Im-Politic: Trump-ism Without Trump for America as a Whole?

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"Defund the Police", allies, CCP Virus, China, climate change, coronavirus, court packing, COVID 19, Democrats, election 2020, enforcement, Executive Orders, filibuster, Green New Deal, Huawei, human rights, Im-Politic, Immigration, Joe Biden, judiciary, lockdowns, mask mandate, masks, metals, multilateralism, Muslim ban, Phase One, progressives, Republicans, sanctions, Senate, shutdowns, stimulus, Supreme Court, tariffs, taxes, Trade, trade wars, Trump, unions, Wuhan virus

Since election day, I’ve spent some time and space here and on the air speculating about the future of what I called Trump-ism without Donald Trump in conservative and Republican Party political ranks. Just this weekend, my attention turned to another subject and possibility: Trump-ism without Mr. Trump more broadly speaking, as a shaper – and indeed a decisive shaper – of national public policy during a Joe Biden presidency. Maybe surprisingly, the chances look pretty good.

That is, it’s entirely possible that a Biden administration won’t be able to undo many of President Trump’s signature domestic and foreign policies, at least for years, and it even looks likely if the Senate remains Republican. Think about it issue-by-issue.

With the Senate in Republican hands, there’s simply no prospect at least during the first two Biden years for Democratic progressives’ proposals to pack the Supreme Court, to eliminate the Senate filibuster, or to recast the economy along the lines of the Green New Deal, or grant statehood Democratic strongholds Puerto Rico and the District of Columbia. A big tax increase on corporations and on the Biden definition of the super-rich looks off the table as well.

If the Senate does flip, the filibuster might be history. But big Democratic losses in the House, and the claims by many veterans of and newcomers to their caucus that those other progressive ambitions, along with Defunding the Police, were to blame, could also gut or greatly water down much of the rest of the far Left’s agenda, too.

CCP Virus policy could be substantially unchanged, too. For all the Biden talk of a national mask mandate, ordering one is almost surely beyond a President’s constitutional powers. Moreover, his pandemic advisors are making clear that, at least for the time being, a sweeping national economic lockdown isn’t what they have in mind. I suspect that some virus economic relief measures willl be signed into law sometime this spring or even earlier, but they won’t carry the total $2 trillion price tag on which Democratic House Speaker Nancy Pelosi seems to have insisted for months. In fact, I wouldn’t rule out the possibility of relief being provided a la carte, as Congressional Republicans have suggested – e.g., including popular provisions like some form of unemployment payment bonus extension and stimulus checks, and excluding less popular measures like stimulus aid for illegal aliens.

My strong sense is that Biden is itching to declare an end to President Trump’s trade wars, and as noted previously, here he could well find common cause with the many Senate Republicans from the party’s establishment wing who have never been comfortable bucking the wishes of an Offshoring Lobby whose campaign contributions it’s long raked in.

Yet the former Vice President has promised his labor union supporters that until the trade problems caused by China’s massive steel overproduction were (somehow) solved, he wouldn’t lift the Trump metals tariffs on allies (which help prevent transshipment and block these third countries from exporting their own China steel trade problems to the United States) – even though they’re the levies that have drawn the most fire from foreign policy globalists and other trade and globalization zealots.

As for the China tariffs themselves, the latest from the Biden team is that they’ll be reviewed. So even though he’s slammed them as wildly counterproductive, they’re obviously not going anywhere soon. (See here for the specifics.) 

Later? Biden’s going to be hard-pressed to lift the levies unless one or both of the following developments take place: first, the allied support he’s touted as the key to combating Beijing’s trade and other economic abuses actually materializes in very convincing ways; second, the Biden administration receives major Chinese concessions in return. Since even if such concessions (e.g., China’s agreement to eliminate or scale back various mercantile practices) were enforceable (they won’t be unless Biden follows the Trump Phase One deal’s approach), they’ll surely require lengthy negotiations. Ditto for Trump administration sanctions on China tech entities like the telecommunications giant Huawei. So expect the Trump-ian China status quo to long outlast Mr. Trump.

Two scenarios that could see at least some of the tariffs or tech sanctions lifted? First, the Chinese make some promises to improve their climate change policies that will be completely phony, but will appeal greatly to the Green New Deal-pushing progressives who will wield much more power if the Senate changes hands, and who have demonstrated virtually no interest in China economic issues. Second, Beijing pledges to ease up on its human rights crackdowns on Hong Kong and the Muslims of Xinjiang province. These promises would be easier to monitor and enforce, but the Chinese regime views such issues as utterly non-negotiable because they’re matters of sovereignty. So China’s repressive practices won’t even be on the official agenda of any talks. Unofficial understandings might be reached under which Beijing would take modest positive steps or suspend further contemplated repression. But I wouldn’t count on such an outcome.

Two areas where Biden supposedly could make big decisions unilaterally whatever happens in the Senate, are immigration and climate change. Executive orders would be the tools, and apparently that’s indeed the game plan. But as Mr. Trump discovered, what Executive Orders and even more routine adminstrative actions can do, a single federal judge responding to a special interest group’s request can delay for months. And these judicial decisions can interfere with presidential authority even on subjects that for decades has been recognized as wide-ranging – notably making immigration enforcement decisions when border crossings impact national security, as with the so-called Trump “Muslim ban.”

I know much less about climate change, but a recently retired attorney friend with long experience litigating on these issues told me that even before Trump appointee Amy Coney Barrett joined the Supreme Court, the Justices collectively looked askance on efforts to create new policy initiatives without legislating. Another “originalist” on the Court should leave even less scope for ignoring Congress.

The bottom line is especially curious given the almost universal expectations that this presidential election would be the most important in recent U.S. history: A deeply divided electorate could well have produced a mandate for more of the same – at least until the 2022 midterms.

Making News: New Magazine Article on China’s (Massive) Election Interference Now On-Line…& More!

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Adam Schiff, China, Democrats, election 2020, Mainstream Media, Making News, Nancy Pelosi, Phase One, Russia, The American Conservative, The John Batchelor Show, Trade, trade war

I’m pleased to announce the publication of my latest freelance article – a piece in this AM’s issue of The American Conservative explaining why China’s interference with American politics is much more wide-ranging and successful than Russia’s, despite claims to the contrary by Democrats and by Never Trumpers in the Mainstream Media and elsewhere.  Click on this link to read.

Sharp-eyed RealityChek readers will see that the article closely resembles August 13’s post.  I don’t like recycling material, as the practice is known, but in this case, The American Conservative saw that piece and asked to run a version.  I was happy to comply because, as sharp-eyed readers also will notice, I was able to add new material that’s surfaced in the last two weeks.

Also, I’m slated to return tonight to John Batchelor’s nationally syndicated radio show tonight on the latest developments in the U.S.-China trade conflict.  Since during the CCP Virus era, these segments are pre-recorded, I don’t know when exactly the interview will air.  But you can listen to John’s show every night on-line here. Moreover, as usual, if you can’t tune in, I’ll post a link to the podcast as soon as one’s available.

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

Making News: New Journal Article on the Future of U.S.-China Trade Now On-Line

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American Affairs, China, dispute resolution, Making News, Phase One, tariffs, Trade, Trump

I’m pleased to announce the publication of my latest freelance article – a piece in the new Fall issue of the journal American Affairs whose surprising answer to the question asked in the title about next steps in U.S.-China trade policy is “nothing major is needed.”  Here’s the link.

BTW, although I haven’t yet delved into the entire issue, the subjects and authors of the other articles all look first-rate.  And of course keep checking in with RealityChek for news of upcoming media appearances and other developments.

(What’s Left of) Our Economy: Mixed U.S. Trade News for June – but Little Good on China or Manufacturing

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CCP Virus, China, coronavirus, COVID 19, exports, global financial crisis, goods, Great Recession, imports, manufacturing, merchandise trade, Phase One, Trade, trade deficit, Wuhan virus, {What's Left of) Our Economy

This morning’s report from the Census Bureau on the newest (June) monthly U.S. trade figures is classic mixed bag – at best. The combined goods and services deficit came down for the first time since February, and a several new export growth records were set. Yet the results in China goods and manufacturing trade disappointed and the export records come with big asterisks – the strong growth followed much steeper CCP Virus-related nosedives.

The total U.S. trade gap narrowed by 7.48 percent on month in June, from May’s upwardly revised $54.80 billion to $50.70 billion. The results brought this trade deficit down 16.86 percent year-to-date – from $297.45 billion to $274.31 billion.

The monthly improvement was led by an all-time best 9.38 percent jump in exports – from $144.69 billion to $158.25 billion. (The data, which go back to 1992, show that the previous record was 8.52 percent, set in February, 1994.)

All the same, the June monthly goods and services export total was still the third lowest (after the April and May figures) since August, 2010’s $157.77 billion. In this vein, the June export advance needs to be seen in the context of the all-time worst 31.67 percent cratering of exports that occurred between February and May. Indeed, this three-month nosedive dwarfed that experienced during the gloomiest three months of the Great Recession that followed the global financial crisis (17.12 percent between October, 2008 and January, 2009). Moreover, total exports are down 15.75 percent on a January-June basis.

As for total imports, they rose 4.74 percent sequentially in June from an upwardly revised $199.49 billion to $208.95 billion. The increase, while not as historic as that for exports, was nonetheless the biggest since March. 2015’s 6.71 percent (also affected by natural disruption – that winter’s blizzards).

Yet virus-related distortions were clearly at work here, too, as the June import increase followed a 19.05 percent drop in total U.S. purchases from abroad between February and May. (Interestingly, the Great Recession’s greatest three-month import fall-off was a slightly larger 22.32 percent – and as with exports, took place between October, 2008 and January, 2009.)

For flows of goods specifically, the 5.29 percent June decline in the trade deficit (from an upwardly revised $76.18 billion in May to $72.15 billion) was also the first monthly decrease since February.

June’s 14.49 percent monthly advance in goods exports was another record – significantly exceeding the 9.01 percent registered in March, 1994. Even so, this impressive performance represented another incomplete recovery from a virus-related blow. For it came on the heels of a 35.01 percent collapse in these shipments between February and June – a fall-off much bigger than that seen between the Great Recessionary period between October, 2008 and January, 2009 (21.51 percent).

So it shouldn’t be surprising that June’s $102.87 billion goods export figure was the third lowest (again, after April and May) since April, 2010. Moreover, on a year-to-date basis, goods exports are 16.74 percent below 2019’s levels.

Goods imports were up 5.42 percent month-to-month in June. As with total trade, this change was considerably smaller than that for exports, and below the record of 7.78 percent set in March, 2015. (Those blizzards again.) But it, too, was CCP Virus-distorted, since it followed a 16.42 percent fall from Feb. through May.

The US-#China goods #trade deficit rose by 6.46% on-month in June, from $26.96 billion $28.40 billion. The only good news embedded in this result is that the monthly rate of growth slowed maredly from May’s 19.99 percent. The June number, moreover, was the highest since last October’s $31.26 billion.

Most discouraging – U.S. merchandise goods exports to the recovering economy of the People’s Republic were down 4.14%, month-to-month, from $9.64 billion to $9.24 billion. Especially important – overall U.S. goods sales to China on a January-June basis are running nearly 16 percent below their 2017 level, the baseline year for judging Beijing’s U.S. import commitments under the Phase One trade deal. The total import number doesn’t necessarily mean that China is way behind on this pledge, since it covered many specific sectors of the economy. But so many sectors are covered that the lag does raise important treaty violation questions.

U.S goods imports from China rose 2.85 percent sequentially in June, from $36.60 billion to $37.64 has also slowed significantly from the 17.79% monthly jump in May and the nearly 57 percent surge in April. That month’s performance reflected the restart of China’s factories following widespread CCP Virus-related shutdowns that depressed these sales to the US by 40.49 percent between January and March.

Manufacturing’s June trade figures were even worse. The deficit increase 5.30 percent over May’s $84.68 billion total, and the new $89.16 billion mark was the biggest since last October’s $92.70 billion.

Between May and June, manufacturing exports grew a healthy 15.46 percent, from $61.88 billion to $71.45 billion. But the much greater amount of imports expanded strongly as well, from $146.55 billion to $160.61 billion, or 9.59 percent.

Year-to-date, though, the manufacturing trade deficit is off by 4.53 percent, with exports running 17.17 percent below comparable 2019 levels and imports 11.24 percent less.

Making News: Podcast Now On-Line of Last Night’s China Trade War National Radio Interview

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China, Gordon G. Chang, Making News, national security, Phase One, The John Batchelor Show, Trade, trade war

I’m pleased to announce that the podcast is now on-line of last night’s interview on John Batchelor’s nationally syndicated radio show on the state of America’s economic conflict with China.  Click on this link to hear a timely discussion with me, John, and co-host Gordon G. Chang on which power has the upper hand in a clash that will greatly influence America’s national security as well as future prosperity.

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

Making News: Back on National Radio Tonight Talking China Trade

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China, Gordon G. Chang, Making News, national security, Phase One, The John Batchelor Show, Trade, trade war

I’m pleased to announce that I’m slated to return tonight to John Batchelor’s nationally syndicated radio show tonight to talk about where the U.S.-China economic conflict stands.  Although it hasn’t gotten as much news coverage as the CCP Virus or the recession or race relations, America’s dealings with its strongest economic rival will go far toward making or breaking its future prosperity and national security.  And you can listen to a timely discussion of these issues with me, John, and co-host Gordon G. Chang, focusing on the Phase One trade deal, by clicking here.

As usual, lately, because of pandemic conditions in New York City, the show’s home base, the interview was recorded this afternoon, and I don’t know exactly when my segment will air.  But the entire program runs from 9 PM-12 PM EST, and tuning into all of it will be well worth your while!

If you can’t listen tonight, I’ll post a podcast as soon as one’s available.  And keep checking in with RealityChek for news of upcoming media appearances and other developments.

Im-Politic: Bolton’s China Derangement Syndrome

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China, decoupling, election 2020, Huawei, Im-Politic, John R. Bolton, Lighthizer, Made in China 2025, national security, Phase One, Robert M. Lighthizer, sanctions, tariffs, tech, Trade, trade enforcement, trade war, Trump

How are John R. Bolton’s new kiss-and-tell revelations to date about his tenure as President Trump’s national security adviser truly deranged? In at least three big, related ways when it comes to China.

First, (according to this most comprehensive statement of his views) Bolton apparently was too busy marketing this policy potboiler to have bothered reading the text of the trade deal with China Mr. Trump signed in mid-January. Rather than the agreement entailing “less…than met the eye,” it entailed much more. Not only did the Phase One deal require China greatly to boost its purchases of U.S.-made advanced manufactures (in addition to the agricultural products on which Bolton obsesses). It also created dispute resolution procedures – meaning an enforcement mechanism – completely tilted in America’s favor.

As I’ve explained, when all procedures are exhausted, China is only entitled to pull out of the entire agreement if it’s unhappy with the results – an extreme unlikelihood given China’s heavy reliance on selling to the U.S. market to maintain growth and employment that Beijing sees as being both political and economically important. The United States has the same ultimate option, but its threats to do so would be highly credible, given the huge net losses it suffered from pre-Trump China trade policies.

Moreover, the President secured these benefits while maintaining steep U.S. tariffs on literally hundreds of billions of dollars worth of prospective Chinese exports to America – and especially on those high value manufactures that have benefited most from the Made in China 2025 program and other Chinese predatory economic policies, and whose development pose the greatest threats to U.S. national security as well as prosperity. Also crucial – Bolton criticizes his former boss for agreeing to China’s insistence that he refrain from imposing new tariffs in return for restarting the trade talks. But the structure of the trade agreement leaves this option entirely open to the United States – and, in effect, with impunity. 

By the way, the results of the trade talks also demolish Bolton’s uber-claim that President Trump’s China policies stemmed solely from his desire for reelection, and the related suggestion that Mr. Trump believed that a purely cosmetic agreement would serve his political purposes much more effectively than reaching a deal heavily favoring U.S. interests.

They similarly leave as a smoking ruin Bolton’s allegation that the President continued to flatter Chinese leader Xi Jinping after the CCP Virus broke out because he was desperate to preserve the trade agreement. If anyone felt such desperation, it was Xi – whose regime hasn’t even tried to use the virus’ damage to China’s own economy as an excuse for at least temporarily ignoring Phase One’s import requirements.

Bolton’s second deranged claim follows on directly from that last point. On the one hand, he accuses the President of being completely indifferent to his master plan of fitting “China trade policy into a broader strategic framework,” and complains that “we struggled to avoid being sucked into the black hole of U.S.-China trade issues.”

On the other hand, he credits Mr. Trump with appreciating “the key truth that politico-military power rests on a strong economy. Trump frequently says that stopping China’s unfair economic growth at America’s expense is the best way to defeat China militarily, which is fundamentally correct.”

Yet as just detailed, Bolton heaps scorn on major Trump achievements that have gone far toward weakening China’s economy vis-a-vis America’s. Moreover, such Trump moves also include punishing sanctions on Chinese telecoms giant Huawei that Bolton bizarrely views as undeserving of mention.

The final evidence of Bolton’s derangement: his whining about the President’s decision-making style. According to the author, Americans should be up in arms because Mr. Trump’s advisers have been “badly fractured intellectually” and because “Trade matters were handled from day one in a completely chaotic way.” Indeed, the Trump leadership style, Bolton moans, “made my head hurt.”

To which any minimally intelligent and/or adult reader should respond “So what?” Leaving aside that it was never the President’s job to please whatever otherwordly expectations Bolton (a longtime Washington operator who obviously knows better) claims to have had about policymaking processes, the results have been entirely coherent and clear to anyone caring actually to look. Whatever uncertainties Mr. Trump may have had about choosing China trade tactics and whose advice to follow, he has plainly put U.S. Trade Representative Robert E. Lighthizer and other so-called hawks in command, and the results have been a wide variety of measures that have both gut-punched China’s economy (see, e.g., here) and steadily decoupled America’s economic fortunes from this dangerous dictatorship. (See, e.g., this post.)

Unless the rest of Bolton’s forthcoming book is completely different and indeed vastly more coherent than the portions made public to date (and why would he and his publicists want to lead with any material they believed wasn’t bullet-proof), his tell-all will only be important for shedding light on a single question: Will the author be best remembered as a dangerously incompetent armchair warhawk who helped lead the United States into a major disaster in Iraq, or as a wildly flailing freelance wannabe hitman who tried to sabotage an urgently needed turnaround in America’s approach to China?

(What’s Left of) Our Economy: Full Virus-Distortion Mode for New U.S. Trade Figures

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aerospace, Boeing, CCP Virus, China, civilian aircraft, coronavirus, COVID 19, decoupling, exports, imports, manufacturing, manufacturing trade deficit, Phase One, Trade, Trump, Wuhan virus, {What's Left of) Our Economy

Here’s a heck of a way to start a blog post: On the one hand, it’s a relief to.be writing about something other than the shameful George Floyd killing and its too-often-violent aftermath, and focus on an economic issue like the latest U.S. trade figures. On the other hand, because of the CCP Virus and the deep U.S. and global recessions (and possibly worse) it’s triggered, it’s hard to make the case that the new numbers (for April) even say much of anything useful about that month, much less about how trade flows and their impact on the economy might evolve going forward.

Even less serious is the notion that they shed light on the past, present, or likely future effectivness of President Trump’s Phase One trade deal with China – which incidentally only went into effect in mid-February.

All the same, speaking of China, the month-on-month change was discouraging at least on the surface. The goods deficit nearly doubled between March and April – from $11.83 billion to $22.27 billion. The last change of that magnitude came back in April, 1989, when trade flows were orders of magnitude smaller, and therefore huge fluctuations much easier to generate. Moreover, this trade gap bounceback followed two straight months of dramatic decline that brought the shortfall to its lowest level since March, 2004.

Worth noting in this regard for additional context. On a year-to-date basis, the U.S. goods shortfall with China is down by 28.55 percent. That’s more than three times greater than the 8.17 percent decrease in the global U.S. merchandise deficit, and more than six times faster than the 4.52 shrinkage of America’s worldwide non-oil goods gap, which is a better global proxy for U.S.-China trade.

In other words, here’s clear evidence of major progress toward President Trump’s unstated but apparent goal of decoupling the U.S. and Chinese economies.

U.S. merchandise exports to the economy of the People’s Republic, which by most accounts has started recovering steadily from its own pandemic setback – did rise by 7.94 percent. But the much greater value of imports shot up by 56.88 percent. That’s the biggest percentage increase ever. In second place? The 49.92 jump back in January, 1986, when trade flows were miniscule.

Year-to-date, U.S. goods exports to China are down by 9.03 percent – a little less than overall U.S. goods exports (9.46 percent) and than overall U.S. non-oil goods exports (10.86 percent).

The comparable imports figures: America’s merchandise purchases from China are off by 23.88 percent. That’s more than twice decrease of its total goods imports (9.03 percent) and of its non-oil goods imports (8.45 percent).

In other words, here’s clear evidence that the decoupling and contraction of the bilateral deficit is taking place exactly where it should from an American standpoint – on the import side.

Some other notable takeaways from the April trade report:

>The combined goods and services trade deficit soared sequentially in April by 16.66 percent, to $49.41 billion. That’s the highest monthly total since last August’s $50.78 billion, and the biggest such rise since…March’s revised 22.11 percent.

But that revision is a story in and of itself. The originally reported $44.42 billion figure for the month is now estimated at just $42.34 billion – 4.68 percent lower. That’s an unusually big change, and indicates some major, CCP Virus-related data-gathering and analysis problems.

Year-to-date, the total trade deficit has fallen by 13.36 percent.

>Total U.S. exports took by far the biggest hit in April. plunging by 20.46 percent, from an upwardly revised $190.18 billion to $151.28 billion. That’s the lowest monthly total since the $150.01 billion recorded in April, 2010, when the last economic recovery was still young.

Moreover, the monthly nosedive was both nearly twice as bad as the old record holder of 10.19 percent set in CCP Virus- and shutdown-impacted March, and nearly doubled the previous all-time high (going back to 1992) of 5.50 percent set in September, 2001 – the month of the September 11 terror attacks.

Goods exports fell even faster – by 33.71 percent, from a downardly revised $127.72 billion to $95.52 billion. This contraction has just obliterated the previous record of 10.03 percent, from Great Recession-y December, 2008. (For comparison’s sake, goods exports declined by 5.80 percent in September, 2001).

>Combined goods and services imports were down dramatically, too, on month in April. But although an all-time high, the 13.36 percent decline — from an upwardly revised $232.52 billion to $200.69 billion – was much smaller than that for exports. In addition, it only slightly exceeded the previous monthly record of 11.58 percent, from the Great Recession month of November, 2008. Further, as with exports, the new April monthly total was also the lowest since April, 2010.

April’s monthly goods import decrease was only a bit greater – 13.62 percent, from an upwardly revised $193.74 billion to $167.35 billion. The monthly level was the lowest since November, 2010 and the rate of decrease just a hair above that of the aforementioned November, 2008.

>The longstanding and huge U.S. manufacturing trade deficit also grew sequentially in April – by 9.63 percent, from $75.08 billion to $82.31 billion..That was the biggest monthly total since October, 2019’s $92.70 billion.

Manufacturing exports sank by 30.51 percent on month in April, while the much larger value of imports was 12.78 percent lower.

Interestingly, the sequential worsening of the manufacturing trade shortfall was dominated by the country’s civilian aerospace industry – once far and away America’s trade surplus and surplus growth leader. But between March and April, this surplus tumbled by 73.21 percent, from $4.05 billion to $1.09 billion. The $2.97 billion decrease accounted for fully 41 percent of the widening of the manufacturing trade gap, and stems from the combined impact of aerospace giant Boeing’s continuing safety woes and production cutbacks, the virus-induced global recession, and its especially great impact on the travel industry.

Year-to-date, moreover, the manufacturing trade gap has narrowed by 6.62 percent, from $324.59 billion to $303.59 billion.

(What’s Left of) Our Economy: More Ridiculous Myths About Trump’s China Trade Policies

Tags

CCP Virus, China, coronavirus, COVID 19, election 2020, enforcement, exports, Hong Kong, imports, Phase One, Trade, trade war, Trump, Wuhan virus, {What's Left of) Our Economy

Time to scotch two myths that have come up recently about U.S.-China relations that are close to a class in themselves in terms of weirdness.

Myth Number One: President Trump is clinging to the “Phase One” trade deal he signed in January because he thinks its continuation is crucial to his reelection.

No less than every single reason cited is wrong. First is the suggestion that it’s a lousy deal but that Trump needs it because it’s one of the only results of his China or overall trade record that can be called an “accomplishment” to any extent.

Actually, even leaving aside Mr. Trump’s record of significant success in disentangling the U.S. economy from China’s (which admittedly isn’t universally viewed as a plus), the trade deal is undoubtedly a major success on terms every American except agents of the multinational Offshoring Lobby should cheer. As I’ve explained, it not only committed China to buying an enormous amount of U.S. goods way above and beyond what its import patterns suggested. It also contained an ingenious enforcement system likely to hold China’s feet to the fire by leaving Beijing only the option of pulling out of the entire deal if it’s dissatisfied with any U.S.actions – including new American tariffs to punish China for treaty violations.

In sharp contrast to their predecessors under pre-Trump administrations, the President’s negotiators acted like they understood that China’s heavy dependence on exporting to the U.S. market would prevent Beijing from walking away – for fear of losing any remaining access. But because the United States needs China’s market much less, a U.S. withdrawal would be a supremely credible threat.

It’s true, as so many critics have charged, that China’s promises in the Phase One deal to cease or cut back on its wide-ranging predatory trade and related practices are pretty general. But the lopsided nature of the enforcement mechanism provides a great way to solve this problem. If Washington decides that Beijing isn’t living up to even vague promises, it can retaliate however harshly it wishes. The only legal option open to China is ending the entire agreement. None of the kinds of tit-for-tat retaliations that Beijing used so skillfully to spark domestic U.S. complaints about the President’s earlier tariffs are authorized. If China tries going down this road, it would likely face even stiffer U.S. tariffs.

Slightly more reasonable – but only slightly – have been observations that Mr. Trump urgently needs the extra Chinese purchases to sustain his claim of guiding the American economy to impressive levels of prosperity. Make no mistake: The export promises specified in Phase One represent valuable, production-based growth opportunities – the more so since 40 percent of those exports were specified to be manufactures, which add so much value to the American economy, as well as create so many family wage jobs.

But the economy – including the trade-sensitive manufacturing sector – was climbing out of a soft patch by the end of last year. Now that the CCP Virus has induced a prolonged national economic shutdown, any growth boost would of course be welcome, including from exports to China. But the downturn has been so gargantuan, and so heavily concentrated in the personal services sectors, that China trade has receded far into the background for the time being. Nor will it matter much to any substantial recovery – which will mainly require a rebound in those same personal services.

But couldn’t a collapse of the Phase One deal – for whatever reason – still threaten the President’s cherished goal of a strongly rising stock market? No, and because investors also appear aware of the trade deal’s marginality to the real economy for time being – and, it seems, especially keenly. In fact, their behavior as Sino-American tensions have risen recently for all sorts of reasons (the virus, China’s apparently impending further crackdown on Hong Kong) contrasts strikingly with their reactions to the trade war’s previous ups and downs. Then, they traded – often frantically – on the resulting headlines. Since the March bottom, though, it’s been a decidedly seller’s market.

Which leads to the second myth that should be headed for the circular file – that the Chinese know they have the upper hand on the President at least during this election year, and that they’re about to use an obscure clause in the deal to get them off the import hook. I’ve always doubted that anyone outside top Chinese leadership circles has any handle on what’s going on and being thought in Chinese leadership circles.

Luckily, howeve, there’s no need for entrails-reading. What matters most of all are Chinese actions. And the record shows that Beijing has never brought up the so-called force majeure clause (see Article 7.6 at the very end of the treaty text), which could enable China to suspend promised increases of imports due to extraordinary circumstances like the virus – which continues to take a heavy toll on its own economy. Indeed, at the recent meeting of China’s rubberstamp legislature, Premier Li Keqiang, second in command to China’s supremo Xi Jinping, explicitly affirmed China’s commitment to meet its Phase One obligations. 

Because that legislature has now passed the newly proposed Hong Kong crackdown law, Mr. Trump will face the challenge of developing a response. His options are wide-ranging, and predicting them seems a thankless task. What does seem certain is that his choices will be accompanied by a new round of bizarre China policy myths.   

Our So-Called Foreign Policy: A Cheer and a Half for Trump’s New China Strategy Document

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alliances, allies, America First, CCP Virus, China, coronavirus, COVID 19, decoupling, globalism, Josh Rogin, liberal global order, Our So-Called Foreign Policy, Phase One, stock markets, technology, The National Interest, Trade, transactionalism, Trump, Washington Post, Wuhan virus

When over breakfast this morning I read Josh Rogin’s Washington Post column on the Trump administration’s new China strategy statement, I was pretty pleased. It’s been a long time since I viewed the intra-administration disagreements on the subject that its release has supposedly resolved as major problems in the China strategy overhaul that President Trump has sought, The tough and, more important, smart Phase One trade deal signed in mid-January was a convincing sign that the “doves” had been marginalized, but only one sign. The new statement itself describes many others. At the same time, the more basic agreement within Mr. Trump’s team, the better.

When I finally read the actual statement a little later, I was less pleased. It’s true that the President is both fully woke to the China threat, and that he’s reversed or overturned many of the disastrous mistakes made by his predecessors on a variety of fronts – including not only trade but technology, foreign investment, and exchange programs in particular. Moreover, the evidence is multiplying that the disaster created by the CCP Virus will lead to still tougher and, more important, still smarter measures. (A further crackdown on U.S. stock exchanges listings of Chinese entities is just one example.)

But the statement also made clear that Mr. Trump hasn’t made the clean break with previous globalist approaches to China and related aspects of American foreign policy that I’ve been advocating and that, as I’ve written, could lead to serious and needless dangers down the road. And as with much of the rest of the Trump framework, the big problem has to do with the role assigned to U.S. allies and alliances. Specifically, it’s still way too big, and not different enough from the globalist approach he’s rightly slammed verbally.

Not that “United States Strategic Approach to The People’s Republic of China” was devoid of America First-y ideas. It was great, for example, to see the administration reaffirm “Our approach is not premised on determining a particular end state for China. Rather, our goal is to protect United States vital national interests” (even though the United States keeps demanding, at least rhetorically, major structural reforms in China’s trade, technology, and other economic policies – demands I’ve explained are fruitless because of impossible monitoring and enforcement challenges).

Similarly encouraging, the top two vital interests identified: “(1) protect the American people, homeland, and way of life; (2) promote American prosperity….”

I also really liked “[T]he United States responds to the PRC’s [People’s Republic of China] actions rather than its stated commitments. Moreover, we do not cater to Beijing’s demands to create a proper ‘atmosphere’ or ‘conditions’ for dialogue. Likewise, the United States sees no value in engaging with Beijing for symbolism and pageantry; we instead demand tangible results and constructive outcomes.”

Indeed, the document adds, “We acknowledge and respond in kind to Beijing’s transactional approach with timely incentives and costs, or credible threats thereof.” This kind of transactionalism – expecting proposed foreign policy measures above all to create specific, measurable short-term benefits for the United States, rather than focusing on more ambitious steps that might turn out even better farther down the road, but whose success is far less certain – is a key tenet of America First foreign policies (as I’ve argued in the above linked National Interest article). Therefore, this explicit mention and endorsement of the term is most welcome (though it needs to be enshrined as a pillar of U.S. diplomacy elsewhere, too).

The statement’s treatment of transactionalism is closely related to its clear skepticism about another dubious globalist concept – though in this instance it’s more important for what it doesn’t say than for what it does: “[C]ompetition necessarily includes engagement with the PRC, but our engagements are selective and results-oriented, with each advancing our national interests….” I read this passage as an implicit announcement that the United States will no longer be seeking any particular kind of “relationship” with China, a gauzy goal that I’ve explained (on Twitter) creates powerful pressures to sacrifice concrete objectives in the here and now in the usually mistaken belief that the other party will feel obliged to make comparable sacrifices going forward – at some point.

And all this excellent material helps make clear why I’m so disappointed in the document’s numerous bow to globalism’s shibboleths. Two stand out in particular, and they’re so intimately intertwined as to be practically two sides of the same coin: the idea that it’s crucial for the United States to uphold something globalists (and the authors of this document) call a “rules-based international order,” and the maxim that critical building blocks of this order are America’s security alliances. The big problem from an America First standpoint with these notions? Once you buy into them, you’re back in Relationships-Uber-Alles-Land.

So I was distinctly unhappy to read passages like:

“[T]he United States does not and will not accommodate Beijing’s actions that weaken a free, open, and rules-based international order. We will continue to refute the CCP’s narrative that the United States is in strategic retreat or will shirk our international security commitments. The United States will work with our robust network of allies and likeminded partners to resist attacks on our shared norms and values, within our own governance institutions, around the world, and in international organizations.”

Indeed, the lionization of America’s international security commitments completely ignores problems that President Trump has rightly spotlighted – like flagrant defense free-riding, diplomatic fence-sitting, and trade policies that have ripped off America nearly as much as China’s. Just as thoroughly ignores problems that have largely escaped Mr. Trump’s notice – like the recent, rapidly growing nuclear war risks the United States has been running in places like the Korean peninsula and Eastern Europe precisely because its allies do so little to defend themselves. Does the Trump administration really believe it can count on these countries to help fight China if shooting starts?

Meanwhile, the similar shout-out to international organizations overlooks the administration’s warning in this very same document about the naivete of assuming that “engagement with rivals and their inclusion in international institutions and global commerce would turn them into benign actors and trustworthy partners.”

Another way to put this critique: The document pays no attention to the fundamental problem with rules-based order worship. In the last analysis, it’s never been based on adherence to rules – i.e., a consensus on what is and is not acceptable international behavior. It’s been based on a willingness of the so-called free world to allow the United States to bear most of the costs and risks of providing them with security and prosperity. Those costs and risks, however, have become unaffordable and unacceptable for the United States, and its allies have displayed no serious signs of helping carry the load.

Let’s end on a happier note: The new China document promises that the United States will judge China by its deeds and not by its words. And since despite the references to alliances and international orders, these considerations so far haven’t much inhibited the administration from hitting China ever harder, especially on the trade and technology fronts, focusing on its deeds seems like the best way to evaluate its China policy, too. 

In fact, here’s possibly the strongest proof of that pudding.  The document doesn’t once mention the aim or even the concept of “decoupling” – the notion that the United States should disengage economically from China as fast and as thoroughly as practicable.  But decoupling – indeed, big time decoupling – is exactly what’s been taking place during the age of Trump.