Im-Politic: Biden’s Massive China Fakery

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2020 election, Biden, CCP Virus, CDC, Centers for Disease Control and Prevention, China, China trade deal, coronavirus, COVID 19, currency, currency manipulation, Hunter Biden, Im-Politic, Joe Biden, Obama, Trade, travel ban, WHO, World Health Organization, World Trade Organization, WTO, Wuhan virus, xenophobia

Imagine the gall that would’ve been required had Republican nominee Mitt Romney campaigned for President in 2012 by blaming incumbent Barack Obama for the financial crisis and Great Recession of 2007-09. Not only did these economic disasters erupt well before Obama took office, but the White House at that time had been held for eight years by the GOP. (The Democrats did win control of the House and Senate in the 2006 midterm elections, but still….) 

Multiply that gall many times over and you get this year’s presumptive Democratic candidate for President, Joe Biden, charging that Donald Trump is largely responsible for the devastating hit the nation is taking from the CCP Virus because Mr. Trump has been too soft on China. The Biden claims are much more contemptible because whereas Romney played no role in bringing on the Wall Street meltdown and subsequent near-depression, Biden has long supported many of the China policies that have both greatly enriched and militarily strengthened the People’s Republic, and sent key links in America’s supply chains for producing vital healthcare-related goods offshore – including to a China that has threatened the United States with healthcare supplies blackmail.

The Biden campaign’s most comprehensive indictment of President Trump’s China and CCP Virus policies was made in this release, titled “Trump Rolled Over for China.” Its core claim:

“We’d say Trump is weak on China, but that’s an understatement. Trump rolled over in a way that has been catastrophic for our country. He did nothing for months because he put himself and his political fortunes first. He refused to push China on its coronavirus response and delayed taking action to mitigate the crisis in an effort not to upset Beijing and secure a limited trade deal that has largely gone unfulfilled.”

More specifically, the Biden organization claims that even long before the pandemic broke out, Mr. Trump has “never followed through” on his 2016 campaign’s “big promises about being tough on China” and simply conducted “reckless trade policies that pushed farmers and manufacturers to the brink” before he was “forced to make concessions to China without making any progress toward a level playing field for American industry.”

I’d say “the mind reels” but that phrase doesn’t begin to capture the mendacity at work here. Not to mention the sheer incompetence. After all, the trade deal was signed on January 15. It was only two weeks before that China told the World Health Organization (WHO) that an unknown illness had appeared in Wuhan. On January 3, China officially notified the U.S. government. It was only the day before the trade deal signing that WHO broadcast to the world China’s claim (later exposed as disastrously erroneous – at best) that no evidence of person-to-person transmission had been found. It wasn’t until the very day of the deal signing that the individual who became the first known American virus case left Wuhan and arrived in the United States. It wasn’t until January 21 that the U.S. Centers for Disease Control and Prevention (CDC) confirmed him as the first American victim.  (See this timeline for specifics.)

So evidently the Biden folks don’t know how to read a calendar.

Meanwhile, in early January, The New York Times has reported, CDC offered to send a team of its specialists to China to observe conditions and offer assistance. China never replied. On January 7, four days after Washington received its first CCP Virus notification, but two weeks before it identified the first U.S. virus case, the CDC began planning for tests. We now know that it bungled this challenge badly.

But did Trump coddle China in order to keep Beijing from terminating the agreement? Surely Biden’s team isn’t calling that failure an effort to appease China. It’s also true that on February 7, the Trump administration announced its readiness to provide Beijing with $100 million worth of anti-virus aid to China (and other countries), and had just sent nearly 18 tons of medical supplies (including protective gear) to help the People’s Republic combat the pandemic. But is the Biden campaign condemning these actions? From its indictment, it’s clear that its focus instead is on the numerous Trump statements praising China’s anti-virus performance and transparency, and reassuring the American public that the situation was under control.

Where, however, is the evidence that these remarks amounted to the President treating China with kid gloves, and stemmed from desperation to save the trade deal? Just as important, here we come to a fundamental incoherence in Biden’s treatment of the agreement – descriptions that are so flatly contradictory that they reek of flailing. After all, on the one hand, the Phase One agreement is dismissed as a fake that fails to safeguard American trade and broader economic interests adequately. On the other, it assumes that China has been eager from the start to call the whole thing off. Yet if Phase One had accomplished so little from the U.S. standpoint, wouldn’t Beijing actually have been focused on sustaining this charade?

But even if the Biden read on trade deal politics is correct, how to explain the January 31 Trump announcement of major restrictions on inbound travel from China that went into effect February 2? Clearly China didn’t like it. Or were these reactions part of a secret plot between the American and Chinese Presidents to snow their respective publics and indeed the entire world?

How, moreover, to explain such Trump administration policies as the continuing crackdown on Chinese telecommunications giant Huawei, and its effort to kick out of the U.S. market  Chinese services provider China Telecom? Or the ongoing intensification of the Justice Department’s campaign against Chinese espionage efforts centered on U.S. college and university campuses? Or yesterday’s administration announcement that although some payments of U.S. tariffs on imports would be deferred in order to help hard-pressed American retailers survive the CCP Virus-induced national economic shutdown, the steep tariffs on literally hundreds of billions of dollars’ worth of prospective imports from China would remain firmly in place?

In addition, all these measures of course put the lie to another central Biden claim – that Mr. Trump is not only soft on China today, but has been soft since his inauguration. A bigger goof – or whopper – can scarcely be imagined.

Unless it’s the companion Biden insistence that the Trump trade wars have devastated American agriculture and manufacturing? When, as documented painstakingly here, U.S. farm prices began diving into the dumps well before the Trump 2016 victory (when Biden himself was second-in-command in America)? When manufacturing, as documented equally painstakingly, went through the mildest recession conceivable, when its output was clearly hobbled by Boeing’s completely un-tradewar-related safety woes), and when every indication during the pre-virus weeks pointed to rebound? When the raging inflation widely predicted to stem from the tariffs has been absolutely nowhere in sight?

Which leaves the biggest lies of all: The claim that Biden is being tough on China now – the promise that he’ll “hold China accountable,” and the implication that he’s always been far-sighted and hard-headed in dealing with Beijing

According to the campaign’s Trump indictment, the former Vice President “publicly warned Trump in February not to take China’s word” on its anti-virus efforts. But this Biden warning didn’t come until February 26. As to making China pay, the campaign offers zero specifics – and given Biden’s staunch opposition to Mr. Trump’s tariffs (and silence on the other, major elements of the Trump approach to China) it’s legitimate to ask what on earth he’s talking about. In addition, Biden insinuated that the Trump curbs on travel from China were “xenophobia” the very day they were announced – before pushback prompted him to endorse them.

Finally, the Biden China record has been dreadful by any real-world standards. In the words of this analysis from the Cato Institute, “he voted consistently to maintain normal trade relations with China, including permanent NTR in 2000” – meaning that he favored the disastrous decision to admit China into the World Trade Organization (WTO), which gave Beijing invaluable protection against unilateral U.S. efforts to combat its pervasive trade predation. He did apparently vote once for sanctions to punish China for its currency manipulation (which has artificially under-priced goods made in China and thereby given them government-created advantages against any competition), but many such Senate trade votes were purely for show. (I apologize for not being able to find the specific reference, and will nail down the matter in an addendum and post as soon as possible.)  

Revealingly, once he was in the Obama administration, he failed to lift a finger to continue the battle against this Chinese exchange-rate protectionism, and served as the President’s “leading pitchman” for the Trans-Pacific Partnership, whose provisions would have handed China many of the benefits of membership without imposing any of the obligations. More generally, there’s no evidence of any Biden words or actions opposing an Obama strategy that greatly enriched the People’s Republic, and therefore supercharged its military potential and actual power. 

For good measure, despite constant bragging that his personal contact with numerous foreign leaders during his Senate and Vice Presidential years, he completely misjudged Xi Jinping, writing in a 2011 article that the Chinese dictator (then heir apparent to the top job in Beijing) “agrees” that “we have a stake in each other’s success” and that “On issues from global security to global economic growth, we share common challenges and responsibilities — and we have incentives to work together.”

There clearly are many valid reasons to support Biden’s Presidential bid.  But if China’s rise and its implications worry you (as they should), then the former Vice President’s record of dealing with Beijing just as clearly shouldn’t be one of them. 

(What’s Left of) Our Economy: Boeing Woes Finally Smack (Otherwise Encouraging) Fed Manufacturing Data

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737 Max, aircraft, Boeing, China, China trade deal, Commerce Department, Fed, Federal Reserve, industrial production, inflation-adjusted output, manufacturing, manufacturing production, manufacturing recession, Phase One, recession, tariffs, Trump, {What's Left of) Our Economy

The Federal Reserve’s report on January industrial production is out, and it not only finally makes clear the impact on manufacturing output of Boeing’s safety woes. It also strongly suggests that whatever (mild) recession industry has experienced is now over.

I say “whatever (mild recession)….” because several official measures of manufacturing output indicate that no downturn took place at all. For example, the Commerce Department’s GDP-by-Industry data series (which gauge factory production on a quarterly basis, not a monthly basis like the Fed) shows that manufacturing’s real gross output (analogous to the Fed’s inflation-adjusted manufacturing output figures) has not declined for two consecutive quarters during the entire current economic recovery. At the same time, it has registered several two-quarter (and longer) stretches periods during which manufacturing by this measure of inflation-adjusted output fell cumulatively.

Commerce’s tables for real value-added (a measure of manufacturing production that tries to prevent counting the production of inputs both as such, and as parts, components, and materials of finished goods) do report that industry’s production dropped between the fourth quarter of 2018 and the first quarter of 2019, and between the first and second quarters of this year. Cumulatively, moreover, this production level was lower in the second quarter of this year than in the third quarter of 2018 – revealing that on this basis, manufacturing suffered a three-quarter downturn.

At the same time, according to this series, both by the consecutive quarters and the cumulative methodology, the manufacturing recession ended in the third quarter, when it topped both the second quarter level and the output figure for the third quarter of 2018.

And don’t forget: According to the Fed’s real manufacturing output figures, domestic industry’s price-adjusted production peaked in December, 2007 – i.e., it’s never pulled out of the slump that began with the Great Recession. Further, as I documented last month, the Fed’s data show that within this long manufacturing recession, several shorter recessions have begun and ended by the cumulative criterion.

So that’s some of context needed for the Fed finding that after-inflation U.S. manufacturing production fell by 0.09 percent in January. That represented its first sequential decline since October, and left year-on-year production down 0.72 percent. By that standard alone, therefore, manufacturing’s recession has continued.

At the same time, industry’s constant dollar production is up since last April – by 0.70 percent. It’s also up 0.34 percent since April, 2018 – the first full month when the Trump administration’s tariffs on steel and aluminum imports went into effect,  and signaled that the President’s tariffs-heavy approach to trade had begun in earnest.

But the Boeing effect also needs to be considered as well. January saw a nosedive in aircraft and parts production of 1.07 percent sequentially, due to the company’s December announcement that production of its flawed 737 Max model would be suspended. The drop-off was the sector’s biggest monthly decline since the nearly 24 percent plunge in recessionary September, 2008.

I’ve wondered whether Boeing’s troubles had already been dragging down manufacturing output – given the company’s huge domestic supply chain, and given that the 737s had been grounded or banned from national airspaces nearly worldwide since March. But today’s report leaves no doubt that their effects have shown up. Indeed, the Fed explicitly stated that “excluding the production of aircraft and parts, factory output advanced 0.3 percent” on month in January.

So without the Boeing effect, January manufacturing output would be up cumulatively since last February – by 1.09 percent, not by 0.70 percent. And the increase since the advent of the main Trump tariffs would have been 0.74 percent, not 0.34 percent. These figures certainly don’t reveal a manufacturing boom – or even close. But given that even after the Phase One trade deal was signed with China, tariffs on hundreds of billions of dollars worth of Chinese products remain in place (many of them levied against goods that are manufacturing inputs), they cast new doubt on how damaging the President’s trade war has been for domestic industry.

Boeing’s 737 Max crisis will end some day. But the company itself warned that it could last “several quarters” more. Moreover, Boeing’s troubles scarcely end with this ill-fated aircraft. In other words, the company’s woes will keep impacting both all U.S. manufacturing data for the foreseeable future. Therefore, it’s up to the nation’s economists and journalists (along with think tank hacks, no matter who’s funding them) to keep this in mind when judging the effect of the President’s trade wars and other economic policies. Let’s see how many can meet this challenge.

Im-Politic: How Trump is Letting the China Virus Crisis Go to Waste

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CDC, Centers for Disease Control and Prevention, China, China trade deal, China virus, coronavirus, Im-Politic, National Institutes of Health, pandemics, pharmaceuticals, Phase One, Trump, Wuhan, Wuhan virus, Xi JInPing

As tragic as the coronavirus has been for victims in China and elsewhere and their loved ones, both the humanitarian and the Machiavellian in me can’t help but think that President Trump is squandering some great and closely related opportunities being created by the outbreak.

To be sure, the President hasn’t completely ignored the disease. He tweeted yesterday that “China has been working very hard to contain the Coronavirus. The United States greatly appreciates their efforts and transparency. It will all work out well. In particular, on behalf of the American People, I want to thank President Xi!.”

He stated at a January 22 press conference at the big global economy conference in Davos, Switzerland that the U.S. government has a plan to contain the virus in the United States. The federal Centers for Disease Control and Prevention (CDC) and National Institutes of Health say they’re working on a cure – in tandem with the U.S. pharmaceutical industry.

But given that the United States is the world leader in medical research, and given that the President has just (justifiably) eaten China’s lunch with the new Phase One trade deal, it seems like much more could and should be done, and in a much higher profile way.

For example, the President, who isn’t shy about broadcasting his achievements and intentions, should announce that’s he’s directing federal research agencies to treat the coronavirus threat as a top priority, as well as seek a similar commitment from U.S. medical schools and drug companies. And how about a summit of American medical research leaders from the public and private sectors to brainstorm both on addressing the present danger and the overall growing threat of pandemics resulting from the ever smaller world being created every day by increasing worldwide commerce and travel?

In fact, why even restrict this meeting to American participants? The President should think about either inviting their foreign counterparts to the session as well, or to a follow-up meeting.

That’s what my humanitarian instincts tell me.

And my more political self? It would advise the President explicitly and publicly to offer his buddy, Chinese leader Xi Jinping, whatever assistance the Chinese need. For good measure, he should propose sending a team of American scientists and public health experts from the government and private sector to China to assess the situation first-hand (including the status of the disease and China’s progress in combating it) and develop recommendations to improve the Chinese response.

Clearly, these actions would serve humanitarian ends. But they would also put Beijing’s dictators in quite the pickle. Right after having their clocks cleaned in the trade negotiations, they’d be put in a position of accepting American help (which would involve a huge loss of the face so critical in Chinese culture), or declining assistance (which can only further anger a Chinese public that’s already not thrilled with the crisis management skills of either the central government or local officials). In other words, either way, the United States scores political points with public opinion both worldwide and in China in particular.

Meanwhile, no one could legitimately criticize Mr. Trump for declaring that all agriculture imports from China are being banned, since the CDC admits that, although it lacks “any evidence to suggest that animals or animal products imported from China pose a risk for spreading 2019-nCoV [the technical name for the virus in question] in the United States,” that “This is a rapidly evolving situation.”

It’s become a well-worn cliché that the Chinese word for “crisis” combines the characters for “danger” and “opportunity.” But even though this specific claim seems questionable at best, the underlying idea and logic are compelling, and need to be applied to U.S. coronavirus policy liji (Chinese for “immediately”).  There’s no excuse, to quote former Chicago Mayor Rahm Emanuel, for letting the opportunity go to waste.