Following Up: More Reasons for the NBA to Get Woke on China

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basketball, China, Following Up, Hong Kong, human rights, India, Japan, LawfareBlog.com, National Basketball Association, NBA, Nikkei Asian Review, sports, Uighurs, Victor Cha

Earlier this month, I published a piece on The American Conservative website scolding the National Basketball Association (NBA) and some of its star players and coaches for too often knuckling under to Chinese human rights-related pressure for fear of getting shut out of the People’s Republic’s vast and rapidly growing market. I justified my call for a more outspoken China stance by this normally politically outspoken league by noting that China wasn’t the only big foreign market capable of adding to the league’s already healthy profits and thus to the players’ and coaches’ already titanic salaries. And I observed that in fact, U.S. pro basketball has enough leverage with China to lead a global sports world push for better behavior from Beijing, especially when it comes to Hong Kong and the country’s Uighur Muslim minority.

That’s largely why it’s been great to see these arguments being reinforced lately both by some new NBA-related business developments and by a leading authority on Asian affairs.

On the business front, a recent report from Japan’s Nikkei Asian Review (NAR) observes that the league is indeed continuing full steam ahead with its efforts to win fans and rake in bucks in Japan and India. The former, not so incidentally, is the world’s third largest single national economy (after the United States and China). The latter has a population so huge and still growing so fast that it’s soon expected to surpass China as the world’s biggest.

According to NAR, this fall the NBA played its first games in Japan (exhibitions) in 16 years and the stands were packed. Moreover, the publication cites one estimate claiming explosive recent growth in subscriptions for the streaming service authorized to carry league games.

Further, the NBA’s popularity in Japan looks set to keep surging for the foreseeable future. For next year’s summer Olympics will be held in Tokyo, and the U.S. and other foreign teams slated to compete will contains dozens of NBA stars. And in 2023, Japan will be one of the co-hosts (along with other big Asian countries the Philippines and Indonesia) of the basketball World Cup.

But perhaps the biggest boost to the NBA’s popularity has been Washington Wizards rookie Rui Hachimura. Hachimura isn’t the first Japan-born player to appear in an NBA game. But so far he looks to be the best by far, and could boost the league’s Japanese fan base in ways reminiscent of Yao Ming’s impact in China.

As for India, the league opened its first office in that population giant in 2017, and although its athletes don’t seem NBA- (or major college-) ready yet, but its fans could identify with Vivek Ranadive, Indian-born owner of the Sacramento Kings. And the Kings played the Indiana Pacers in Mumbai this fall shortly before the Japan exhibition games.

Meanwhile, my claim that the NBA possesses ample clout to confront China successfully on human rights issues was seconded recently by Victor Cha, a Georgetown University political scientist and former National Security Council Asia specialist under George W. Bush’s administration. In a December 8 post for the Lawfare blog, Cha wrote:

“China may continue to ban broadcasts of [certain NBA] games, but how long before Chinese people express frustration? It’s not like there is an alternative to NBA stars like Lebron James or Steph Curry for youth on a Chinese basketball team to worship. China’s punishment may be costly in the short term, but in the long run, the demand signal from Chinese consumers will remain strong. And if the Beijing authorities are seen to be standing in the way, the Chinese Communist Party may be doing more harm than good to its own domestic standing. Moreover, the attention brought to the Chinese over the NBA ban could make the Chinese people aware of alternative narratives of the events in Hong Kong beyond the official media’s framing of the protests as criminal, thuggish and unjustified behavior.”

And I would strongly second Cha’s broader conclusion that “China’s predatory liberalism is an affront to the liberal international order, and the NBA, whether intended or not, is now a part of this struggle. Its actions going forward will set precedents, hopefully positive, for governments, companies, and individuals both inside and outside of China.”

Making News: A New China (and Basketball!) Op-Ed, and Back on CNBC Today!

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China, CNBC, European Union, Hong Kong, human rights, Making News, National Basketball Association, NBA, The American Conservative, Trade, Trump

I’m pleased to announce that a new op-ed article of mine was posted last night.  Appearing on the website of The American Conservative, it explains why the National Basketball Association and its often politically outspoken players and coaches can easily afford to lead a global campaign to press China to clean up at least some of its human right act in Hong Kong and elsewhere.  Click here to read.

Also, I’m scheduled to return to CNBC this afternoon to discuss all the fast-breaking developments in U.S. trade policy across the board – including with China and the European Union.  The segment is slated to begin at 2 PM EST and, as usual, if you can’t tune in (or if you’re dying to see it again), I’ll be posting a link to the streaming video as soon as one’s available.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

 

 

Our So-Called Foreign Policy: Signing the Hong Kong Democracy Bill Should be a No-Brainer for Trump

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China, Congress, democracy, Hong Kong, Hong Kong protests, human rights, Our So-Called Foreign Policy, sanctions, trade deal, trade talks, Xi JInPing

Full disclosure: I don’t believe that promoting human rights and democracy abroad should be a high priority for U.S. foreign policymakers. (My most detailed explanation comes in this late-1994 article in FOREIGN POLICY magazine, which is available on-line here and here.) All the same, there’s no doubt in my mind that President Trump would be making a big political and substantive mistake if he, as he’s (very obliquely, to be sure) hinted that he might veto the Hong Kong Human Rights and Democracy Act of 2019 just passed overwhelmingly by both the House and Senate.

Don’t get me wrong: I’m under no illusion that the legislation will do anything in the foreseeable future to promote human rights and democracy in Hong Kong – and you shouldn’t be, either. In fact, there’s every reason to believe that it’s a classic example of political virtue-signaling. For example, even the sponsors of the bill don’t seem to believe that any plausible official American words or deeds can affect the fate either of Hong Kong generally or of the huge numbers of protesters who have been challenging China’s determination to keep eating away at the special freedoms enjoyed by its residents since its hand over by the United Kingdom to Beijing in 1997.

If they did, you’d think that they’d have included in the bill some economic sanctions against the Chinese economy. But not only are such provisions entirely missing. The only measures resembling economic sanctions or potential sanctions are directed against the economy of Hong Kong – in the form of requirements that the various ways in which U.S. policies and other laws that treat Hong Kong differently from China (based on the assumption that this “Special Autonomous Region,” as Beijing calls it) really still is autonomous – remain justified by the facts on the ground in Hong Kong.

The bill does contain some sanctions instructions directed at China – but not at any sectors of its economy. Instead, they’re to be applied against “foreign persons” determined to be “knowingly responsible” for any “gross violations of internationally recognized human rights in Hong Kong.”

To which the only serious response is “So what?” The Hong Kong officials who give the specific orders to the police to fire tear gas or crack some heads or shoot rubber bullets into crowds are nothing more than tools of the dictators in Beijing. Concentrating punishment on them amounts – knowingly – to punishing the little fish and letting the prize catches get away. And P.S. – they’re as easily replaceable and interchangeable as any ordinary functionary.

Unless you can think of many U.S. politicians in either party who would back imposing sanctions on Chinese kingpin Xi Jinping or any of his senior cronies? Fat chance – assuming you could even locate any of their assets vulnerable to America’s reach. After all, how many American elected officials genuinely doubt that China’s top leaders are ultimately responsible for the harsh repression of the Hong Kong protests – or for the extradition law that triggered this uprising?

Nonetheless, the politics alone argue compellingly for presidential signing of the Hong Kong measure. It attracted nearly unanimous support on Capitol Hill, so a veto override is likely. And although the President won’t win much praise for enacting the bill into law, he’ll generate a hail of brickbats for any opposition.

And for what? As I argued in the article cited at the beginning, human rights interests generally should take a back seat in U.S. foreign policy for any number of reasons, but chiefly because other interests are usually more important for America’s security or prosperity (since foreign governments’ human rights practices as are almost completely incapable of undermining these objectives). Moreover, American actions can sometimes backfire, and it’s far from far-fetched to worry that a Trump approval of the Hong Kong bill and more frequent and stronger expressions of official outrage will only further convince China’s dictators (and much of the nationalistic Chinese public) that the unrest in Hong Kong stems from foreign meddling, not legitimate concerns.

Yet U.S.-China relations these days are so bad that it’s difficult to imagine a Trump signature on the Hong Kong legislation significantly worsening them. It’s possible that Beijing could retaliate with still higher tariffs or other curbs on American exports, especially farm products, but China remains much more vulnerable to U.S. economic pressure than vice versa. Nor is the President likely to suffer much politically from such measures during the upcoming election year, since nearly all of his political opponents have spoken out much more emphatically against China’s record in Hong Kong than he has. As for “outside agitator” claims – the Chinese are already making them, including against the United States.

Which leaves us with the one stated presidential reason for considering a veto of the Hong Kong bill – that an obstacle could be created to reaching a trade deal. The problem here is that a trade deal that serves U.S. interests (as opposed to a cosmetic deal that, e.g., results in increased American exports to China in exchange for American tariff reductions with no commitments from Beijing to end its most important predatory trade practices) simply isn’t possible. As I’ve written repeatedly, even a complete Chinese cave-in on paper to every demand the administration has ever made can’t possibly be verified adequately – because the Chinese government is so big and so secretive.

In fact, if there’s any relationship between trade policy and Hong Kong policy, it surely works the other way: More human rights pressure from Mr. Trump would be added to the economic pressure that’s already making Xi’s life hard enough. And whatever throws the Chinese off balance by definition helps the United States. For it would force Beijing to spend more time putting out fires and playing defense generally across the board, and leaves less time for pursuing offensive economic and geopolitical goals that undermine American interests.

As I’ve always seen it, claims that these interests (properly defined, of course) and ideals are always ultimately compatible are among the most fatuous made by practitioners, scholars, and historians of American foreign policy. But especially for a country with America’s range of geopolitical and economic choice (by dint of its high degree of built-in security and economic self-sufficiency, and potential for even more), there’s also no question that the United States can afford to promote its admirable values on a regular basis.

Hong Kongers’ struggle for more freedom and democracy represents one such case, meaning that a Trump-ian failure to sign the Hong Kong bill would call into question not only his support for these ideals, but his pragmatic instincts as well.

(What’s Left of) Our Economy: Now What in the U.S.-China Trade War?

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agriculture, allies, China, decoupling, Democrats, election 2020, forced technology transfer, Hong Kong, Huawei, impeachment, intellectual property theft, National Basketball Association, Phase One, Steven Mnuchin, subsidies, supply chains, Taiwan, tariffs, Trade, trade talks, Uighurs, verification, {What's Left of) Our Economy

This is the second working day since the United States and China reached what the Trump administration is calling a “Phase One” trade deal with Beijing last Friday, and the questions surrounding the agreement still far outweigh what’s known. That alone should tell you that towering obstacles continue blocking any confident assessment of where the President’s so-called trade war stands, much less where the conflict is likely to go. Even so, here are some observations I hope are useful.  (Teaser:  One major point concerns tonight’s Democratic presidential candidates debate.)

First, the absence of any written statements or documents from the U.S. side describing or even summarizing what’s actually in the agreement justifies big doubts that anything deserving the term “deal” has been reached at all. Further reinforcing legitimate skepticism is China’s long record of broken promises on trade.

Second, especially strong skepticism is warranted about U.S. claims that any meaningful progress has been made on the so-called structural issues focused on from the very beginning by the Trump administration. For it as I’ve long argued, China’s government is so vast and secretive, and leaves such scanty written records of key decisions, that it will simply be impossible for the United States to monitor and enforce even the most promising Chinese commitments on intellectual property theft, technology extortion, discriminatory Chinese government procurement, and Beijing subsidies that shaft U.S.-owned and other foreign businesses vis-a-vis their Chinese rivals.

Third, even if China currently means to keep its alleged promises to binge buy American agricultural products, any number of external events could upset the apple cart. They include the Hong Kong picture becoming uglier (its becoming prettier can’t be totally ruled out, but seems highly unlikely); new Chinese crackdowns on other protests that may emerge (especially among the Uighur Muslim population) or revelations of new Chinese atrocities against the Uighurs or other minorities or other protesters; more attempted Chinese bullying of high-profile U.S. businesses like the National Basketball Association; a major flare-up of tensions over Taiwan or China’s aggressive moves in the South China Sea; a step forward in the Huawei case that increases the chances that the CFO daughter of the founder of this Chinese telecommunications giant will be extradited to the United States from Canada for sanctions-busting; and Chinese moves that persuade Washington that Beijing has no intention of keeping its perceived agriculture or other promises.

Moreover, the longer China takes to ramp up its buys from American farmers, the greater the potential for these kinds of shocks to bring this “Phase One” agreement crashing down.

Fourth, the less impressive the “mini-deal” keeps looking, the more convincing my view that its apparent modesty reflects President Trump’s belief that his domestic political position has weakened significantly – both because of the new impeachment threat and signs of an economic slowdown.

It’s true that Treasury Secretary Steven Mnuchin has suggested that if the deal hasn’t been finalized by December 15, the Trump administration will go ahead with a previously vowed 15 percent increase on $156 billion worth of levies on Chinese imports. But that’s anything but a concrete threat. In addition, it’s important to note this report suggesting (the specifics are really sloppily described) that China wants the sequencing to work in the opposite way:  First, tariffs get rolled back (or frozen in place?), then the agriculture buys begin. 

Moreover, no one in the administration has said anything about reversing its Phase One-related decision to suspend a big tariff increase (to up to a formidable 30 percent on some products) previously announced to begin on October 15. So even though U.S. duties on some $360 billion worth of Chinese goods would still remain in place if China blows Mr. Trump off, there’s a real chance that Beijing won’t incur any further punishment – doubtless because the President believes that tariffs above and beyond current levels and coverage could panic investors again and further soften economic growth.

Some kind of blow-up in Hong Kong or elsewhere could yet change Mr. Trump’s calculations. But the more important point so far is that events, not the President, are now in charge of the trade talks track of his China policy.

Fifth, at the same time, none of the above means that the United States is devoid of leverage versus China and in particular the kind of clout that can keep advancing its economic as well as closely related technology and national security interests, and this is where a second, arguably more important, track of the Trump China policies needs to be remembered. As I’ve written, the President has sought not only to end the threat of China’s economic predation by forcing Chinese policy changes through tariff pressure. Although he rarely speaks of it, he’s also been trying to repel Chinese threats to U.S. security and prosperity through a series of unilateral measures aimed at decoupling the United States from China economically.

By crimping trade, investment, and technology flows, these decoupling steps are reducing America’s vulnerability to China by significantly reducing the access to the U.S. market so crucial to the success of China’s advanced industries; by shrinking the footprint of China’s state-controlled economy in America’s largely free market system; and by cutting off a Chinese tech sector that could be become highly dangerous from critical supplies of U.S. components.

Decoupling has also been advanced by those tariffs so far imposed on $360 billion worth of Chinese products (amounting to nearly 86 percent of all goods imports from China last year). They haven’t done much to achieve their stated aim of improving China’s behavior, but they have decreased China’s importance to the U.S. economy by prompting an exodus of global manufacturing supply chains out of the People’s Republic.

Further, the Trump decoupling campaign has also helped awaken many foreign governments to the China tech and broader economic threat – though because so many other countries (including major American treaty allies), were profiting so handsomely from the pre-Trump globalization status quo, progress on this front has been uneven and disappointing. (See here for why Germany, for example is so conflicted.) 

Sixth and finally, one major set of actors in this drama, though, hasn’t been very woke on China issues:  most of the Democratic presidential candidates. Sure, many have supported a policy of “doing something” on China (though rarely involving tariffs – or any other concrete measures). But so far, none seems to view China’s multi-dimensional challenge to America as a major concern – and all the top-tier contenders and most others now support impeaching the President. 

Consequently, they could greatly strengthen not only Mr. Trump’s position, but the American position, with firm declarations in tonight’s debate that China will stay squarely in Washington’s cross-hairs if they win the White House, and that therefore there’s no point in stonewalling in hopes of easier post-2020 U.S. policies. Not that any confidence looks well founded that any of them will.        

(What’s Left of) Our Economy: What the Mini-Deal Says About Trump’s China Policy

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agriculture, business investment, censorship, China, decoupling, democracy, Democrats, election 2020, Elizabeth Warren, Hong Kong, Hong Kong protests, human rights, impeachment, Populism, Republicans, tariffs, Trade, trade talks, trade war, Trump, Uighurs, Ukraine, Ukraine Scandal, {What's Left of) Our Economy

The “Phase One” min-deal reached by the United States and China tamping down bilateral trade tensions for the moment, speaks volumes about the three major forces that are now driving President Trump’s China policy, and that will keep shaping it through the next U.S. election – though not always in consistent ways. They are:

>the President’s evident belief that his reelection hopes are being threatened mainly by revived impeachment threats but also by an economic slowdown that has unmistakably been influenced by the so-called trade war with China;

>his consequently increased need for political support from the establishment Republicans so numerous in Congress who have never boarded the Trump Tariff Train and who are worried about their own reelection chances next year; and

>Mr. Trump’s consistent (though generally unstated) belief that no matter how the formal trade talks proceed, America’s national security as well as economic interests require the U.S. economy to continue steadily decoupling from China’s.

The strength of the impeachment drive faced by the president is now indisputable. Some polls are even showing growing Republican support for not only impeachment by the House but removal by the Senate. Moreover, this political challenge comes at a time when the President’s strongest suit by far (at least according to polls) – his economic policy record – is looking somewhat weaker.

Few signs point to a recession breaking out by Election Day, much less during the preceding weeks or months. But growth has been slowing to levels that Mr. Trump himself has deemed unacceptable – in no small measure because they were the rates that prevailed for most of the Obama administration.

The tariff-heavy Trump trade policies hardly deserve all the blame. (See, e.g., this recent post.) But the failure of business investment to stay elevated following passage of major tax cuts for business is especially telling. It buttresses claims that both the President’s various sets of tariffs and the inconsistency with which they’ve been both threatened and applied have inhibited companies from approving big new expenditures on new factories and other facilities.

As a result, nothing that can reasonably be expected from Washington (in other words, ruling out a big infrastructure spending bill) is likelier to boost the economy more than a nerve-calming trade truce with China mainly featuring some Chinese market opening or re-opening (especially for agricultural products) in return for some U.S. tariff cuts, promises to refrain from new levies, or some some combination of such moves. At the least, such an agreement would in theory help growth maintain the momentum it has remaining.

A mini-deal along these lines would also please the Senate Republicans who might ultimately judge the President’s fate, and who generally have lagged far behind the GOP base in turning against pre-Trump China and broader trade policies. Moreover, as I’ve written, impeachment politics have greatly magnified their sway over Mr. Trump before. Despite his sky-high popularity with Republican voters, the President was heavily dependent on their political backing until this spring in order to neutralize any impeachment chances while his Russia ties were being investigated. That’s surely why his early policy initiatives were dominated by traditional Republican priorities, like tax cuts and repeal of former President Barack Obama’s healthcare overhaul, rather than by populist priorities like an infrastructure bill and the prompt imposition to tariffs.

Once the Special Counsel and other investigations flopped for various reasons, Mr. Trump had a much freer hand. But because of the emergence of “UkraineGate,” for now, those days are over. Probes growing out of those events are certain to last for months. Therefore, continued, much less higher, tariffs on China that could further drag on the economy and further frustrate the rural constituencies so crucial to the President and many other Republicans seem out of the question.

The President is so hamstrung that he’s been unable to marshal greater public support for staying the tariff course even though China is antagonizing American public opinion with its harsh suppression of the Hong Kong protests and the Muslim Uighur minority, and with its heavy handed efforts to extend its censorship practices to the National Basketball Association and other U.S. businesses. And don’t forget: These developments have placed China in a much weaker position, too.  

One reason that the President hasn’t been able to capitalize could well be his reluctance to declare publicly the functional equivalent of economic war, or his intent to decouple – presumably because any such statements would prompt the Chinese to crack down even further on American companies even doing business in the PRC that have nothing to do with job and production offshoring aimed at serving the U.S. market from super-cheap and highly subsidized Chinese facilities, as opposed to serving Chinese customers. And that reasoning has been entirely understandable.

Much less understandable – the President’s insistence that a trade war with China would be easy to win and inflict no economic harm on Americans, rather than choosing to challenge his compatriots to endure some sacrifices in order to beat back a mortal threat to their national security as well as prosperity. No wonder public support for so-called hard-line policies remotely strong enough to offset the opposition and reservations of the Congressional Republicans and most Democratic politicians is nowhere to be seen.

And don’t doubt that the Chinese fully understand. Whatever problems they initially experienced in figuring Mr. Trump out, they surely have concluded that they’re best advised to play the waiting game on the broader and deeper so-called structural issues dividing the two countries (e.g., intellectual property theft, technology extortion, massive subsidies) until the President is replaced by a Democrat who’s much easier to deal with.

Indeed, the evidence for this conclusion is abundant. China issues have played a small role in the Democratic primary campaign so far – even when it comes to long-time critics of pre-Trump trade policies like Democratic Socialist Vermont Senator Bernie Sanders, and Massachusetts Senator Elizabeth Warren. One likely explanation: In recent years, Democratic voters and leaners have markedly flipped on those pre-Trump approaches, from deep dislike to general approval. This shift in public opinion (matched in part by a trade flip in the other direction among Republicans and leaners) may also warrant some Chinese confidence that even a President Warren might prove a more acceptable interlocutor than Mr. Trump.

Nonetheless, the formal talks are not the only track on which the Trump administration’s China trade policies are running. And the other track – featuring unilateral U.S. moves to restrict Chinese involvement in the American economy, and thereby foster decoupling – is much less controversial than the trade talks and especially the tariffs and tariff threats clearly required to spur any meaningful progress.

Highly revealing on this score (in terms of the importance attached in Washington to decoupling): Even as a high level Chinese delegation was jetting to Washington, the President approved actions against Chinese tech companies and Chinese officials that were justified by human rights concerns, but that in the first case clearly advanced decoupling. Just as revealing (in terms of possible Chinese acceptance of a more skeptical new bipartisan U.S. consensus on China policy): Despite the provocative timing, the Chinese didn’t turn around and head back home once they heard the announcement.

Reinforcing the new American consensus on decoupling has unmistakably been the growing realization by the U.S. corporate sector that its heavy bets on China have dangerously increased its vulnerability not only to the whims of American politics, but to a Chinese regime that’s turned out to be much less hospitable than expected. As a result, “Phase One” is not only a suspiciously convenient-looking term being used by the President to describe his new deal. It also looks suitable for describing where his administration’s overall China policy stands right now.     

Making News: Two China Trade War (& NBA?) National Radio Interviews Coming Up Today

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censorship, China, Hong Kong, Making News, Market Wrap with Moe Ansari, National Basketball Association, NBA, The John Batchelor Show, Trade, trade talks, trade war

I’m pleased to announce that I’m scheduled to be interviewed on two nationally syndicated radio programs today on the current, possibly crucial phase of the U.S.-China trade talks.  I also suspect that both segments will at some point turn to the uproar over China’s efforts to censor a National Basketball Association executive for tweeting his support for the Hong Kong protesters, and Beijing’s follow-on efforts to intimidate the league.

The first, slated to air at 3 PM EST, is with Moe Ansari on his popular “Market Wrap” program.  You can listen on-line here.

The second, which will start at 9:15 PM EST, is on “The John Batchelor Show,” and here’s the listen live on-line link.

As always, if you can’t tune in, I’ll post links to the podcasts as soon as they’re available.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

Im-Politic: The NBA’s Not Real Woke on Hong Kong

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Adam Silver, basketball, Bradley Beal, China, Chris Paul, Daryl Morey, David Fizdale, democracy, Draymond Green, Golden State Warriors, Gregg Popovich, Hong Kong, Hong Kong protests, Houston Rockets, human rights, Im-Politic, James Harden, Jaylen Brown, Kevin Durant, LeBron James, National Basektball Association, NBA, Russell Westbrook, Steph Curry, Steve Kerr, Tilman J. Fertitta, Trump, Twitter, Uighurs

In recent years, the National Basketball Association (NBA) has worked hard to earn its reputation as the most socially conscious sports league in America and possibly the world – and certainly its owners and Commissioner Adam Silver have both permitted the players to speak out on various political and policy issues, and demonstrated a pretty high degree of “wokeness” themselves. Nor has American men’s pro basketball’s commitment to social and economic and political justice been limited to words. Time after time, many of the NBA’s biggest stars and most successful franchises and coaches have backed up their rhetoric with actions, ranging from boycotting events with President Trump to supporting social programs in low-income communities and other worthy causes.

What a shame, then, that neither the players’ nor management seem to believe that Hong Kong’s democracy protesters deserve even a syllable of sympathy. Worse, the issue has gotten the silent treatment even from the NBA’s most outspoken figures, and the league itself just made clear that it’s so determined to maximize profits in its current huge and potentially much bigger China market that it’s given the cause of freedom in Hong Kong – and by extension, the mainland – the back of its hand.

Hong Kong has been in turmoil since June, engulfed by massive, angry, and sporadically violent protests – and a more violent government crackdown – triggered by the government’s proposal of a law that would enable the extradition of criminal suspects to China. To be sure, despite Beijing’s promise as part of the 1997 “handover” agreement with the city’s British colonial rulers to permit Hong Kong to retain its largely democratic political system and rule-of-law legal system to remain in place for fifty years, China has steadily encroached on those freedoms practically since Hong Kong became a “Special Administrative Region” of the People’s Republic.

Nonetheless, the extradition measure has apparently convinced many Hong Kong-ers that China has greatly sped up the timetable for replacing the “one country, two systems” arrangement with “one country, one system.”

But although the NBA has been a large and rapidly growing presence on the Chinese sports scene for decades, there’s no record of anyone associated with the league making any remarks on the Hong Kong situation until last Friday – when Houston Rockets General Manager Daryl Morey tweeted “Fight for Freedom. Stand with Hong Kong.”

That long-time silence isn’t necessarily proof of NBA hypocrisy. What does look disgraceful is the U.S. pro basketball world’s reaction. Morey’s boss, Houston owner Tilman J. Fertitta, denounced the tweet, insisting that the Rockets “are NOT a political organization.” The NBA itself expressed “regret” that Morey had deeply offended many of our friends and fans in China” and specified that his backing of freedom in Hong Kong “does not represent…the values of the league.”

It’s important to note that Morey has (so far) kept his job – after deleting the original tweet from his account and sending out a subsequent statement on the network indicating some contrition, albeit seemingly for commenting on Hong Kong in haste, without considering “other perspectives” and not for his Hong Kong views per se. The NBA also pointedly declared that it backs individuals “sharing their views on matters important to them.”

But there can’t be any reasonable doubt that the NBA’s China stance has been much more timid than its position on issues such as rebuking President Trump – which prompted this statement from Silver:  “These players in our league, our coaches, are speaking out on issues that are important to them and important to society. I encourage them to do that.”

Nor can there be much doubt that the league’s Hong Kong timidity stems from China’s sharp reaction – which has so far included decisions by the league’s chief Chinese digital partner and state media (the only kind permitted in China) to remove Rockets games from their broadcasts, and by the country’s official basketball organization to “suspend cooperation” with the Houston franchise.

In fact, the NBA’s record on other China-related issues looks pretty shabby, too. As reported on Slate.com:

“The league runs a training center in Xinjiang, a region where the state has imprisoned and subjugated an entire class of people who are part of the Uighur minority. The NBA’s most progressive coaches, Steve Kerr and Gregg Popovich, have rightfully spoken out against the Trump administration’s Muslim ban. If anyone associated with the league were to bring attention to human rights abuses, it’s them, but neither man publicly addressed the Chinese government’s imprisonment of roughly a million Uighurs while they were in the country with USA Basketball [the private, non-profit organization that, among other responsibilities, supervises American participation in international basketball competitions like the Olympics] for this summer’s FIBA [International Basketball Federation] Championships.”

All the same, the number of ordinarily outspoken star NBA players, prominent teams, and leading coaches who to date have said absolutely nothing about the Hong Kong protests – or the league’s plain vanilla reaction – is stunning, and aside from Kerr and Popovich includes the following (as of early this afternoon):

Lebron James, Steph Curry, the Golden State Warriors, Draymond Green, Kevin Durant, Bradley Beal, Jaylen Brown, David Fizdale, and Chris Paul.

But even their silence looks good next to James Harden’s reaction: He’s apologized for Morey’s original tweet both on his own behalf and that of Houston Rockets teammate Russell Westbrook.

And here’s what’s even weirder about this soft NBA cave-in to China: It apparently hasn’t occurred to anyone associated with the league that it’s astronomical popularity in the People’s Republic is not only an immense cash cow – it gives them considerable leverage, too. Sure, if major American basketball figures decried repression of Hong Kong-ers, or the Uighurs, or any other Chinese, the government could drastically reduce the NBA’s activities in China and reduce the league’s profits. But just how well is that likely to sit with China’s legions of basketball fans? And given the unrest in Hong Kong, would Beijing really be so anxious to antagonize another significant chunk of its citizenry?

The answer might indeed be “Yes.” But wouldn’t it be interesting and important – not to mention courageous and inspiring – if any of pro basketball’s (already incredibly wealthy) social justice warriors decided to put this proposition to the test?

(What’s Left of) Our Economy: Why This Trade War Hasn’t Been “Easy to Win”

Tags

China, Hong Kong, Huawei, One Belt One Road, Taiwan, tariffs, Trade, trade war, Trump, Xi JInPing, {What's Left of) Our Economy

Friday’s U.S.-China trade war escalation leaves little doubt that I was wrong about the conflict in one major respect. So was President Trump.

Just as Mr. Trump was first unilaterally tariff-ing Chinese products in response to Beijing’s wide-ranging economic predation (which of course extended far beyond trade flows into intertwined investment and technology issues), I confidently stated that Beijing wasn’t about to risk antagonizing its most important market by far with any retaliatory moves. Indeed, although I didn’t agree with his near-blanket statement that “trade wars are good,” I was fully on board with his claim that they’re “easy to win” – or at least reasonably so.

China’s announcement yesterday of new tariffs on $75 billion worth of American goods in response to the most recent round of Trump trade levies was just the latest evidence that Chinese leader Xi Jinping in fact has little compunction about risking American official ire and even believes he might prevail.

Even so, the President and I have an excuse. Our mistake wasn’t maintaining that the bilateral economic balance of power didn’t overwhelmingly favor the United States. Just check out the new claim by the founder of Huawei that U.S. national security sanctions – which could cut the Chinese tech giant off from access to the  U.S.-brand semiconductors central to its products operations – has confronted this entity with a “life and death” crisis. Moreover, trade flows remain as grotesquely lopsided as ever, meaning that the export-heavy Chinese economy still remains much more dependent for adequate growth on selling to the United States than vice versa.

Instead, our mistake has been underestimating just what a delusional bonehead Xi is, and how he can’t seem to resist the temptation to overestimate China’s power and prospects. He’s clearly overreaching in his treatment of Hong Kong, in the process courting a global public opinion backlash that’s likely to dwarf that following the Tiananmen Square massacre of 1989 – and turn him into a rival and even replacement for President Trump himself as a worldwide punching bag. He’s clearly overreaching regarding Taiwan, even given Beijing’s longstanding view of the island as a renegade province and equally longstanding practice of threatening it militarily. As a result, the United States will be selling the Taiwanese armed forces $8 billion worth of advanced fighter jets. He’s also clearly overreaching in connection with his ballyhooed One Belt One Road global infrastructure project – which is increasingly being recognized as at best the biggest potential white elephant in world history and at worst an equally gargantuan engine of pollution and corruption.  (See, e.g., this post for a typically negative review.)

Even more noteworthy are the signs that Xi’s trade war overreaching is seriously damaging China’s own economy. Just a few of the recent signs: the lowest overall economic growth rate in 27 years; the worst industrial production growth (which includes mining and utilities as well as manufacturing) in 17 years; and all-time record official unemployment in China’s cities.

That last milestone is especially important, since keeping people at work is the top economic priority for China’s leaders. The reason: jobless Chinese workers could turn into politically restive Chinese workers, and pose big dangers to the employment status of Xi and the rest of the ruling Central Committee.

And surely more worrisome for Xi: He must know better than most that China’s official economic data strongly tend to overstate China’s economic performance. In other words, the domestic economic picture is likely even worse than Beijing is letting on.

Why then does Xi keep standing on his high horse? Of course, I have zero inside info. But the only answer that makes sense to me is that he and his colleagues have decided that if they can prick enough American economic fingers (whether among consumers or farmers or investors), the resulting complaints will be amplified through a deafening chorus of gloom-mongering from the staunchly anti-Trump Mainstream Media. Eventually, Americans could talk themselves into a recession that would ensure the election in 2020 of a much more pliable Democrat – chiefly, former Obama Vice President Joe Biden.

That’s not a crazy plan by any means, especially since the President is no slam dunk to win reelection. At the same time, it’s far from clear that Xi or whoever’s advising him on American politics are such whizzes on the subject. If they were, would China under his rule have acted belligerently enough on trade, national security, and human rights to have helped elect Mr. Trump in the first place?

(What’s Left of) Our Economy: Trump’s Latest China Tariff Moves – & Why They’re Mistaken

Tags

China, consumer goods, consumers, Hong Kong, inflation, producer goods, tariffs, Trade, trade war, Trump, Xi JInPing, {What's Left of) Our Economy

If you’re confused by President Trump’s latest China tariffs moves, don’t feel bad. They’re really confusing!

Much clearer is their main implication: Once more, the President has needlessly let China off the trade war hook – and significantly reduced the odds of U.S. success no matter how it’s defined.

To summarize the chain of announcements and decisions that have produced the present situation: As of August 1, in various stages, the United States had imposed 25 percent tariffs on $250 billion worth of goods imports from China based on the latest data. And on May 5, Mr. Trump threatened to place tariffs of 25 percent on the rest of China’s merchandise shipments to the United States (about $300 billion worth).

That announcement was seen as especially significant because the previous tariffs mainly hit what businesses and economist call “producer goods” or “intermediate goods.” They’re the parts, components, and materials that companies use to produce final products, including consumer products. As a result, even when they do lead to higher consumer prices, the role played by these duties is difficult for consumers (i.e., voters) to identify, much less complain about to the politicians responsible.

In addition, as I’ve frequently noted (e.g., here), tariffs on these producer goods often don’t lead to any inflation, or much inflation, at all, for a variety of reasons and combinations of reasons. In many instances, retailers and other businesses simply lack the needed pricing power. As a result, they often seek to persuade their entire supply chain to preserve market share by eating some or all of the higher prices and accepting lower profits. Alternatively, various parts of the supply chain – including the final customer – can try to offset tariff-induced price increases by boosting productivity. That’s actually good for the economy in the long run, as improved efficiency not only enables companies to absorb cost increases while maintaining and even increasing margins. Such better productivity tends to spur the development of new efficiency-enhancing products, services, and technologies – a great way to boost living standards in a healthy, sustainable way.

Yet the May Trump $300 billion threat – which stemmed from the President’s unhappiness with the lack of progress in the trade talks with China – would have finally hit most consumer goods imports. Therefore, it would have created the risk that shoppers would blame the President for any price increases they did encounter. Even worse, the timing of the threat practically ensured that these higher prices would start appearing just as holiday shopping heated up – or typically heats up.

In late June, however, after meeting with Chinese leader Xi Jinping at a global summit in Japan, Mr. Trump agreed to a trade truce and to hold off on the $300 billion threat. Two weeks later, though the threat was back on the table, according to a Trump tweet.

On August 1, following a new round of apparently unsuccessful trade negotiations and the President’s belief that China had broken a promise connect with the late June trade truce to buy more American farm products, Mr. Trump specified that ten percent tariffs on the $300 billion worth of consumer goods-dominated imports from China would begin on September 1. Just four days later, his administration announced another “hawkish” trade war decision – officially designating China as a country that manipulated its currency to gain trade advantages (by keeping its products artificially cheap and therefore making goods and services from trade competitors artificially expensive in comparison). At the same time, the currency decision by law doesn’t automatically result in new tariffs, although it could eventually bring about some other penalties.

And yesterday came the latest turnaround: Mr. Trump decided to postpone tariffs on an estimated $160 billion of the $300 billion from September 1 to December 15. Not coincidentally, as his remarks on benefiting holiday shoppers made clear, many of the items on the postponement list included particularly popular gift items like toys and smartphones.

In addition, tariffs on some $30 billion worth of imports from China would be lifted permanently (at least for now!). But new duties on some $110 billion worth of imports from China are at this point slated to go into effect at the beginning of next month, and this group, too, is dominated by consumer goods.

Commentators focusing on the postponed goods called the latest Trump move a cave to China spurred by the President’s fears of a falling stock market, weakening U.S. economy, and angry consumers. Others, pointing to the products that will be slapped with new levies, and to the continuation of previously announced tariffs, insisted that Mr. Trump was keeping considerable pressure on the Chinese.

I lean toward the former interpretation, for these reasons. First, there’s no sign that the President’s forbearance has won any concessions from China. Second, the tight Trump focus on appeasing holiday shoppers can only signal weakness to Beijing, and feed its hopes that it can prevail in the trade and broader economic conflict by waiting for the President to be replaced by a more conventional, more pliable chief executive in 2020. Third, the delay announcement came just before a batch of absolutely terrible economic data was released by China. And given Beijing’s history of publishing overly bullish figures, it’s a safe bet that its economy is even weaker than most recently indicated. Fourth, Xi Jinping is under pressure not only economically, but politically, due to the rising unrest in Hong Kong.

Fifth, it’s true that from the standpoint of China’s longer-term prospects, maintaining the tariffs on its producer goods matters crucially. For this category includes most of the high tech and other advanced manufactures that represent any economy’s hope for continued technological progress, and therefore faster, healthier growth and a stronger military. But the consumer goods matter politically – because since they’re largely labor-intensive in nature, they’re mass employers. And China’s dictators view high unemployment as a mortal danger to their rule.

Sixth, although it’s clear that U.S. investors hate the trade war, the President needs to remember that, however much he likes to tout the stock market as a barometer of his economic performance, these markets and the real economy are by no means identical. We’ll be getting some key economic data tomorrow, when the Federal Reserve releases its new report on industrial (including manufacturing) production. But so far, the manufacturing numbers have shown that, after a soft patch in the winter, both inflation-adjusted output and capital spending are trending upward again. So unless these and other upcoming data break notably from their most recent patterns, recession – and even further slowdown – predictions will keep looking far-fetched.

Importantly, none of the above analysis means that I’ve changed my view that no China trade deal acceptable for U.S. interests is possible because of insurmountable verification obstacles. Instead, America’s only realistic option is to keep disengaging economically from China – both to reduce U.S. economic reliance on an increasingly hostile power, and to weaken further the only country capable of posing noteworthy national security threats. As a result, however, Washington should pass up no opportunity to inflict pain on China’s economy. And although no one would be shocked if he reversed course yet again before too long, that’s exactly the mistake that President Trump just made with his latest China tariffs delay.

Making News: Podcast On-Line of a New National Radio Interview on Globalism…& More!

Tags

Breitbart News Tonight, China, globalism, Hong Kong, Making News, nationalism, Robert Kagan, South China Morning Post, The Washington Post

I’m pleased to announce that a podcast of a national radio interview from last night is now on-line.  Conducted by the folks at Breitbart News Tonight, it addresses the wide range of issues raised by a (revealingly) humongous article by Robert Kagan defending globalist approaches to domestic and foreign policy (and singling out nationalism as a particular evil) that appeared yesterday in the Washington Post.  Go to this link and click on the March 15 entry with my name for a fascinating conversation that literally has it all – politics, world affairs, economics, history,  philosophy, and more!

Also, it was interesting, to put it mildly to be described as “anti-China” in this article from the Hong Kong-based South China Morning Post by an author who “researches and writes about global, regional and Hong Kong challenges from a Hong Kong point of view.” Hong Kong, you’ll recall, is now controlled by China, and although Beijing has permitted the locals to maintain a modicum of free expression and self government, the range of permitted liberties keeps narrowing all the time.

For the record, I’m perfectly fine with the Chinese people in general, and with much of Chinese culture.  But the country’s government and leaders?  Not nearly so much

And keep checking in with RealityChek for news of upcoming media appearances and other developments.