I think Alan Johnson makes a pretty good case that we are altogether too tolerant of China's foreign policy. I'm less keen on the idea that we should be playing an active role in undermining the Chinese government - like many others, I'm sceptical about big projects based on the assumption that you can not only lead the population of a foreign country to liberal democracy, but make them drink - but the foreign policy question is separate. In places round the world from Burma to Sudan, China is an extremely pernicious influence, and it's a really major impediment to the project of getting the international institutions to do their job properly. The question is, what do we do about it?
There are three options. The first one is that we should express solidarity with the democratic and progressive forces within China, while ceasing to appease the leadership in their repressive agenda. This has the disadvantage that it will be awfully difficult to tell whether we have done it or not. In manifestos and policy documents (and in the communiqués of high-level summit meetings), it is possible to convince yourself that there is a difference between "a load of cheap talk" on the one hand, and "nothing" on the other, but actually there isn't. The current status quo, of course, always has the advantage that it isn't worse than the status quo, which is a hurdle that surprisingly many policy proposals fail, but surely we have to be able to do better than that.
The second option is, of course, war. This has the disadvantage that it is insane. This disadvantage is mitigated somewhat by the fact that it is also impossible, but even so, we ought to be able to come up with a better option.
Option three (of course, there are a multitude of options, but I am picking one as the third because I want it to look like a sensible "middle way") is that we take some diplomatic action that is more than words, but less than war. Something that will have genuine consequences, but will leave the world still a more or less acceptable place to live in. How about chucking them out of the WTO?
I mention this not because I have a big plan about it, but because WTO membership is just about the only international diplomatical thing that I have seen in recent years that the Chinese government seemed to care about. If we could credibly threaten to do that, I suspect that we could extract a few concessions in other areas; it is unlikely that they would give up on the general project of being China, but we might get them to stop providing political cover in Darfur, for example.
This is, of course, not a costless exercise at all, for us or them. In order for it to be a credible threat, we have to be prepared to actually do it, for a few years at least, and to put tariffs back to roughly where they were in 2000. The documents written at the time of WTO accession suggested that the benefit to the Chinese economy might be about 2-3% of GDP, while the benefits to the USA and Europe would be of the order half a per cent. That's not far off $1 trillion a year while the dispute went on, which is about twice as expensive as the Iraq war.
Also, the incidence of the costs would be different as it would not be possible to put them on the tab by adding them to the US budget deficit. The way that these costs would work through to the economy would almost certainly be through a recession: the absence of cheap Chinese goods would mean that inflation rose, interest rates would rise to contain inflation and we would have a medium-sized recession. In recessions, people lose their jobs, and the suicide rate rises; I suspect that the "casualty rate" of a decision to fight a trade war with China would be about twice that of the Iraq war too, around 6,000 people. As with the Iraq war, the burden of the deaths would fall most heavily on the working class, but the incidence of the financial cost would be significantly different, since the main beneficiary of free trade with China has been capital rather than labour (due to the effect of Chinese competition on wages). Trade war with China would be a net benefit for labour in terms of share of GDP - of course, nobody really wins from a recession.
In China, it's clear that the working class would suffer most from trade sanctions. However, it's quite possible that the loss of the US export market would make it much more difficult to sustain the Faustian bargain by which the Chinese Communist party provides just about enough growth and prosperity to stop the small but developing middle class from doing what middle classes have historically done and demanding more political rights to go along with their economic importance. If you are serious about destabilising the Chinese government, I'd argue, you don't mess around with sponsoring radio stations; you put a 200% tariff on textiles and electronics. It would border on Fukuyamaism to seriously advance the proposition that a trade war could end up deposing the government and bringing democracy to China, but it is not unreasonable to assume that the government would be prepared to stop causing trouble in the UN over Darfur in order to avoid finding out.
The big advantage of trade wars over the other kind, however, is that there is a really easy exit strategy: you just cut the tariffs. Also, they don't involve you in long-term commitments to keep troops overseas. There is a lot more controllability to the costs of a trade war than a normal war.
So there's an interesting question here: is it worth our while to cause a recession in our domestic economies that will involve unemployment and genuine suffering, in order to inflict a worse recession on the economy of China that we think will have useful political and diplomatic consequences? And a potentially even more interesting question: what has happened to our political system to make it the case that a question like this is completely impossible to ask in mainstream politics these days, because trade has been removed from the debate and handed over to economists and technocrats?
