Donald of Orange, China and the trade war — short versus long-term thinking

14 May 2019

Rattling cages — just to be doing so — is not an effective strategy

As I implied yesterday, competent strategizing requires understanding both the problem you're trying to solve and the people who stand in your proposed solution's way.

If you point some of your guns at your own feet, you have probably failed.

Today, I am suggesting that China does less that destroys its standing in the world, than the United States does.

Part of the difference is China's longer term strategic perspective.

To illustrate this point, I lifted a few excerpts from China's Global Times. These were published today and yesterday. All, presumably, written in reasoned response to President Trump's escalation of the trade war.

As background — consider President Trump's trade strategy

In beginning a trade war with China, the President's announced purpose was to force the Chinese government into rolling back some of its unfair trade practices.

Instead, his self-initiated and notably escalating tariff war appears to be trying to destroy China's economy.

Trump's "who's got the power" analysis appears to be predicated on the assumption that the US, being a net importer from China, has the upper hand.

China disagrees, based on an arguably better thought out analysis of the same situation:

Clearly China's development, prosperity and entire destiny cannot depend on US goodwill.

Growing stronger is the chief ingredient for China to defuse strategic pressures from the US . . . .

China should further expand its domestic market and improve technological capabilities.

Not strong enough in soft power, China also needs to improve ability to affect international public opinion and seize moral high ground when caught in diverse conflicts.

Development is the best response to US pressures . . . .

China should wake up from the daydream that tensions in China-US ties can be reversed with diplomatic measures.

The history of China tells us that backwardness draws an external bully.

We have to show . . . that suppression will make China more prosperous and the US will suffer losses.

China also has a better grasp of what is going on over "here" . . .

. . . as compared to what we know about over "there".

Consider, for example, the PRC's take on the reasons underlying American tariff behavior:

The dilemma the US faces amid threats of an economic slowdown, is that it rejects state intervention in the economy and is already running a very large budget deficit.

[T]he only weapon available to attempt to limit an economic slowdown, which would affect the 2020 presidential election, is to reduce interest rates.

Consequently, President Trump has recently launched public attacks on the US Federal Reserve, demanding that it reduce interest rates.

Foreseeing that China's economy will continue to grow far faster than that of the US, and that the US will slow, US neo-cons are desperate to attempt to slow China's economy through tariffs.

However, US stock market thinks that the combination of a slowing economy and tariffs would be toxic.

Similarly, from the editors at the Global Times:

With everything on the table, Washington is becoming increasingly anxious at seeing no sign of China concessions.

The way the US has opted to mobilize public support is telling untenable stories. For instance, Washington stressed that it could collect $100 billion in tariff revenue and China would pay the tariffs.

This is nonsense.

It's well known that tariffs are paid by US importers and those importers can negotiate with Chinese manufacturers to share some of the burden. Given that the original profits of those Chinese products are quite small, it's hard for American importers to make Chinese manufacturers help and ultimately, the tariffs will largely be passed onto American consumers.

The US also claimed that its tariff hikes would force companies to leave China. China itself today is a huge market, the size of which is comparable to, and on the trend to surpass, that of the US.

The consumption capabilities and market consumption potential driven by demand are what foreign companies value most when they come to China.

The Chinese government has been blunt about the difficulties and losses that the trade war will bring to the Chinese economy. This is in sharp contrast to the US government seeking to beautify the trade war.

The Chinese side is obviously more realistic while the US is falsifying.

China's longer term strategic perspective

The dean of the College of International Relations at Huaqiao University wrote this:

I believe that the Taiwan Assurance Act of 2019 and the House Resolution 273 reaffirming the US commitment to Taiwan and the implementation of the Taiwan Relations Act (TRA) are merely the wishful thinking of the US establishment elites.

It won't strengthen Taiwan's security. Instead, they may embolden Taiwan secessionist forces to take risks, resulting in a full-scale conflict and a catastrophic head-on collision between China and the US.

We must make it clear to the anti-China US establishment that their tricks will not succeed.

In the context of globalization, China and the US are inextricably linked.

The fundamental strategic cooperation (global security and peace, regional hotspot issues, energy, climate change, etc.) between China and the US, the two most powerful nations in history, cannot be ignored.

Xinhua (China's government-run press agency) observed that:

Xi [Jinping] has long been a believer in, advocate of, model for and contributor to communications across civilizations.

[H]e maintains that exchanges and mutual learning among civilizations have empowered human progress as well as world peace and development.

In a world beleagured by alarming anti-globalization sentiment, rising protectionism and unilateralism, mutating security threats, and resurging assertions of a "clash of civilizations," cross-civilizational communication is of vital significance and in dire need of fresh vitality.

The BRI [Belt and Road Initiative], put forward by Xi in 2013, was inspired by one of the most renowned legacies of cross-civilizational communication in history -- the Silk Road, a network of ancient trade routes linking China in the East with ancient Rome in the West and beyond.

A priority in Xi's signature initiative is to build a road connecting different civilizations where mutual respect will replace discrimination, exchanges will replace estrangement, and mutual learning will replace clashes.

Among the global threats of security and climate change is the thinly veiled sense of superiority held by some in the West, who are in the midst of resurrecting an outdated "clash of civilizations" theory.

The last is propaganda — but — so what?

If you were an uninvolved third party, would you rather follow a nation that offers a quasi-constructive view of the human potential?

Or one, led by President Trump, that is perpetually in everyone's face, threatening them with — and actually delivering — economic and military harm?

The moral? — If you let culturally ignorant strategists do stupid things, bad strategic consequences usually follow

My guess is that President Trump's legitimate wish to constrain some of China's trade abuses has escalated, under Ignorance and Combativeness's influence, into the unobtainable.

This is an example of why knowing one's adversary is important. History (and Chinese leadership's words) indicate that China is not going to back down. At least, not in any way that appreciably negatively affects its economic development.

A wiser strategist than Donald Trump would have first examined China's room to maneuver and afterward based American strategy on achieving only what was realistically (or probabilistically) possible.

Taking a winner-take-all imperialistic approach toward China is a mistake. Unlike us, China remembers its past. Face is important.

If you combine forcing the loss of face, with an overt and parallel assault on China's economic endeavor, you have created yourself a highly motivated adversary.

Only a fool goes out of Reason's way to force a strategically clumsy confrontation with 1.4 billion organized people.

And especially so, while intentionally offending one's own allies on a near daily basis.

PeteFree.com

Donald of Orange, China and the trade war — short versus long-term thinking