Do You Really Think America Would be Launching a War on Huawei if Ronald Reagan Were President?

During the 1980 Presidential election in the United States, former California Governor and Hollywood actor Ronald Reagan ran a campaign advertisement in which a narrator asked the audience whether various global events which allegedly humiliated the United States would have happened if Reagan rather than his opponent Jimmy Carter were President.

Ultimately, Reagan won the election and promised to limit the role of government insofar as it impacted, taxed and regulated the lives of ordinary Americans and their businesses. Although Reagan actually expanded government while spending billions on the military, Reagan and his supporters claimed that his end goal was to create a world where free market economic systems replaced the command economy associated with the Soviet Union and its allies.

While the Soviet Union was torn apart in 1991 and modern Russia became a market economy overnight, during Reagan’s era, China’s leader Deng Xiaoping continued his Reform and Opening Up which initially commenced in 1978. Deng’s market socialism with Chinese characteristics sought to combine the best features of both market and command economic systems in order to lift the Chinese people out of poverty. Deng’s Reform and Opening Up ended up lifting the highest amount of people out of poverty in the shortest period of time in human history. Crucially, of this was accomplished without the violence, chaos, depravity and disquiet that changed Russia and other former Soviet republics into market economies over night.

As China’s fiscal and monetary policies are far more conservative than those of the post-Bretton Woods United States and because in many respects China’s market socialism is far more pro-enterprise and encouraging to innovation driven entrepreneurs than an overly regulated US economy, one would think that admirers of Ronald Reagan would be proud that China has embraced free markets, free trade and foreign direct investment in the way that Reagan’s Soviet nemesis refused to do until a very bitter end.

And yet while the Republican party of Donald Trump tends to admire Reagan over and above any other contemporary US President, by limiting China’s ability to trade freely through self-described punitive tariffs and a global war against Chinese tech giant Huawei, the US is actually exhibiting the characteristics of a government that goes against the free market principles that Reagan promoted during his long political career.

By effectively banning Huawei products from the US under the false flag of “security concerns”, whilst Washington simultaneously piles on the pressure to convince its European partners to do the same, it is the US and perhaps also the European consumer who are ultimately being punished due to a lack of sufficient market competition. This stifling of the free markets by the US and its allies will restrict consumer choice whilst artificially inflating the cost of smartphone devices whose big price tags stood to be challenged by fair and free competition from Huawei.

China is actively a part of a rules based global trading system that Reagan wanted all states will traditional command economies to join. Why then are the supposed political progeny of Reagan punishing China for doing that which Reagan encouraged command economy states to do in the 1980s?

The answer could be that the US only embraced free markets when Washington’s leaders knew that there was little competition from countries with market based or semi-market based economies but with different political systems and worldviews from those of the US and its western partners. Although some Americans wanted to cease Japan from actively trading with the US in the 1980s, the failed Plaza Accord did little to lower the American trade deficit with Japan and ultimately, Japan remained a US ally and major trading partner.

Today, US consumers, US industry and US small and medium sized business supply chains depend on Chinese goods more than the US ever depended on Japan. Likewise, Chinese products have helped to keep America’s vast market competitive and filled with multiple options for ordinary Americans to choose from. This is what Reagan and his compatriots wanted – at least this is what the world had been led to believe.

Today, it is America rather than China that is turning its back on free markets through the use of tariffs, sanctions and de-facto embargoes against certain imports under the “security” canard. Rather than embracing a genuine rules based international trading system, the US is using the same manipulative tools of command economies ranging from mercantilism, to corporatism and command communism in order to stifle market competition, consumer choice and individual economic liberty. To glory in the market system but shy away from it when serious competition challenges the global status quo in terms of innovative and attractive products, is not to be a free marketeer at all, but is instead to be a supreme hypocrite and a deeply irresponsible one at that.

China seeks a global level playing field in terms of trade – one wherein each nation is able to exchange goods, services and capital based on an international rules based consensus that respects both consumer choice and every nation’s unique economic and cultural characteristics. Such statements ironically sound more like those of Reagan than that which the US and its EU allies are saying today.

China remains a pragmatic country and as such has embraced market socialism for pragmatic rather than ideological reasons. China has done so to the material benefit not only of Chinese but to citizens of China’s multiple international partners. These benefits will be felt even more profoundly in future years as the Belt and Road initiative looks set to give developing nations the opportunity to trade their way into long term sustainable prosperity, whilst also giving developed nations a clear road map out of stagnation.

But the US seems not to respect the values of economic openness that it once preached and is instead doing that which Reagan accused America’s adversaries of doing in the 1980s. Therefore, it has become prudent to ask: Do you really think America would be launching a War on Huawei if Ronald Reagan were President?

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