Why China’s Rise Is Great for America

How America can turn an economic rivalry based on fear into a race to the top

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Job applicants gather outside the Foxconn Qinghu recruitment center on Feb. 13 in Shenzhen, China.

A book called Becoming China’s Bitch arrived at my office the other day.

It certainly got my attention. As I started reading, I braced for an angry xenophobic rant, a litany of offenses by the sinister, relentless yellow horde. But the book, it turns out, doesn’t quite have the courage of its cover: it’s just a squishy pile of moderate policy recommendations lit up with a lurid title.

What’s most interesting is that the publisher thought the title was necessary. And in a way, the words Becoming China’s Bitch do make an apt subject heading for a growing list of recent books, commentaries and jeremiads about how China is becoming — what’s the political science term? — America’s daddy.

(MORE: Stephen Leeb: The Real China Threat)

Six decades ago, as Mao’s Communists seized power, the question in Washington was, “Who lost China?” Now, as his capitalist descendants stand astride the world stage and Washington worries about decline, it seems to be, “Who lost America?” My answer is, nobody — yet. But if there ends up being a culprit, it won’t be China.

To be sure, the United States has profound problems, not least our faltering educational and physical infrastructure. But China’s economy and society face structural challenges that we Americans, in our anxiety, overlook. It’s true too that China is one of America’s largest foreign creditors. At the same time, Beijing’s share of total U.S. debt is small, dwarfed by what our own government holds.

There are facts available for either fear or calm. The deeper issue is mindset. Much of our national debate proceeds as if China and America were locked in a zero-sum game in which one’s loss is precisely the other’s gain. That’s how it can seem in geopolitics, particularly when the last fresh example of bipolar rivalry — the Cold War against the Soviet Union — was indeed a pretty zero-sum affair, a mechanistic grind between two inalterably opposed sides.

China is a different case. This is not a zero-sum relationship; it’s positive-sum. It’s characterized not by stasis and deadlock but by feedback loops, positive and negative. Our nations are intertwined and interdependent in ways the U.S. and the U.S.S.R. never were. Indeed, the most fitting axiom for our relationship with China might be, “We’re all better off when we’re all better off.”

(MORE: Jeffrey Kluger: China’s Going to the Moon — and That’s Good for Everyone)

If that sounds naive, consider the iPhone. Why does an iPhone cost only a couple hundred dollars? Because, as the stage performer Mike Daisey depicted in an arresting one-man show called The Agony and Ecstasy of Steve Jobs, Apple’s shiniest products are made by a shadowy company in China called Foxconn.

Foxconn keeps laborers in 24-hour barracks to be awakened on demand for new bursts of production. The New York Times reported on this extensively last month. Foxconn factories seem to be just a few steps up from forced labor, but they’re a long march from a workers’ paradise. They represent a decades-old deal that American companies and consumers have been complicit in: lower costs at any cost, no questions asked.

But now, under pressure from labor activists, the press and Mike Daisey’s audiences, Foxconn has promised to raise wages 25%. They’re not alone. Across China, wages are rising as migrant laborers reach the limits of what they’ll tolerate.

The deal is going to change. iPhones and other consumer goods may end up costing Americans more, but that’s good for everyone. As wages rise in China, their workers enter a middle class capable of buying things the United States can export. Customers there create jobs here. Higher demand means American workers can start earning higher wages — wages that enable them to afford those slightly more expensive iPhones. A virtuous cycle. We’re all better off when we’re all better off.

Another way to put it is that we’ve got the Chinese right where we want them. If we manage this rivalrous relationship right, we can turn it into a race to the top. Busting unions, big-boxing our economy, treating everyone and everything like a cost to be driven down: these are the marks of a race to the bottom. We can’t win that race. America can’t do Foxconn. But in a race to the top, where a diverse American middle class is educated more and paid more to do work requiring ever more skill, I like our chances.

China’s ascent can be great for America. Competition forces us to make more disciplined choices, to activate more fully our creativity and ability to cultivate and elevate talent from anywhere. This is our secret weapon. No one adapts like the United States.

At least, no one has the potential to adapt like us. If we’re to deliver, we have to shift the way we think. Seek virtuous cycles, not vicious ones. Spend energy rebuilding our middle class, not waving red flags about Red China. The greatest danger we face isn’t becoming China’s bitch; it’s becoming slave to a mindset that keeps America from being its best.

MORE: What Would Steve Jobs Do?

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