May 5, 2021 - 10:56am

When the world’s two great powers, the United States and China, normalised relations in 2000, it was heralded as liberalism’s crowning triumph. That China, an authoritarian country with no democratic history to speak of, could accede to the WTO and acquiesce to a rules-based system underscored the belief that the arc of history bended towards democracy.

“When China joins the W.T.O., by 2005 it will eliminate tariffs on information technology products, making the tools of communication even cheaper, better and more widely available,” announced president Bill Clinton. “We know how much the Internet has changed America, and we are already an open society. Imagine how much it could change China. Now there’s no question China has been trying to crack down on the Internet. Good luck! That’s sort of like trying to nail Jell-O to the wall.”

As the last few years have shown, China did manage to nail Jell-O to the wall; it is now a surveillance state with an iron grip on the Internet and its population. So it was curious to see Hillary Clinton, considered one of the architects of the neoliberal era, talking in rather different terms at a Chatham House talk yesterday. With no mention of her own involvement in the China policy of the past 30 years, she now only stresses the need to reshore supply chains and “take back the means of production”:

It’s time we recognise that we need to rebuild our own supply chains even if that requires a certain level of subsidised industrial productivity. We cannot be dependent on the Chinese market. It’s not only bad for economies, it is bad for our geo-political strategic interests. Look at what happened with the lack of PPE and pharmaceutical ingredients when the pandemic hit. We were at the mercy of China. We cannot let that continue and we need to work together across the Atlantic to figure out how we are going to take back production. Now will it be as low cost? Obviously not. How do we set our tax systems so that there are incentives to return to western democracies to produce things?

I would add that more and more businesses are seeing that unless they are low-cost producers of retail clothing which will probably never come back. But if they are producing anything more sophisticated, increasingly the Chinese government — through coercion, unfair regulation, enforced partnerships or royalty agreements — is slowly stealing that intellectual property anyway. So we have got to get smarter about how we deal with the economic threat. For people who say “but that disrupts the market!” — China has disrupted the market. China is not a free market economy — we tried! We let them into the WTO; we sent the our businesses over there; we made trade deals. They are a controlled top-down economy. You will never compete and win against them unless you take back the means of production. It is way past due for us to do that.

- Hillary Clinton, Chatham House