The Ethics of Trade with China and Authoritarian Upgrading

| August 2019
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In an earlier posting, I discussed some of the ethical frameworks for assessing the trade war with China, themes that were expanded upon in a podcast for the Carnegie Council. Commentators responding to those points have wanted to explore in greater depth the ethical considerations of large-scale trade and economic interdependence with an illiberal state.

As I noted, the ethical assumptions–the twin gambles, really–were as follows: 1) increased trade and expanded economic linkages between the United States and China would decrease the possibility of conflict by making the two countries so interdependent that neither would risk the damage that would be caused by an open rupture and a large-scale resort to force; and 2) increased Chinese integration with the U.S. market would create conditions for domestic liberalization.

By the way, this was not simply an assumption vis-a-vis China, but seen as the best pathway for promoting democratization throughout the world.

This is why I have read with great interest the report prepared by Edward Lemon for the Foreign Policy Research Institute on recent developments in Uzbekistan. Increased foreign investment and engagement is producing, not democratization, but “authoritarian upgrading”–where selected reforms are designed to legitimize a softer authoritarianism. Lemon’s description of Uzbekistan’s present reads, in some ways, also as a description of China’s past. In both cases, authoritarian modernization does produce “genuine benefits for the population, such as lower repression and the economic benefits of increased foreign investment.”  Yet Lemon concludes that, in Uzbekistan, “while the system is being modernized, there is little evidence that this will result in political liberalization.” This could easily sum up the current assessment of the grand gamble of the last three decades of the U.S. approach towards China.

But Lemon also brings up another point that we must now consider. Part of the “democratic community” approach that Ash Jain has been espousing calls for reorienting the trade and economic links between the U.S. and China to some extent away from Beijing and towards other democracies, so that there is a greater overlap between shared values and those we do business with. But will businesses even in democratic states want to give up markets in the “upgraded authoritarian” community? In the past, the authoritarians represented a small share of overall world markets, but as Lemon points out, “Since the end of the Cold War, the share of global gross domestic product produced by autocratic states has risen from 12 to 33 percent … Half of the ten countries with the highest average incomes are classified as ‘not free’ or ‘partly free’ by Freedom House.” While trade wars might involuntarily close off markets, a call to reduce or curtail business links with “upgraded authoritarians” might find a less receptive audience among companies in democratic states given the size and buying power of those markets, who might argue that “upgraded authoritarians” are good enough when it comes to governance and values questions.

“Upgraded authoritarians”–akin to my own conception of “managed pluralism“–presents an ethical “glass half-empty/half full” dilemma, and one which we may need to continue to wrestle with, watching the direction China, Uzbekistan, Russia and other states are likely to evolve towards in the coming decade.

 

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