The United States and China look like two punch-drunk prizefighters squaring off for a major championship fight. They have no good reason to fight and every reason to cooperate now that both their stock markets have been in turmoil.
Six hundred point market swings down and then up look like symptoms of economic nervous breakdown.
Factions in both nations are beating the war drums, putting presidents Donald Trump and Xi Jinping under growing pressure to be more aggressive.
Trump shoulders much of the blame for having started this unnecessary confrontation by imposing heavy duties on Chinese goods. The US president has turned the old maxim on its head that nations that trade heavily don’t go to war. The US and China, both huge trading partners, appear headed to military clashes, or even full scale war, if their governments don’t come to their senses soon.
Trump was clearly trying to bully China into major trade concessions and better commercial behavior. He is right about this. I’ve done business in China for over 15 years and seen every kind of chicanery, fakery and double-dealing imaginable. China learned from the French that the First Commandment is ‘Thou Shalt Not Import.’
The Japanese are no better. I recall Japanese health authorities telling my pharma firm that all our tablets had to be triangular shaped to make them nearly impossible to swallow.
Theft of technology is indeed rampant, as Trump asserts. But has he looked into CIA and NSA’s techno spying recently? They ransacked the Soviet Union during its last dying days. Much of our postwar missile technology was developed by German scientists spirited off to the USA. After the Sputnik launch in 1957, I recall seeing a German cartoon showing a Soviet and US satellite in orbit next to one another. One whispers to the other, ‘Now that we’re alone, let’s speak German!’
Meanwhile, US warships are patrolling the South China Sea and playing chicken with Chinese naval units and aircraft. It’s only a matter of time before a dangerous incident occurs that could spark a real shooting war. The Trump White House has been encouraging India to challenge China at sea and in the high Himalayas.
Beijing has pulled the rug out from under Apple sales in China, causing a near panic on the US stock market. In his quest for power and glory, Trump may have fatally wounded US financial markets. Apple was the shining example of fruitful cooperation between the US and China.
Trump’s confrontation with China was aimed at winning him votes in the US Farm and Bible belts. It’s ironic that over 80% of Trump backers who profess themselves evangelical Christians are cheering on his military adventure against China and, for that matter, North Korea. ‘Turn the Other Cheek’ got lost on the road to Iowa.
China’s ruler, Xi Jinping, has gotten sufficiently annoyed with Trump to rekindle his nation’s strident claims to ‘renegade province’ Taiwan. In past years, the mighty US Seventh Fleet would have turned any Chinese invasion fleet into chow mein. US Naval officers used to claim they would make a Chinese amphibious invasion of Taiwan into ‘a million-man swim.’ Today, China has the technology, manpower and naval power to invade Taiwan, should it so choose.
While lacking the military proficiency of the US Navy, China’s new fighters, drones, anti-ship missiles and fleet submarines already pose a serious challenge to the US 7th Fleet. It would be foolish to underestimate China’s striking power.
In the midst of all these tensions, the US chose to get Canada to arrest the daughter of China’s leading high tech firm, Meng Wanzhou, on charges of trading with Iran. Trump appeared unaware of plans to arrest Meng as she was transiting Vancouver airport. There is a very strong suspicion that the rabid hawks in the White House, John Bolton and Mike Pompeo, hatched this incident to keep the US and China in confrontation.
During the Bush administration, Bolton pulled off a similar machination to thwart a peace deal between North Korea and the US. Now the Chinese are humiliated and furious at Washington for the arrest of Mrs Meng, and the Canadians, who had no business getting involved in this fracas over Iran, are left holding the bag. Pathetic.
Source: the author’s blog
My old econ prof (of blessed memory) once announced to the class that trade subsidies don’t matter. If some foreign nation wants to subsidize their exports, we should just thank them for their generosity. There are a few problems with that; if China makes the chips, how do we know they are reliable and without backdoors for hacking? Particularly important for military applications.
Why would a nation give us something for free. They will expect something in exchange for the goods they send us. What they are getting is not just goods but US debt such as t-bills. The POTOUS should issue an executive order forbidding the US Treasury from issuing any more debt instruments, and balancing the books by cutting back on spending. Congress cannot compel the POTUS to spend money they do not appropriate. They cannot compel him to issue debt to pay for deficits. Shut down unnecessary parts of government.
Old debt can be paid as it matures, by issuing Treasury Notes known as “Greenbacks”. Other expenditures could be paid with Treasury bills that are backed by precious metals and land, which the US government owns. Most of the US budget goes to Social Security Retirement/Medicaid. the difference between a “note” and a “dollar” is that notes promise to pay in dollars such as gold and silver coins. US Federal Reserve Notes are no longer redeemable in real dollars. US debt can be paid with FRNs.
Taxes should be phased out,. and replaced by user fees. The US military should withdraw from all areas not to US national interest. Pull out of NATO and SEATO unless they pay full value for services provided.