American companies that once lobbied hard to keep Washington's relationship with Beijing on track have gone silent. After years of being locked out of Chinese markets and forced into joint ventures that drained their technology, US firms barely pushed back when successive administrations piled on tariffs and investment restrictions.
Eswar Prasad, a Cornell trade policy professor and Brookings Senior Fellow, has detailed the shift in a Foreign Affairs essay, "Hvylya" reports. According to Prasad, commercial interests that once served as "the glue binding the world closer together" have lost that function entirely.
The turning point came gradually. After China joined the World Trade Organization in 2001, US companies rushed to set up supply chains there, drawn by low labor costs and a fast-growing consumer market. Financial institutions saw opportunity in serving China's expanding middle class. But Beijing tilted the playing field: cheap state-backed loans, subsidized land and energy for domestic firms, and mandatory joint ventures that let Chinese partners absorb foreign know-how.
Prasad pointed to the bilateral merchandise trade deficit, which climbed from $83 billion in 2000 to $418 billion in 2018. What economists call the "China shock" wiped out more than two million American jobs between 1999 and 2011, roughly a million of them in manufacturing. US politicians seized on those numbers, and demonizing China as an unfair competitor became bipartisan common ground.
When Donald Trump slapped tariffs on Chinese imports in 2018 and the Biden administration kept them while adding its own restrictions, the corporate pushback was "relatively muted," Prasad wrote. US firms in both manufacturing and services had grown disillusioned with their inability to operate freely inside China. The commercial bridge that once restrained geopolitical rivalry simply stopped carrying traffic.
"Hvylya" also reported on why Washington and Beijing face a leadership test that echoes the tensions of 1914.