Chinese history shows how a closed economy could squander a nation’s greatness

From a certain angle, US President Donald Trump’s tariff blitz looks like nothing so much as a chronic case of China envy. Look at the losers’ list announced last week in the season finale of this all-too-real reality show: Every sign points towards a desire to Make America China Again, from the obsession with trade deficits to the promise to bring back manufacturing jobs from abroad. Think of a continent-sized economy with a persistent trade surplus and a booming factory sector, and the most obvious candidate is China.

If Trump is borrowing an economic lesson from China, though, it’s not the one that drove its economic rise over the past two-and-a-half decades. That episode followed a sharp reduction in trade barriers and decades of reforms to reduce the role of the state and provide a stable investment environment, pretty much the opposite of what the US is doing right now.

Also Read: Trade war: Trump’s shock-and-awe tariffs only have a faint silver lining for India

Instead, Trump’s model could be drawn from an earlier episode: the Ming Dynasty’s bans on foreign trade from the 14th century onward. Far from making China great, that isolationist policy paved the way for centuries of decline and eventual humiliation by foreign powers. An America that wasn’t able to reverse the curbs on commerce imposed by Trump 1.0 should reflect on how much worse things may get now. The US has imposed a 34% tariff hike on most Chinese products, adding to the 20% tariffs that took effect earlier this year, bringing total levies to at least 54%.

Like 21st century America, 13th century China was one of the world’s great powers. The development seafaring around 1,000 CE fostered lively commerce, with Chinese ceramics and textiles traded for Indian and Southeast Asian spices and commodities. The existence of paper money backed by the imperial treasury’s reserves of silver, and the development of steelmaking and coal mining, fostered similar conditions to those seen in Britain at the dawn of the Industrial Revolution.

Isolationism put an end to that golden age. For the next five centuries, Chinese governments imposed stricter and stricter controls on foreign trade, blocking ports, banning ship-building and conducting military expeditions against merchants who the government saw as pirates.

Also Read: Trump’s ‘Liberation Day’ tariffs will deal the Global South a hard blow

The reasons for its haijin (sea ban) policy have long been debated. Perhaps China wanted trade under tighter control, replacing freewheeling commerce with tribute missions. Perhaps it was concerned about silver disappearing into foreign merchants’ coffers and undermining the base of its fiat money system, risking the hyperinflation that plagued the era. Perhaps it was just about power, with many officials quietly profiting from illegal voyages.

As with Trump’s tariffs, the attempt to hold back the economic tide prompted more extreme measures. Consider the biggest victims: Countries like Vietnam, Thailand, Taiwan and Malaysia that had been expanding trade with the US in recent years as back-door conduits to China in response to Trump 1.0’s attempt to decouple the two economies.

The Ming sea bans, similarly, had limited success in shutting off commerce, prompting ever-more-extreme measures. At its most reactionary, the government depopulated whole swathes of the country’s coastal regions.

Also Read: Andy Mukherjee: Trump’s tariffs should push India to double down on reforms

The effect was devastating. With trade seen as a threat rather than a boon, China found itself cut off from the wider world, and fell further behind. Despite worldly officials and a bustling class of brokers in the few ports where trade was permitted who could see the benefits of trade, the system stayed largely in place until the mid-19th century, when the Opium Wars saw British and other colonial forces forcing its market open.

Nothing of that level is going to happen to the US any time soon. Even so, Trump’s measures are world-historical in scale, as they lift tariff barriers to their highest levels since the 19th century, by some estimates. Like China, America is a continental economy that needs the world much less than the world needs it: As a share of gross domestic product, only Cuba, Sudan, Ethiopia, Bermuda and Guam exchange less merchandise with other nations. These measures will be painful for Americans, but even more painful for other nations.

Also Read: Reciprocal tariffs: Should India respond to Trump’s move at all?

Therein lies the danger. Trade restrictions cushioned Ming China against the shock of its relative decline as the Age of Sail put Europe in control of the world. A similar policy may provide some psychological comfort to a 21st century America unable to come to terms with the similar rise of China, and of India after that.

Like muscles that atrophy from lack of use, however, a country closed off from international commerce will gradually weaken. If Trump wants America to be great again, a retreat into isolationism is the worst path to follow. ©Bloomberg

The author is a Bloomberg Opinion columnist covering climate change and energy.