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The economic costs of America’s conflict with China

By Stephen S. Roach

24 Apr 2023 · 4 min read

Editor's Note

The U.S. has been gripped by anti-China sentiment, argues the economist Stephen S. Roach; the rising confrontation will mean slower economic growth, higher inflation, and possibly a weaker dollar.

NEW HAVEN – Five years into a once-unthinkable trade war with China, US Treasury Secretary Janet Yellen chose her words carefully on April 20. In a wide-ranging speech, she reversed the terms of US engagement with China, prioritizing national-security concerns over economic considerations. That formally ended a 40-year emphasis on economics and trade as the anchor to the world’s most important bilateral relationship. Yellen’s stance on security was almost confrontational: “We will not compromise on these concerns, even when they force trade-offs with our economic interests.”

Yellen’s view is very much in line with the strident anti-China sentiment that has now gripped the United States. The “new Washington consensus,” as Financial Times columnist Edward Luce calls it, maintains that engagement was the original sin of the US-China relationship, because it gave China free rein to take advantage of America’s deal-focused naiveté. China’s accession to the World Trade Organization in 2001 gets top billing in this respect: the US opened its markets, but China purportedly broke its promise to become more like America. Engagement, according to this convoluted but widely accepted argument, opened the door to security risks and human-rights abuses. American officials are now determined to slam that door shut.

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