I flew back from Washington DC to Munich just a day before the travel embargo from the Schengen zone to the United States came into effect. As I watched anxious gate agents, tense flight attendants, and passengers eyeing each other with suspicion, I could not help but think that what I was witnessing was the beginning of a radical recompilation of the mistaken notions that for the past three decades have shaped U.S. and European economic policy, and indirectly, international security. The idea that the People’s Republic of China can become a responsible stakeholder in the international community—that it can “be like us”—is being laid to rest behind the masked faces of petrified Westerners scurrying through airports to get home.
Amidst the 24/7 breathless media coverage and calls for politicians to “do something,” one fundamental question still needs to be addressed forthrightly and in the open: Who did this to us and what to do to prevent it from happening again?
The question about assigning agency and blame is pretty straightforward to answer: The communist Chinese state, which for more than three decades has been draining capital and knowledge from the West, benefiting from our greed and myopia, has just let loose a virus that in the coming months is about to effectively paralyze Europe and the United States and bring severe pain, both human and economic on the world. The “eruption at a wet market” explanation for the virus has to be questioned until we know the full story, if for no other reason than the fact that Beijing suppressed data for two months when the coronavirus first appeared, and even to this day refuses to come clean as to exactly what happened. Indeed, the Chinese Communist Party (CCP) is now spinning propaganda stories that both seek to somehow pin the blame on the United States, and that try to frame their bungling, denial-ridden, heavy-handed reaction as some kind of model for the world.
As a result of all this, the West is now shutting down, at least for a while. The ultimate cost to the world, in terms of new government debt, failed businesses, and human lives and suffering, is difficult to quantify at this point. But there are indications that the fallout from the Wuhan Virus could be transformative.
We must acknowledge our own complicity in what is now unfolding. The belief that globalization, through the radical centralization of market networks, was the unavoidable path forward has been exposed as a grave, near-delusional miscalculation. The offshoring by corporations of supply chains to China has not only eviscerated communities that were previously reliant on manufacturing jobs, but has also brought with it an unprecedented level of vulnerability and fragility to our economies. The populist revolts that have wracked Western democracies for the past several years are in part rooted in the pain that these dislocations have caused. Worse yet, for the past three decades, this offshoring process has favored an adversary that is determined to replace us as the hub of global economic and military power and place itself at the new normative center of the world.
Should the fallout from the Wuhan Virus prove to be as damaging as it looks like it might be, the first casualty should be China’s quest to become the premier manufacturing center for the world. Few corporations will want to again risk being caught in a situation where their entire supply chain has been locked into one country—much less a palpably hostile dictatorship. The subsequent era will, I hope, be one of strategic reconsolidation, with a special focus on onshoring critical supply chains that have been moved to China. Even the siren song of potentially-vast consumer markets in China may end up being more than offset by the trauma we are about to face.
As the dust settles, the United States should be taking a hard look at streamlining our federal and state regulatory framework, tax structure, and all other outstanding obstacles in order to encourage U.S. businesses to come back home. If, once this crisis is over, we do not have at least a blueprint for rebuilding America’s manufacturing base and restoring our ability to provide critical supplies to the country regardless of the actions of our adversary, a decisive opportunity will have been squandered. Such a plan ought to be accompanied by other measures, including ending China’s unfettered access to our research centers and universities, putting restrictions on technology exports to, and manufacturing in, China going forward, and using the Committee on Foreign Investment in the United States (CFIUS) more aggressively to prevent Chinese takeover of key industries and corporations.
The status quo ante should have never been an option for a free people to accept.