Stephen RoachMay 6, 2023
America, China, and the Clash of False Narratives
Yale University Press 2022
Denial is a classic symptom of codependency ... Lacking a sense of self, codependent partners tend to be hypersensitive to criticism or negative feedback, preferring instead to deflect it onto others. The resulting denial fuels an escalating cycle of blame and conflict that drives codependent partners apart. Unfortunately, this progressively dysfunctional pathology applies all too well to the conflict between the United States and China. The United States sees its trade deficit as China’s fault, as if its own lack of saving had nothing to do with it. China sees its surplus saving and its related current account and trade surpluses as benevolent support for deficit-prone America, as if its own underfunded social safety net and the resulting suppression of personal consumption were not its own doing. Both economies are steeped in denial over the effects of their self-inflicted saving imbalances. Each then turns that denial into blame directed at the other.
– Stephen Roach, Accidental Conflict: America, China, and the Clash of False Narratives (Yale UP, 2022)
In the short span of four years, America and China have entered a trade war, a tech war, and a new Cold War. This conflict between the world’s two most powerful nations wouldn’t have happened were it not for an unnecessary clash of false narratives. America falsely blames its trade and technology threats on China yet overlooks its shaky saving foundation. China falsely blames its growth challenges on America’s alleged containment of market-based socialism, ignoring its failed economic rebalancing.
In a hard-hitting analysis of both nations’ economies, politics, and policies, Stephen Roach argues that much of the rhetoric on both sides is dangerously misguided, amplified by information distortion, and more a reflection of each nation’s fears and vulnerabilities than a credible assessment of the risks they face. Outlining the disastrous toll of conflict escalation between China and America, Roach offers a new road map to restoring a mutually advantageous relationship.
A rare combination of thought leadership on Wall Street and academia places Stephen Roach in the unique position as a leading practitioner of analytical macroeconomics, and he is one of the country’s most influential economists. A forecaster by training in his early days as a Fed economist, Stephen Roach has long been mindful of the perils of historical extrapolation. As seen through that lens, his vision of the “Next China” grew out of this deep respect for the past as a template for the exciting but daunting possibilities of China’s uncertain future. Roach’s focus on the US-China relationship is an outgrowth of the interplay between two major strands of his professional experience — a leading US economist and an influential analyst of a rising China. Roach’s analyses and opinions on China, the United States, and the global economy have long helped to shape policy debates from Beijing to Washington.
Professor Stephen Roach is a Senior Fellow of the Paul Tsai China Center at Yale Law School. He joined the Yale faculty in 2010 after 30 years at Morgan Stanley, mainly as the firm’s chief economist heading up a highly regarded global team followed by several years as the Hong Kong-based Chairman of Morgan Stanley Asia. He was also a Senior Lecturer at Yale’s School of Management and has drawn on his rich experience and developed popular new courses on Asia — notably "The Next China" and "The Lessons of Japan." His prolific writings also include two other books Unbalanced: The Codependency of America and China (2014), and The Next Asia: Opportunities and Challenges for a New Globalization (2009). The professor’s work has appeared in both domestic and international media, as well as academic journals and in congressional testimony over his long and ongoing career.