James McGregor in Foreign Policy: Trump, China, and Hamilton

February 7, 2017

James McGregor, Greater China Chairman of consultancy APCO Worldwide, has proposed that the U.S. work with China to define long-term economic and trade relations based on the U.S. traditions of Alexander Hamilton's state intervention outlined in his 1791 Report to Congress.

In his Feb. 3 review of U.S.-China trade relations and disputes in Foreign Policy magazine, McGregor says that China used the same tools employed by Hamilton for its own progress: "protective tariffs, import bans, subsidies for encouraged industries, export bans on key raw materials, prizes and patents for inventions, the regulation of product standards, and the development of infrastructure for finance and transportation."

The Asia Tigers and Japan "followed this path" and "China got its start in 1994 with the 'Outline for Industrial Policy' that copied many of Japan's protectionist policies..." He also compared the Chinese Communist Party and government control of the economy to that of FDR's World War II War Production Board, where "The United States became the world's largest centrally planned economy overnight."

Although often phrased in the adversarial terms of one who watched American industry decline in the face of China's rise, McGregor proposes that Presidents Trump and Xi Jinping meet face-to-face in annual two-day summits, alternating between the two countries, where "reciprocity," perhaps his answer to what Xi Jinping calls win-win, "should be the bedrock underlying trade and investment agreements...."

McGregor wants a revival of TPP to deal with what he calls China's "techno-nationalism" and alleged technology theft but admits that China is now pushing "Made in China" becoming "Made by China" with forced domestic innovation. The challenges of this focus, though, require foreign expertise, which leads McGregor to bring in Alexander Hamilton in the section headlined, "China Needs a Deal and So Does the United States." He adds, "So we have no reason to demonize China. Perhaps we should even congratulate China on its masterful performance. The country has gone down a well-worn path." How to make a deal? He writes: "China needs outward investment to gain the technology.... The United States needs to protect the country's technology base and rebuild our industrial base. Both sides are focused on jobs."

McGregor makes little mention of the Belt and Road Initiative, and, although recognizing Xi Jinping's exceptional leadership efforts since 2012-13, he nonetheless fails to mention the universal implications of Xi's "China Dream" and what that means for a needed U.S.-China "win-win" arrangement.