China’s economic strategy is no secret. In the short term, Beijing will grow the country’s economy by manufacturing and exporting cheap, globally competitive goods. Over the longer term, it will build the capital, infrastructure, and expertise necessary to make the country an innovation powerhouse.
China is not the first to adopt this strategy. The same measures powered the rise of countries such as Germany, France, and Japan over the last 70 years. And even then they caused considerable trade friction with the United States. Washington accused all three of those countries of unfair trade and monetary policies—Germany and France in the 1970s and Japan in the 1980s. Recent U.S. administrations have accused China of the same. But this time around, the tension is more concerning. China is much more populous than Germany, France, or Japan, and its economy could easily become the world’s largest. Beijing also projects influence beyond its borders, sharing technology with smaller countries and endeavoring to create a set of close trade and investment relationships—ones that may one day be based on Chinese renminbi instead of the U.S. dollar.
In his second term, President Barack Obama tried to pressure China to
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