Scenes of Beijing (left) and Washington Photo: VCG

Editor's Note:

Recently, China and the US have reached a principled agreement on implementing the important consensus reached by the two heads of state during their phone call on June 5 and the framework of measures to consolidate the outcomes of the economic and trade talks in Geneva.

In this interview, Mitch Presnick (Presnick), the founder of Super 8 Hotels China and former vice chairman of the American Chamber of Commerce in China, told Global Times (GT) reporter Su Yaxuan that while decoupling was politically driven, ultimately unsustainable, the current phase represents a "post-engagement" era defined by strategic leveraging, where both nations should cooperate selectively and guard against full decoupling. Presnick urges realism over ideology and pragmatic cooperation over confrontation. This is the 16th piece of the "Wisdom on China & US" series.

GT: Following a period of limited momentum, China and the US have recently made new progress in addressing each other's economic and trade concerns. As a businessperson deeply engaged in both China and the US, what has been your strongest impression regarding tariffs during this period? 

Presnick: First, trade wars are self-defeating for both countries - like all wars, they're best avoided. But if one happens, it's better that it ends quickly and leads to a moment of reflection and negotiation.

Second, this stage is part of a much broader "reset," which has been long overdue, I think. Since the China-US relationship began to gain momentum, China has transformed itself into a global manufacturing and trade powerhouse, now the world's second-largest economy. Yet many elements of the China-US relationship were still based on outdated dynamics. That was simply unsustainable, and some kind of rebalancing was inevitable. Resets are never smooth - they are messy, tense and unpredictable. What we're seeing now is part of that necessary turbulence.

I believe the era of "engagement," based on mutual economic benefit, was always going to end. It was born in a time when the US was dominant, and China was still developing. But as China gained parity in many areas, the foundation of that era changed. So, the engagement era ended, and we entered what some called the "decoupling era."

But decoupling was never a realistic strategy - it was more of a political impulse. In reality, both countries are deeply interdependent. So complete decoupling was never going to succeed. Now, we've finally arrived at the stage we were always heading toward - what I call the post-engagement world. This new phase will be characterized by strategic leveraging: Each side will selectively cooperate in areas where they need one another and avoid dependency where they don't. This arrangement is probably closer to what Chairman Mao Zedong and former US president Richard Nixon originally intended in 1972, and it would bring a level of honesty and clarity that will offer stability to the bilateral relationship as well as our respective business communities.

Scenes of Beijing (left) and Washington Photo: VCG

GT: What are your expectations for the next phase of China-US talks?

Presnick: In fact, this question is exactly where I've focused my work over the past two years.

Over the past 35 years, US policy toward China has largely been shaped by two camps: the so-called China hawks and China doves. The doves believed that as China became more developed and powerful, it would gradually become more like the US. The hawks, on the other hand, believed that if the US applied the right policies, it could contain China's economic and technological rise.

I think both camps have been proven wrong, and for the same reason. For decades, the US approach to China has been overly ideological and emotionally driven - either overly optimistic or excessively adversarial. But now that we are dealing with two peer powers, such emotion and ideology are no longer appropriate, whether hawkish or dovish. In fact, they are probably a liability.

I believe we are entering a new phase - an era of strategic leveraging. In this phase, the US will leverage China's strengths, and China will leverage America's strengths. There will be no love, no hate and no ideology - just business. The future of the China-US relationship will be shaped by this logic of transactional, reciprocity-based mutual benefit based on each country's self-interests. And whether the relationship becomes larger or smaller from here will depend on how much cooperation can be achieved within this pragmatic framework.

I believe the key lies in the US' current push for reindustrialization. To successfully reindustrialize, the US must achieve three things: rebuild targeted manufacturing capacity, restore reliable supply chains and recover technological competitiveness. When you think about it, what is the one country in the world best positioned to help the US accomplish these three things? What country now dominates advanced and precision manufacturing capabilities? What country has the world's most comprehensive, robust and flexible supply chains? What country leads - or is deeply competitive - in most areas of critical technology? The answer is China.

Which brings us to the central point: The US will either pursue these three goals with China or without China. If the US tries to accomplish these without China, the process will be slower, more expensive and more difficult. That's not ideology - that's just fact. And because it would be slower, more costly and riskier, it increases the burden on US businesses and policy makers. 

What comes next? Honestly, I don't know the exact steps. I don't know what counter-countermeasure or policy shift will happen next. But what I do know is this: A new paradigm is necessary and imminent. And getting there is not going to be smooth. In fact, I would not be surprised to see the trade and technology negotiations continue for some time, perhaps even a year or more. To use the American idiom, "you can't make an omelet without breaking some eggs."

GT: When we spoke last year, you expressed strong optimism about China's economic future. Do you still hold that view? 

Presnick: I do still see many reasons for optimism, but with some important qualifications. As I mentioned earlier, the US is currently undergoing a conversation around reindustrialization - whether to do it with China or without. And trying to reindustrialize without China is much riskier. That's true for the US, and a similar logic applies in reverse.

For China, achieving the next stage of economic growth can be done with or without US cooperation. But doing it without the US, without collaboration with the most powerful economy in the developed world and the most influential member of the G20, is far riskier and more difficult. That's simply a reality.

So, while I remain optimistic about China's economic fundamentals, I'm far less optimistic if China and the US fail to cooperate in a meaningful way.

I always tell people: Never underestimate China. But also, never underestimate the US. I say that from a unique perspective - I've lived 28 years in the US and over 30 years in China. I love the people of both countries. And because I understand both, I can say with certainty: Pragmatic, unemotional cooperation is in the best interest of both sides going forward.

We're in a symbiotic, if sometimes uncomfortable, relationship. But the interdependence is real. 

And ultimately, that interdependence will drive both countries back to the negotiating table - again and again.