SIOUX FALLS, S.D. — South Dakota Rep. Dusty Johnson is one of dozens of state and national leaders who have characterized the relationship between the United States and China as a new version of the Cold War.
His rhetoric around the need to strategically decouple certain key industries, such as pharmaceuticals, from China, while also keeping the nation at bay in its expanded purchases of agricultural land and processing facilities in the United States, earned the third-term congressman a seat on the bipartisan House Select Committee on Strategic Competition between the United States and the Chinese Communist Party.
However, during a Johnson-led roundtable with South Dakota business and education leaders at the Sioux Falls Chamber of Commerce on Monday, May 1, it quickly became clear that the significantly intertwined economies of the two nations make this new era of conflict — or “competition,” as Johnson put it — a bit more difficult in parsing winners and losers.
"[The Soviets] were a military peer. But we didn't have to talk about how best to decouple our economy from the Soviet Union's, right?” Johnson said. “They just were not an economic powerhouse like that. And this is going to be a much more complicated situation.”
Johnson, in listing some of his takeaways from the meeting, focused on “nuance” as the Select Committee on China moves forward with hearings and potential policy recommendations.
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On the one hand, delineated by Johnson over the nearly two-hour discussion, there are myriad ways that the Chinese Communist Party has shown a willingness to exert force at home and abroad, actions he says must be corrected if China can be a willing partner in the set of global institutions backed by the United States.
Johnson mentioned the party’s treatment of ethnic minorities such as the Uyghurs, the sometimes draconian terms of Chinese investment in developing countries and the threat of “reunifying” the island nation of Taiwan with mainland China as some examples.
“[Chinese President Xi Jinping] has said reunification will happen either voluntarily or by force. And he's talking about by force,” Johnson said. “This is totally unacceptable for any kind of normal human being’s understanding of the rules-based international order, where the bullies don't get to go to take what they want. And if we just put our head in the sand, we make more likely the kind of invasion that we saw of Ukraine.”
An important addendum to these criticisms was the importance of separating the Chinese Communist Party from the Chinese people; the latter, according to anecdotes from several panelists who have traveled in the country, has an admiration for the West that shouldn’t be discounted.
“The Chinese people are not our source of concern, and in fact, they are the primary victims of the repression of the government,” Johnson said. “And it's important that we talk about this issue in a way that doesn't denigrate the Chinese people or Chinese Americans.”
But one limiting factor to the sort of sanctions or other punitive measures that the United States has often pursued in changing the behaviors of certain nations is the potential for the serious impact of Chinese economic backlash.
The worry is not simply imaginary. One example, offered by Jerry Schmitz, the executive director of the South Dakota Soybean Association, is the integral role of China in the soybean market. About 60% of South Dakota’s soybeans are exported; China represents the world’s largest buyer of soybeans, which they mainly use as hog feed.
During the 2018 U.S.-China trade war, initiated by the Trump administration in pursuit of fairer trade terms between the two nations, a full $2 came off the price of soybeans; Schmitz estimated that the average South Dakota farmer lost $50,000 each year during the more than two-year trade dispute, though the government did buttress some of these losses with subsidies.
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“It’s a difficult issue to tackle. Because the first thing that happens, and I think we see it a lot in government and the press, is nationalism takes over, ‘I want my team to win,’” Schmitz said. “And I think the reality is we need all teams to win.”
On top of key trading relationships, another complicating factor to any sort of economic decoupling is the huge volume of investment by American companies in physical infrastructure and labor in the Chinese market.
Judd Guthmiller, the vice president of international business at Brookings-based Daktronics, noted that the electronic scoreboard company has a Shanghai-based factory and heavily relies on Chinese supply chains for production.
“If a policy is going to change, us knowing that so we can adjust and be nimble and stay out in front of it would be good,” he said.
In sum, Johnson and the panelists agreed on a sort of all-of-the-above approach: diversifying some investments to other developing markets in East Asia and elsewhere; continuing to work with China in mutually beneficial ways; and investing in American manufacturing and education.
Evert Van der Sluis, a professor of economics at South Dakota State University, urged the congressman to help increase research spending in the upcoming Farm Bill, for example.
However, in closing, Johnson tried to re-focus the stakes, again highlighting the parallels between the already underway competition with China and the past conflict with the Soviet Union.
“It is going to require a certain amount of American inward investment. It's going to require a certain American willingness to work with our allies,” Johnson said. “But we don't want the most powerful country on the globe to be one that thinks human rights and economic freedoms are silly or not fit for humanity.”
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Jason Harward is a Report for America corps reporter who writes about state politics in South Dakota. Contact him at 605-301-0496 or jharward@forumcomm.com.
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