I.The “Inflation Reduction Act”: International Unfair Competition under the Guise of Self-Development
At the beginning of 2023, the United States introduced the “Inflation Reduction Act”, the protectionist tendencies of which are so strong that even the United States’ traditional Eurasian allies are increasingly feeling the chill brought about by its extreme unilateralism. The industrial policy proposed by the Act, under the banner of protecting American industrial interests and “revitalizing” American manufacturing, gives high consumer subsidies to new energy products (such as electric vehicles, power batteries, etc.) produced within the United States, citing the promotion of domestic new energy industry development, and imposes stringent requirements on the localization ratio of the industrial chain. In combination with the localization control strategy of the semiconductor industry chain gradually emerging from the implementation of the “Chips and Science Act”, the impact of the “Inflation Reduction Act” on the European new energy industry can be roughly divided into two stages: the first stage, attracting European and other countries’ new energy companies to invest and set up factories in the United States through localization subsidies, sacrificing domestic industrial interests to create an industrial chain and employment for the United States; the second stage, by inserting private interests in the later implementation of the subsidy eligibility provisions of the law, indirectly coercing companies that have invested in the United States to hand over their important business information or even management control, creating conditions for American companies to seize opportunities and ultimately achieve the United States’ dominance and control over the entire industry.
It can be foreseen that through a series of domestic economic and trade legislations under the banner of “America First”, such as the “Inflation Reduction Act”, the United States will openly violate World Trade Organization rules and adopt aggressive industrial policies, such as implementing massive fiscal subsidies, to indirectly lure new energy industries from Europe, Japan, South Korea, and Taiwan, China to transfer to the United States. As a result, countries and regions affected by the policy’s spillover will face a severe “de-industrialization” crisis, with not only heightened economic downturn risks but also uncontrollable outflows of talent capital, gradually losing their dominance and voice in core industrial sectors and becoming vassals in the new century global economic hegemony system envisioned by the United States.
Through an examination of its domestic economic and trade legislation, it can be found that many of the United States’ unfair competition practices in the international trade field often receive support from its domestic laws. These domestic laws ostensibly focus on the economic development of the United States and safeguard its national interests, but they extensively apply methods such as extraterritorial jurisdiction and foreign interference to achieve their demands, often ignoring basic principles of international law and basic morals of the international community, reflecting obvious self-centered tendencies.
The United States has a long history of using domestic law as a weapon to attack foreign enterprises in its international competitive strategy. Since the introduction of the “Trading with the Enemy Act” in 1917, the United States has been gradually constructing a judicially instrumentalized, legislatively double-standardized, and administratively prioritized economic and trade legal system, mainly used for interfering with and sanctioning foreign enterprises. Subsequently, the United States enacted numerous laws to provide a legal basis for suppressing foreign enterprises, consolidating its monopoly hegemony in the global economic order. Over the past half-century of exercising “long-arm jurisdiction” over foreign companies, the U.S. government has gained substantial economic benefits from the overseas entities being penalized through fines and settlements – reaching the scale of tens of billions of dollars in almost every case.
In the last 50 years of the 20th century, this approach was complementary to the US’s dominant political and military position in the international community after the Cold War. However, the same strategy has shown signs of exhaustion and difficulty in the 21st century. A significant manifestation of this is that when the US tries to shift crises to Eurasian countries to protect its interests, it not only faces widespread resistance from these countries but also results in a loss of its own interests.
II.”Silicon Valley Bank Crisis”: Collapse of the Old-Era International Competition Mindset
On March 19, local time, Credit Suisse was acquired by UBS at a 40% discount to its market value, marking the temporary end of the Credit Suisse crisis that has been affecting the entire European financial system. The Credit Suisse crisis is not an isolated event; its direct cause was the previous collapse of the US Silicon Valley Bank. Less than two weeks before, aggressive interest rate hikes by the Federal Reserve led to liquidity crises in several investment banks, causing financial system shocks. Silicon Valley Bank was the first to bear the brunt, collapsing within 48 hours from a stock market crash to a run on deposits, and finally announcing bankruptcy. This became the largest bank failure since 2008. As the second-largest creditor of Silicon Valley Bank, Credit Suisse was affected by the chain reaction and became one of the dominoes in the Silicon Valley Bank crisis.
As experts have pointed out, the crisis of Silicon Valley Bank and Credit Suisse is not a simple financial crisis, but the bitter fruit of inappropriate national policies such as the generalization of “national security” and the “sanction crackdown” on other countries.
Similar to the surface policy objectives of the “Inflation Reduction Act,” the direct reason for the Federal Reserve’s interest rate hike is to reduce the persistent inflation in the United States in recent years. A significant cause of inflation is the US government’s aggressive “quantitative easing” monetary policy to combat the economic recession caused by the pandemic. The massive money supply inevitably pushed up prices, setting the stage for a round of inflation.
Since 2022, the United States, in order to consolidate its control over Europe, has continuously provoked disputes between European countries and Russia, relying on the NATO collective defense system. This eventually led to the Russia-Ukraine military conflict, followed by the imposition of sanctions on Russia by European countries. Russia is an important and convenient supplier of food, raw materials, and energy for Europe and competes with the United States in multiple supply sectors. By cutting off supplies from Russia, Europe has no choice but to turn to American companies for procurement. This has brought huge benefits to the United States but has also severely damaged the industrial and socio-economic foundations of European countries. The lack of competition in the single-seller market and the need for transoceanic transportation of supply chains have driven up product prices, leading to soaring costs for European industrial production and daily life.
However, as energy and raw material prices skyrocket, the price system of Western industrial products further deteriorates. The ultimate impact is felt within the United States, making it increasingly difficult to control domestic inflation. The Federal Reserve has no choice but to resort to aggressive interest rate hikes as a potent remedy. Little did they know that the structural problems of the U.S. financial system were far more severe than estimated. This aggressive interest rate hike failed to cure inflation and instead pushed a large number of U.S. banks to the brink of collapse.
Looking back at the entire Silicon Valley Bank crisis, we can clearly see that the United States has been steadfastly implementing its “America First” values throughout the entire event, only to eventually shoot itself in the foot. This shows that times have changed, and the old-era hegemonic mindset that the United States has long upheld has reached its end.
III.Abandoning the old mentality of “every man for himself” and embracing the new pattern of global integration and development
For a long time, the United States has leveraged its superpower status, relying on domestic legislation, and frequently using trade and financial means as weapons to maintain its national interests and suppress competitors. This self-serving and harmful approach is actually moving against the historical trend and cannot be sustained indefinitely.
First, with the deepening integration of industrial chains and continuous advancement of information technology, the current world economy demonstrates a clear trend towards globalization and integration. The economic development competition among countries is characterized by integration, cooperation amid opposition, and a shared fate in both prosperity and adversity. However, the United States, for its own selfish interests, recklessly disrupts global economic collaboration and industrial chain patterns. Although this can bring some short-term gains, it is akin to draining the pond to catch the fish, with the ultimate outcome being the exhaustion of resources available for plunder, the disappearance of global economic development momentum, and inevitable harm to the United States itself.
Second, after years of distorted development, the U.S. domestic economy faces various structural issues, such as industrial hollowing out and government debt crises, which pose serious threats to its future sustainable development. Fundamental reforms with resolute courage are needed to address these issues substantially. Instead, the United States repeatedly shifts crises onto other countries, allowing domestic problems to spread and accumulate. Once it can no longer continuously “harvest the crops,” long-standing contradictions may erupt more violently, severely damaging not only the U.S. domestic economy but also causing far-reaching negative impacts on the global economy.
Lastly, as the world moves toward a unipolar-multipolar structure, responsible major powers should recognize their moral obligations to maintain international economic and trade order and actively practice them. They should establish and consolidate their credibility and prestige as global leaders through core contributions to world economic development. The approach that the United States has persisted in undoubtedly depletes the international credibility and leadership authority it has established since World War II, ultimately facing an inescapable predicament of isolation.
At present, international disputes abound, multiple conflict hotspots are shrouded in the specter of war, and neighboring countries face numerous difficulties in economic and social development. These are undoubtedly the consequences of the old international order concept that advocates “every man for himself.” A fair and reasonable international order in the new era requires respect for the interests of each country and strives to benefit every nation. Countries should work together to replace division with unity, confrontation with cooperation, and exclusion with inclusion. Abandoning Cold War mentality, hegemonism, unilateralism, and protectionism, we should uphold the banner of peace, development, cooperation, and win-win outcomes, practice true multilateralism, and examine and contemplate national development and global competition strategies from the new perspective of “sharing the global temperature.” Only then can we break the historical cycle and truly embark on the path of global integration, prosperity, and development.
