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Argument: If the United States Doesn’t Make The Rules, China Will If the United States Doesn’t Make Th...
On Oct. 4, Houston Rockets general manager Daryl Morey tweeted his support for pro-democracy protesters in Hong Kong. In that moment, Morey placed in jeopardy the NBA’s success in cultivating an estimated 500 million Chinese basketball fans and may have derailed efforts by Tencent, its Chinese partner, to regain its luster. Tencent paid $1.5 billion for the rights to carry NBA games—games that it may no longer be able to broadcast.
Welcome to the world of Chinese market power. Beijing’s response to the NBA may appear particularly crude, but it fits a broader pattern. China routinely conditions market access, most notably by requiring foreign firms to partner in joint ventures with Chinese businesses. U.S. firms complain about how this requirement facilitates the theft of their intellectual property, but many simply cannot resist the allure of China’s large and growing domestic market.
Even with slowing growth, China’s market will remain a powerful force in international affairs. The Chinese internal retail market has already overtaken, or will soon overtake, that of the United States. But even the fact of such comparisons underscores the degree to which the U.S. market—clocking in at roughly $5.5 trillion this year—remains large and lucrative. The United States, however, is becoming less effective at using its market power to pursue crucial policy goals. Washington has, particularly under Republican leadership, degraded the regulatory infrastructure necessary to make the most of that market power. The result is that, in too many areas, Washington is starting to punch below its weight.
For progressives, in particular, reinvigorating U.S. market power holds the promise of transforming foreign economic policy. Since the end of the Cold War, globalization has helped lift hundreds of millions of people out of poverty. But in the United States, stagnant wages, growing inequality, and new economic competitors in Asia have led a number of prominent politicians on both the right and the left to sour on the whole project. Whether President Donald Trump, Sen. Bernie Sanders (to whose 2016 campaign one of the authors of this piece, Daniel Nexon, previously provided policy advice), or Sen. Elizabeth Warren, they often reach for a similar diagnosis: the failures of free trade. This leads some commentators to see little difference between the two sides, to argue that “we are seeing a new left-right axis emerge around protectionism and isolationism.”
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