrictions Australian beef and barley, while periodically halting delivery of Australian coal. These sectors — particularly natural resources — have been some of China’s greatest cheerleaders in the past decade. Yet Beijing’s insistence on doing so underscores the substantial hardening of China’s foreign policy in recent months.
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