Economic Policy is the New Foreign Policy

Image: Matt Brafman

By Jimmy R. Lewis

For months now it has been difficult to engage with any media outlet without hearing something about the U.S. trade war with China. Everyone knows the trade war is significant, but I’m not sure we all know why it’s significant. Besides the obvious economic impact of the U.S./China trade war; it is a pivotal point in history because the situation gives us a glimpse into the future of foreign policy, and it’s revealing that economic policy is the new foreign policy.

In his 2015 book, The 100 Year Marathon, Michael Pillsbury, a former Department of Defense official, explains that China’s grand strategy starting in 1949 is a century-long plan for world-rule. This plan is mentioned and –to some capacity— outlined in Liu Mingfu’s book, The China Dream: The Great Power Thinking and Strategic Positioning of China in the Post-American Era. Liu is a former leading scholar at China’s National Defense University, his book is a best-seller in China, and it has been openly referenced and endorsed by President Xi.

The China Dream describes China’s gradual rule over the world as a century-long economic plan, not a military or traditional foreign policy plan. Pillsbury summarizes the conclusion of Liu’s plan when he says, “After China wins the economic Marathon and develops an economy twice as large as America’s, China’s new status may have to be protected through military force. The world’s largest economy will need a force more powerful than any other—one that would eventually render American military might obsolete.” In short, China hopes to surpass the U.S.’s economy, then it’s military.

China’s most ambitious economic expansion plan in the past century is the Belt and Road Initiative (BRI) and it would build economic connections between China and countries on four continents. The countries involved with the plan consist of approximately 62 percent of the world’s population (4.4 billion), and the combined GDP of these countries is $23 trillion.  To put this into perspective, U.S. GDP in 2018 was nearly $20.5 trillion and China’s was approximately $13.6. This initiative, if successful, will significantly supplement China’s economy while also giving the country even more influence over the politics and economies of the other countries involved.

The trade war is the U.S. Administrations’ way of fighting against China’s goal of expanding its economic empire. Aside from economically stifling a communist regime that has detained and tortured well over a million of its own citizens in recent years and is known for overreaching with its’ authority, the trade war serves as a pseudo-war. It is referred to as a trade war because it is precisely that, a war with China wherein there are no boots on the ground or bombs in the air. A global economy allows for trade wars to take the place of traditional wars, particularly when the economic and political costs of a traditional war outweigh the costs of a trade war.

In a nutshell, two nationalist leaders are looking towards what they believe their country’s best interests to be, avoiding a physical war, and fighting for a better economic and political position on the world stage. Neither wants to admit defeat, and the trade war is the weapon being used to handicap their opponents. To be sure, the trade war has cost both China and the U.S. However, neither Trump nor Xi view their alternatives as a better or less costly option.

War is never desirable or painless, and that includes trade wars, but if this is indeed the foreign policy of the twenty-first century –an age where the two greatest world powers and economies go head to head like never before— it is certainly preferable to the alternatives of an expanding communist power throughout the world and traditional warfare. Furthermore, no war is sustainable indefinitely, and this is true for the trade war as well. A truce will become necessary for one or both countries at some point, but for now the war rages on.

As Pillsbury points out in The 100 Year Marathon, China has been fighting a war through economic means for the better half of a century; economic policy is their foreign policy. The Trump administration has responded to China’s economic policy disguised as foreign policy by weaponizing the U.S. economy. The trade war between China and the U.S. is not merely economic policy, it is foreign policy, and this shift in grand strategy by the two leading world powers is precisely why the trade war is such a historic state of affairs.

Jimmy R. Lewis Holds a BS in religion and an MA in philosophy from Liberty University. His research focuses on religion, ethics, and foreign policy.