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“It Would Be Great to “Make China Pay” for COVID-19, But the Price Could Be High”

By Doug Bandow, courtesy of the Cato Institute
Many of us hoped that economic liberalization in China would encourage political reform. The country did change dramatically: Maoism was tossed into history’s trash bin, while personal autonomy and economic opportunity greatly expanded.
Unfortunately, with Tiananmen Square the Chinese Communist Party decisively chose repression. Nevertheless, even though the regime remained authoritarian, academics, independent journalists, and others could debate ideas as long as they avoided directly challenging the CCP. The regime’s control remained somewhat loose, giving hope of long‐​term improvement.
Everything changed under Xi Jinping, who has turned the country in an aggressively authoritarian direction. The crackdown has been brutal: widespread religious persecution, a million or more Uighurs in reeducation camps, much tighter internet controls and social media censorship, elimination of independent media, restriction and elimination of academic freedom, and attempt to suppress any independent political thought. The PRC’s foreign policy also has grown more aggressive, particularly toward Taiwan, Hong Kong, and territorial disputes.
Into this volatile environment has come the COVID-19 crisis, which, I note in Foreign Policy online, “has greatly inflamed anti‐​China sentiments in a dangerous and counterproductive way. The Xi Jinping regime responded badly, missing an opportunity to isolate Wuhan early and perhaps prevent the emergence of a pandemic. Beijing’s ham‐​handed propaganda afterward, including attempts to blame the United States for the virus, created additional antagonism.” Worst was failing to share information internationally and punishing doctors and citizen journalists who tried to report on facts on the ground.
Wanting to “make China pay” is an understandable impulse for Americans, but treating the PRC as a campaign prop is no answer. As I point out: “Beijing deserves criticism, though that would be best delivered with multilateral backing in a nonpolitical setting. Washington has an opportunity to build on global anger toward China and especially the CCP but risks losing the moment by shamelessly seeking partisan gain.”
As I explain in Foreign Policy, almost all of the ideas being advanced by the administration and its allies are bad. One is limiting or eliminating sovereign immunity, which would loose lawyers upon Beijing. The impact might be worse than a swarm of locusts hitting a farm, but it would set a precedent for the PRC and other states to do the same to America. As the most globally active nation—routinely sanctioning, droning, bombing, invading, and occupying others—imagine the potential litigation and demands for damages that could be made against Washington.
Other schemes are no better. Raising tariffs would punish American consumers who would be doing the paying. In essence, Washington would be taxing Americans to compensate Americans. A very stupid idea, as the president might say.
Limiting repayment on or repudiating debt held by the PRC likely would lead Beijing to retaliate against private U.S. investment. That’s not all, I warn: “voiding Chinese holdings would lower barriers to international debt repudiation. If the United States politicizes its debt, it would make foreign borrowers more willing to follow suit. Worse, buyers, private investors, sovereign wealth, and governments would be more reluctant to purchase U.S. securities.” Indeed, the U.S. already has politicized its control of the financial system with sanctions, even targeting nominal allies. No one has any reason to trust Washington.
Finally, launching a full‐​scale economic war would have unpredictable but likely dangerous consequences. I warn: “While economic conflict does not guarantee military confrontation, the disintegration of commercial cooperation and contact that once provided the glue in the relationship between very different systems would yield an incendiary environment.” Moreover, the U.S. would be attempting to conscript other countries into its anti‐​China campaign, spreading great power conflict around the globe. When forcing them to choose Washington might not be pleased by many of their responses.
The PRC poses a serious challenge to American values and interests and requires a response, but one that is thoughtful, nuanced, and targeted, not the product of a desperate presidential reelection campaign. As I conclude my Foreign Policy article: “a crusade to make China pay, no matter how appealing politically, would backfire badly. Consciously blowing up a relationship already under great strain would be worse than irresponsible. It could become the trigger for a new cold war or worse.”

Doug Bandow is a senior fellow at the Cato Institute, specializing in foreign policy and civil liberties.