Sinophobia's Most Dangerous Phase

The US House of Representatives recently passed 25 anti-China bills during "China Week" — signaling a new and dangerous phase of US-China conflict esclation

I have been warning about this for far too long.  Two books, Unbalanced and Accidental Conflict, and countless articles later, my fears are coming to pass:  The American strain of Sinophobia has now taken on a life of its own.  There would come a time, I wrote as recently as six months ago, when toxic rhetoric would give way to action, such that “… by acting on these anxieties, America risks inciting the very outcome it wants to deter.”  That time is now at hand.

At least that’s the conclusion that can be drawn from “China Week,” a mid-September flurry of legislative initiatives by the US House of Representatives that saw passage of 25 anti-China actions.  As the table below indicates, these bills span the gamut, from biosecurity and drones, to Confucius Institutes and scientific collaboration, to deterrence measures aimed at Taiwan and Hong Kong. Unsurprisingly, the House Select Committee on China, whose McCarthyesque hearings of 2023 set the stage for the vitriol of Sinophobia, applauded the efforts, issuing a barrage of statements in support of these actions, as “…crucial pieces of legislation to protect Americans against the military, economic, ideological, and technological threats posed by the Chinese Communist Party.” America’s growing ranks of China hawks could hardly have asked for more.

No, this is not a done deal. With Senate passage and Presidential signatures on these measures far from certain, it’s not as if the House actions of China Week are about to become law immediately. That’s especially the case ahead of next month’s highly contested US elections. But considering public opinion polling that continues to show record levels of anti-China sentiment in the American public at large, it is probably safe to assume that the flurry of China Week initiatives is a  good approximation of where US policy toward China is now headed.

That could well be the final nail in the coffin of any hopes for US-China conflict resolution. My take on this unfortunate turn of events is that it wouldn’t have happened  were it not for the profusion of false narratives that both nations have embraced toward each other. I detail this in Accidental Conflict but stress here the interplay between political expediency and blame.  Rather than admit to problems of their own making — US trade deficits and Chinese growth struggles, for example — surprisingly vulnerable political leaders in both countries find it all too convenient to blame the other side for self-inflicted adversity. In doing so, they create false narratives to justify the blame.  

The China Week initiatives bring this blame game to life. The twenty-five legislative actions go hand in hand with many of the false narratives that have given rise to Washington’s allegations of unfair Chinese trading practices, technology theft, and military saber rattling.  Yes, there are two sides to every dispute. As I document in Accidental Conflict, I view China as equally guilty of its own penchant for false narratives and stress that this confluence of false narratives from both sides makes conflict escalation all the more intractable.

False narratives don’t arise out of thin air.  They are based on a biased, often convoluted, assessment of facts, resulting from a projection of what academic psychologists call a “narrative identity” arising out of a distorted “autobiographical reconstruction of the past.” In the United States, as well as in many other countries, that reconstruction unfortunately reflects a toxic strain of identity politics arising from long histories of racial and ethnic prejudice. The American strain of Sinophobia is an outgrowth of that culture.

As an economist, I have long been struck by false narratives embedded in the economic dimension of the US-China conflict. My favorite example is America’s gaping trade deficit. US politicians seize on the facts of a large bilateral trade deficit with China and then distort that imbalance to construct a politically-expedient rationale for blaming the national trade deficit on China. In doing so, they deny responsibility for massive budget deficits which have led to a profound  shortfall of domestic saving. And yet deficient saving is what forces the US to import surplus saving from abroad, leading to an outsize balance of payments gap and multilateral trade deficits with many nations; in 2023, the US ran merchandise trade deficits with 106  countries.  In other words, for the United States, China is an important piece of a much bigger puzzle.

But the politics of denial and blame are apparently more appealing than the macro case for America’s large multilateral trade deficit. It was that way in the 1980s when Washington falsely blamed Japan for a large trade deficit.  And now it is the case with China.  There is, of course, an important difference between the two situations that hinges critically on national security concerns. That was not a problem with our security partner, Japan, but is clearly a lightning-rod issue with our geostrategic rival, China. The security threat acts as a catalyst to the US-China conflict — it amplifies the fears of false narratives.  Initially, I  viewed Sinophobia as the outgrowth of a growing chorus of unsubstantiated allegations associated with Chinese connections to TikTok, electric vehicles, dock-loading and construction cranes, and America’s utility infrastructure. As security concerns have deepened, the legislative initiatives of China Week take the fears associated with these false narratives to a new and more ominous level of action.

The biggest risk all along is that a confluence of false narratives on both sides would become the functional equivalent of the high-octane fuel of conflict escalation that could easily be ignited by any one of several potential shocks. Frictions over Taiwan, the South China Sea, to say nothing of America’s China containment policies, are especially worrisome in that regard. Xi Jinping’s latest warning of the perils of “Taiwan separatists” is a case in point, as are the ongoing ramifications of the “small yard, high fence” framework that Washington continues to embrace in dealing with the alleged Chinese technology threat.  Cloaked in the veil of national security, there is a notable absence of meaningful guardrails on the path of US-China conflict escalation.

In the end, we get what we ask for — not just mounting bilateral trade, tech, and security conflicts with China but also the unintended consequences of politically-expedient false narratives. Huawei’s competitive revival is an important example of how Washington’s sanctions-based approach may have backfired.  Paul Triolo’s recent analysis of the risks of accelerated US-China decoupling of the semiconductor sector is even more disconcerting.  These are only two of the many instances whereby false narratives exacerbate the risks of accidental conflict.

Nor will it be easy to unwind this insidious psychology of conflict.  Robert Shiller, Nobel laureate and champion of narrative economics, warns of one of the most worrisome consequences of politically-expedient false narratives.  In his “fifth proposition of narrative economics,” Shiller stresses that “truth is not enough to stop false narratives.” Reflecting the persistent interplay of politics, personalities, and social media, this suggests that false narratives may endure long after being disproved by facts or events.  In other words, forget about fact checkers — MAGA’s steadfast acceptance of Donald Trump’s Big Lie in denying his defeat in the 2020 election is an obvious and important case in point.

Unfortunately, all this casts the current state of the US-China conflict in an increasingly ominous light. The US Congress has led the charge. With anti-China rhetoric reinforced by the steady drumbeat of contentious hearings of the House Select Committee on China, there is no political constituency in favor of reengagement. The recent actions of China Week are visible manifestations of the self-reinforcing tendency of false narratives. In the haste to pander to the bipartisan fears of the body politic, Sinophobia has gone from the script of a bad movie to the realpolitik of the most dangerous phase of US-China conflict escalation.