Our So-Called Foreign Policy: The Unanswerable Question Driving Biden’s China Policy

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Antony J. Blinken, Asia-Pacific, China, foreign policy, globalism, Indo-Pacific, liberal global order, national security, Our So-Called Foreign Policy, rules-based global order, strategy, Taiwan, Xi JInPing

Two of the first maxims of strategy in world affairs (and probably in some other realms, too) are that (a) intentions and capabilities are fundamentally different and that (b) the former are much harder to gauge than the latter. These rules of the road in turn lead promptly to a key lesson: The greater the extent to which plans are based on intentions, the likelier they are to produce failure.  

The difference between measuring intentions and capabilities and the resulting policy implications matters crucially these days. For the evidence keeps mounting that the Biden administration is relying more on gauging China’s intentions in formulating its approach to the People’s Republic (PRC) and less on the much sounder foundations of assessing Beijing’s wherewithal and, most important, how this capacity’s dangers to specific U.S. interests are evolving – including over Taiwan, the newest and scariest bilateral flashpoint.  . 

The reason for focusing on capabilities is no great mystery. Figuring out how strong or weak a country’s military and economy are entails dealing with matters that are readily measurable to begin with. Although dictatorships like China’s in particular often go to great lengths to present misleading economic data, and misinformation about the state of their armed forces, the PRC’s competitiveness can be judged pretty dependably by tracking its interactions with other economies – e.g., its export performance, its attractiveness as a magnet for foreign investment. And U.S. intelligence is good enough to determine roughly how many soldiers and weapons, and the quality of the latter, that China could bring to bear in various contingencies.

Even more obvious – and important – is the case for deciding on U.S. interests. For whatever a potential adversary’s overall capabilities, why should Americans care about those that can’t plausibly affect whatever goals and missions that the United States decides it values?

Identifying what China’s leaders want is a qualitatively different and more formidable challenge. Good intelligence can provide some valuable information, as can face-to-face dealings with Beijing’s representatives. But ultimately, measuring intentions is an exercise in mind-reading, and it’s rendered all the tougher because of the secretiveness of China’s political system and the cultural gaps dividing East Asian countries like China’s and their western counterparts like the United States.

Which is exactly why the Biden administration’s strategy toward the PRC is so troubling. A heavy emphasis on intentions is clear from at least two of its features.

The first is its obsession with playing word games to define how it wants the relationship with China to develop, which in turn faithfully reflects the globalist position that achieving various types of relationships with allies, adversaries, and countries in between should be a high foreign policy priority. As I’ve written previously, that’s a great way to substitute form for substance, and to rationalize failure to achieve or preserve particular valued objectives in the here and now for the sake of payoffs stemming from a sense of mutual obligation that could be entirely unilateral and imaginary, over a time frame that tends to keep lengthening. Think of it this way – it’s easy to avoid rocking the boat if you don’t care who owns or controls the vessel.

The Biden administration, however, has taken relationship fetishizing to a whole new level. How else could one reasonably characterize all the time and effort it’s devoted to terming U.S. dealings with Beijing as a “competition,” or an “extreme competition,” or “a steep competition,” or a “stiff competition” (see here for the last two) or a relationship that will be, in Secretary of State Antony J. Blinken’s words, “competitive when it should be, collaborative when it can be, adversarial when it must be.”

Why do the Biden-ites think anyone cares or should care? In particular, why do they think China cares or should care? Do they have any evidence of much thinking in Beijing along these lines? Or that any Chinese definition of a desirable relationship relationship would be remotely acceptable to the United States?

If anything, the President’s declaration that Chinese dictator Xi Jinping “is deadly earnest on [China] becoming the most significant, consequential nation in the world. He and others, autocrats, think that democracy can’t compete in the 21st century” can only mean he thinks that win-win ties are the last things on Beijing’s mind. Unless Mr. Biden believes that Xi is just interested in purely verbal bragging rights?

The second feature of Biden foreign policy that reveals a potentially dangerous emphasis on intentions is the refusal of the President and his top aides to define U.S. interests with any specificity – or even to speak concretely about the very idea of purely U.S. interests.

Their rhetoric is peppered with phrases like Mr. Biden’s claim that during his first phone call with Xi, “I made absolutely clear that I will defend American interests across the board.” But you’ll search in vain for meaningful elaborations beyond “I also told President Xi that we’ll maintain a strong military presence in the Indo-Pacific, just as we do with NATO in Europe — not to start a conflict, but to prevent one” – which of course refers to American commitments that have been in place for decades, not to anything new, much less that reflects concerns heightened for any reason.

What you will find – ad nauseam – are statements like Blinken’s declaration that the United States is “committed to leading with diplomacy to advance the interests of the United States and to strengthen the rules-based international order. “That system is not an abstraction. It helps countries resolve differences peacefully, coordinate multilateral efforts effectively, and participate in global commerce with the assurance that everyone is following the same rules. The alternative to a rules-based order is a world in which might makes right and winners take all, and that would be a far more violent and unstable world for all of us.”

Blinken of course might be entirely right on the merits. But it was more than a little interesting that the Chinese response to his remarks – which took place at that confrontational bilateral March meeting in Anchorage, Alaska – emphasized that the rules-based order is nothing more than a system selfishly “advocated by a small number of countries”; that “The United States itself does not represent international public opinion, and neither does the Western world;” and no doubt most important, “the United States does not have the qualification to say that it wants to speak to China from a position of strength.”

In other words, as the Chinese see it, whatever Washington’s view of “right,” what matters is that it lacks the might to create or maintain it over China’s objections – which evidently are legion.

None of this is to say that specifying concrete interests is a guarantee of foreign policy success. But how else can that goal be achieved without setting out objectives considered vital to the nation’s security and prosperity, communicating them abroad in no uncertain terms, and ensuring that enough power is available to prevail when they’re threatened whether Americans guess correctly about potential adversaries’ intentions or not?

And these questions have moved to the forefront lately because Sino-American tensions are rising steadily over Taiwan – the world’s new leader in semiconductor manufacturing technology, which near neighbor China views as a renegade province. Worries are understandably rising that Washington and Beijing might stumble into a conflict that neither truly seeks. If the Biden administration could straighten out its own thinking about Taiwan and other U.S. interests in the Indo-Pacific region, the odds of such an unnecessary catastrophe could at least be considerably reduced.    

 

Following Up: A New Warning on U.S. Allies’ Reliability

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alliances, allies, Asia, Asia-Pacific, Biden, China, deterrence, Following Up, Indo-Pacific, infotech, multilateralism, national security, Nonproliferation Policy Education Center, semiconductors, Sheena Greitens, Taiwan, Taiwan Semiconductor Manufacturing Company, tech, TSMC, Xi JInPing, Zack Cooper

Well isn’t this a kick in the pants for the Biden administration – and by extension for all Americans?. No sooner did the President give a major speech to U.S. allies on his plans to return them to the center of American foreign policy-making because they’ll be such crucial assets in vital efforts to achieve essential goals like coping with China’s rise, than a new study comes out reporting that these hopes could be in vain. 

Specifically, the United States’ allies in Asia could well stay on the sidelines in what’s arguably become the most important potential showdown with China of all: ensuring Taiwan’s independence.

As known by RealityChek regulars, keeping Taiwan free of Beijing’s control has become so pressing for two reasons. First, Chinese dictator Xi Jinping is sounding and acting more determined than ever to “reunify” what he and his predecessors have regarded as a breakaway province by whatever means necessary – including using force. And second, a Taiwanese firm, Taiwan Semiconductor Manufacturing Corporation (TSMC), has recently grabbed the global lead in actually producing (as opposed to designing) the world’s most advanced semiconductors. If China manages to control TSMC’s capabilities, it could use them to build the electronic devices and defense systems that would secure substantial technological and military superiority over the United States.

President Biden is of course correct in arguing that the more allies the United States can mobilize, the easier it will be to handle China’s increased aggression and economic predation. But that claim inevitably assumes that these allies will actually join with America to push back against China, and especially that Washington can count on their assistance if heaven forbid the missiles and bullets start flying.

And this assumption is exactly what’s questioned in a paper recently published by the Washington, D.C.-based Nonproliferation Policy Education Center. According to authors Zack Cooper and Sheena Greitens, there’s not a single country in the Asia-Pacific (or, as it’s now officially called by the U.S. government, the Indo-Pacific) region that’s sure to stand shoulder to shoulder with American forces as they seek to actually repel either a Chinese attack on Taiwan, or an effort by Beijing to turn the island into a satellite through coercive means short of full invasion, like limited military strikes, cyber-attacks, or an embargo.

In fact, write Cooper and Greitens, these allies not only would likely balk at sending their own ships, plans, and troops to buttress American forces. To varying degrees, they’d be reluctant to allow the United States the kind of access to their military bases needed to prevail over China in any of the above contingencies.

The authors believe that sufficient allied cooperation can be generated if the United States begins (ASAP!) “a series of detailed discussions with key allies about their roles in different contingency scenarios involving China and Taiwan (and for some, the South China Sea).” That advice sounds fine as far as it goes.

But the need in the first place for “detailed discussions” on such dangerous and perhaps rapidly growing threats – which would leave all countries in the region far less prosperous and prosperous if not deterred or beaten back – makes appallingly clear just how dysfunctional these alliance relationships have become. Moreover, you can be sure that the longer and more detailed these discussions become, the more allied doubts they’ll reflect, and the less likely they’ll be to produce the kind of certainty when push comes to shove that the United States or Taiwan will need.

I don’t view Cooper and Greitens analysis as gospel. But in my experience, the Nonproliferation Policy Education Center has done serious work on Asian security issues in the past, and the larger project of which this essay is a part has had support from sponsors across the political spectrum. So its warning is worth taking seriously, and if its arguments are on target, the problem they describe will resist easy solution – and not just because truly worthwhile agreements with the allies could take years to negotiate, but because the U.S.-based semiconductor production capacity needed to reduce Taiwan’s importance will take just as long to create.

Luckily, as indicated in the piece linked just above, both Congress and the new administration claim to recognize the need – at least rhetorically – to restore cutting-edge U.S. competitiveness in this and other information technology manufacturing. In the meantime, the Biden administration should of course try maintaining enough of a semblance of allied unity vis-a-vis China to give Beijing pause over Taiwan. Hopefully, Washington  can even inspire some genuine support for preserving the island’s independence.

But as I’ve written previously (in the afore-linked National Interest piece), the greater the emphasis placed on resolving the semiconductor challenge via the homegrown solution of reviving the domestic industry, instead of relying mainly on protecting Taiwan’s security militarily, the better the odds of maintaining American security and prosperity. And in any necessary negotiations with the allies, the sooner President Biden abandons his globalist faith in apologetics and gauzy preaching, and acknowledges the need for at least some of the hard-bargaining Trump-ian “transactionalism” he’s decried, the better.  

Our So-Called Foreign Policy: “Anonymous” Inanity on China

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Atlantic Council, Biden, China, China Strateg Group, decoupling, Donald Trump, Foreign Affairs, George F. Kennan, globalism, Iran, Our So-Called Foreign Policy, The Long Telegram, The Longer Telegram, X Article, Xi JInPing

How lucky for President Biden that, just as he’s announced a wide-ranging review of U.S. China policy (after he and his supposedly fellow foreign policy mavens spent the entire presidential campaign lambasting Donald Trump’s initiatives and clearly conveying that they knew exactly how to fix these alleged blunders), a wavelet of advice has appeared offering answers, at least at the broad brush level.

How unfortunate for the United States, though, that so little of this advice has any prospect of advancing and defending American interests vis-a-vis China, much less improving on the Trump efforts to neutralize the China threat. In fact, if Mr. Biden follows his longstanding Beijing-coddling instincts and generally heeds the authors, the United States is bound to become more vulnerable and more beholden to the People’s Republic than ever.

Two blueprints for the President to follow have emerged in recent weeks: a memo from an anonymous author who clearly views him or herself as a latter day George F. Kennan; and a collective effort from a “China Strategy Group” dominated by Silicon Valley figures (and co-chaired by Google co-founder Eric Schmidt). The first is the most easily disposed of, and will be the subject of today’s post. Tomorrow I’ll discuss the Group’s China grope.

Kennan, in case you’ve forgotten, was the mid-twentieth century American diplomat whose analyses of Soviet power and behavior (including an early 1946 memo written during his stint in Moscow that became known as “The Long Telegram”) powerfully shaped the Cold War strategy of containment adopted by Washington. He was by no means perfect, but in my view amply deserves his reputation as one of the most incisive foreign policy analysts in American history – which is why if he read the new and arrogantly titled “The Longer Telegram,” he’d probably be hard-pressed to decide whether to laugh or cry.

The most eye-catching proposal made by the author (whose desire for anonymity apes that displayed Kennan in a 1947 article that grew out of “The Long Telegram” that he published in the journal Foreign Affairs as “X”): urging that rather than focus on broadly changing China’s totalitarian system of government and control over the economy, or targeting the Chinese Communist Party (CCP) in particular as Public Enemy Number One, U.S. policy recognize Chinese leader Xi Jinping and his inner circle as the dominant game changer that has turned the People’s Republic and its practices from a “manageable” challenge into today’s mortal danger not only to the United States but to the entire world.

I actually agree with the author that prompting Chinese reform of any kind is a fool’s quest – a prime reason that I regard substantially decoupling America’s economy from China’s as the best way to ensure that the nation can handle whatever problems Beijing creates. It was also heartening to see “Anonymous” recognize that dealing with China successfully will be that much harder for Washington if it keeps going out of its way to demonize Russia – which has clearly become a Democratic Party staple.

But concentrating U.S. China policy “through the principal lens of Xi himself” and seeking to capitalize on “significant” opposition within the CCP to “Xi’s leadership and its vast ambitions” in order to “return [China] to its pre-2013 path—i.e., the pre-Xi strategic status quo” suffers from at least two glaringly obvious flaws.

The first is Anonymous’ belief that however numerous China’s challenges to U.S. interests before Xi gained control, “they were manageable and did not represent a serious violation of the US-led international order.” In fact, even the author him/herself doesn’t seem to believe this.

If he or she did, why admit that the current Chinese challenge, “to some extent, has been gradually emerging over the last two decades”? And that that “China has long had an integrated internal strategy for handling the United States….” And that pursuing its goals “nationally, bilaterally, regionally, multilaterally, and globally….has been China’s approach for decades.” And that “What links” today’s China threat and that posed by the Soviet Union in particular during the early Cold War is that “the CCP, like the former CPSU [Communist Party of the Soviet Union], is an avowedly Leninist party with a profoundly Marxist worldview”?

Have Xi’s ambitions magnified the threat? Of course. But – as Anonymous also admits – not because Chinese leaders’ goals have fundamentally changed, but because growing economic and therefore military strength have brought them within reach.

In the author’s own words,

“China has undergone a dramatic economic rise in recent decades, and it is using its economic power to engage in coercive practices and to become the center of global innovation….China is transforming its economic heft into military strength, modernizing its military and developing capabilities to counter the United States’ ability to project power in the western Pacific.”

And although China has generated much of this impressive progress through its own devices, it’s also indisputable that its closely related economic, technological, and military advances stem from the U.S. and other free world resources and knowhow that flooded into China precisely when the bipartisan Washington consensus viewed any possible dangers emanating from Beijing as “manageable.” In other words, whether knowingly or not, Anonymous in effect is arguing for a return to the policies that helped create the problem he’s (correctly) identified. And P.S. Since he or she is described as “a former senior government official with deep expertise and experience dealing with China,” chances are the author had more than a minor hand in crafting this failed approach.

The second fatal flaw in “The Longer Telegram” is its assumption that American foreign policymakers understand enough “about the fault lines of internal Chinese politics” to manipulate them into bringing back those allegedly manageable pre-Xi leaders. To which anyone with even the skimpiest knowledge of American diplomacy should be responding, “Remember Iran.”

For since that country’s 1979 revolution replaced a generally pro-American monarch with a zealously anti-American Shiite Islamic theocracy, U.S. leaders have tried repeatedly to find influential moderates that would help reshape the new regime’s behavior. Because the United States knew so little about the internal politics and fault lines of this leadership, all these efforts have failed. Does Anonymous really believe that Washington’s knowledge of China’s even more secretive leadership is any better?

The Atlantic Council, the globalist Washington, D.C. think tank that published “The Longer Telegram,” calls it “one of the most insightful and rigorous examinations to date of Chinese geopolitical strategy and how an informed American strategy would address the challenges of China’s own strategic ambitions.”

Actually, its signature recommendation is so internally contradictory and naive that I don’t blame the author for wanting to stay Anonymous.

Im-Politic: New Signs that Biden Will Lift the China Tariffs – & That Beijing is Counting on It

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China, China tariffs, currency, election 2020, exchange rates, Im-Politic, Joe Biden, Kamala Harris, Mike Pence, Susan Page, tariffs, Trade, trade war, Vice Presidential debate, Xi JInPing, yuan

Between wall-to-wall coverage of the fly and the smirks, it was easy to lose sight of one of the most important reveals of Wednesday’s vice presidential debate: There’s now more reason than ever to believe that if Joe Biden becomes President, he’ll lift President Trump’s tariffs on China. And just as important, there’s now more reason than ever to believe that this is exactly what China is expecting.

Whether you believe that Trump-type China trade policies have been needed and/or have worked (two closely related but not identical matters), the likelihood that the tariffs would be toast is incredibly important because it begs the questions of whether the Democratic nominee has a coherent alternative China trade poicy in mind that can adequately serve U.S. interests (along with alternative investment and tech policies) and whether he’s capable of developing one.

As known by RealityChek regulars, I believe that on both scores, the answer is an emphatic “No.” But what’s more important right now is making clear that Biden running mate Kamala Harris’ debate performance strongly indicated that a major course change is coming.

First, though, a deserved swipe at moderator Susan Page’s China question. Page, the Washington Bureau Chief of USA Today, inadvertently reminded viewers (and should have reminded the Commission on Presidential Debates that organizes such events) why veteran campaign and White House reporters are almost uniquely unqualified to serve in these roles – at least if you’re looking for some minimally satisfactory discussion of issues.

For these journalists tend to be preoccupied with politics, not policy – and with the most superficial horse race or gossipy dimensions of politics at that. As a result, their substantive background is even less impressive than that usually boasted by colleagues who are supposed to know something about the issues they cover (a low bar).

So although Page deserves some credit for even bringing up the topic of China policy, no one should have been surprised by the Happy Talk nature of her question. I mean, here’s a country that’s been blamed across the American political spectrum for destroying huge numbers of American jobs with its wide-ranging trade predation, whose tech companies have been just as widely deemed as dangers to U.S. national security and American’s privacy rights, which increasingly is threatening U.S. allies and other countries in the “Indo-Pacific” region (foreign policy mavens’ latest name for the Asia-Pacific region, due to India’s, and which is treating its own population ever more brutally.

And Page’s question was dominated by claims that China is “a huge market for American agricultural goods” and “a potential partner in dealing with climate change and North Korea”? Not to mention suggesting that its role in bringing the coronavirus to the nation and world is nothing more than a charge leveled by President Trump?

All the same, Harris’ answer was what counted:

“Susan, the Trump administration’s perspective, and approach to China has resulted in the loss of American lives, American jobs and America’s standing. There is a weird obsession that President Trump has had with getting rid of whatever accomplishment was achieved by President Obama and Vice President Biden. For example, they created, within the White House, and office that basically was just responsible for monitoring pandemics. They got away, they got rid of it.”

Previously that evening, she argued that:

“You, [Vice President Mike Pence] earlier referred to, as part of what he thinks is an accomplishment, the President’s trade war with China. You lost that trade war. You lost it. What ended up happening is, because of a so called trade war with China, America lost 300,000 manufacturing jobs. Farmers have experienced bankruptcy, because of it. We are in a manufacturing recession, because of it. And when we look at this administration has been, there are estimates that by the end of the term of this administration, they will have lost more jobs than almost any other presidential administration.”

Let’s leave aside the accuracy or relevance of any of these points – like the 300,000 manufacturing jobs claim loss claim that apparently comes from an economist who admits his 2016 predictions about economy’s performance during the Trump era were completely off-base; or the plainly nutty insistence that the Trump China policy cost American lives.

If Harris believes any of this, and especially that the trade war has been “lost,” then clearly the only important question about the China tariffs isn’t whether they’ll be lifted by a President Biden, but how fast.

Moreover, there’s abundant evidence that Biden fully agrees that these Trump measures have been seriously counter-productive. When asked in August if he’d “keep the tariffs,” he responded, “No. Hey, look, who said Trump’s idea’s a good one?” said Biden. “Manufacturing has gone into a recession. Agriculture lost billions of dollars that taxpayers had to pay.” In other words, most of the main anti-tariff arguments in two pithy sentences.

An aide to the former vice president tried to walk back these remarks, shortly afterwards, but Biden’s words perfectly fit journalist Michael Kinsley’s epic definition of what’s usually mischaracterized in American politics as a “gaffe”: an instance “when a politician tells the truth—some obvious truth he isn’t supposed to say.”

Equally interesting and important with regard to the Biden-Harris China policies – one clear and one possible new sign that Beijing is actively rooting for their success, and assuming the tariffs’ removal. The first came during the vice presidential debate, when Chinese authorities censored some of Pence’s critical comments on China just as Chinese audiences were about to hear them, and then restored the signal in time for Harris’ rejoinder.

The second came last night, when in its first announcement since the end of its Golden Week holiday of a new exchange rate for China’s currency, the yuan, versus the U.S. dollar, Beijing revalued (i.e., made it more expensive compared with the greenback) by the greatest amount in four and a half years. The main reason – at least as I see it: China believes that Biden will win, and is permitting its currency to strengthen because any competitiveness loss by its exports resulting from this and even significant further revaluation will be more than offset by the removal of U.S. levies that have typically hit 25 percent.

Of course, I could be wrong about Biden. So could China. But keep in mind that the former Vice President boasts that he knows Chinese dictator Xi Jinping well because of all the time he’s spent with him. Does anyone seriously think that, by the same token, Xi hasn’t learned a thing or two about Biden as well?

Glad I Didn’t Say That: The Voice of Experience on China?

Tags

China, election 2020, Glad I Didn't Say That!, Joe Biden, Xi JInPing

“I’ve spent more time with in private meetings with Xi Jinping than any world leader.”

— Democratic Presidential candidate and former Vice President Joe Biden, quoted on May 2, 2020

Xi Jinping “is a guy who wants to feel it and taste it, and he’s prepared to show another side of the Chinese leadership.”

— Democratic Presidential candidate and former Vice President Joe Biden, 2012

Xi Jinping “is a guy who doesn’t have a democratic — with a small d — bone in his body. This is a guy who is a thug.”

–– Democratic Presidential candidate and former Vice President Joe Biden, February, 2020

(Sources: “Biden Aims to Out-Tough Trump on China While Invoking His Obama Experience,” by Warren P. Strobel and Sabrina Siddiqui, The Wall Street Journal, May 2, 2020, https://www.wsj.com/articles/biden-aims-to-out-tough-trump-on-china-while-invoking-his-obama-experience-11588420801 and “‘This is a guy who is a thug’: how the US elite became hawks on Xi’s China,” by Demitri Sevastopulo, Financial Times, October 8, 2020, https://www.ft.com/content/75ce186e-41f7-4a9c-bff9-0f502c81e456)

Im-Politic: Bloomberg in China’s Pocket?

Tags

China, election 2020, Financial Times, Im-Politic, Ivanka Trump, Laura Ingraham, Michael Bloomberg, Michael Kranish, Trump, Washington Post, Xi JInPing

Boy! I thought Michael Bloomberg’s business’ dependence on China was worrisome when I first read this early January Financial Times report on the billionaire Democratic presidential candidate’s lucrative conference-holding business in the People’s Republic!

Then thanks to a segment last week on Laura Ingraham’s Fox News cable talk show, I checked out this Washington Post piece on the same subject – which I somehow missed – and I’ve gotten even more worried. And since Bloomberg has been rising steadily in the polls in recent weeks, and is spending a big chunk of his fortune on the campaign, you should be worried, too.

Now I know what at least some of you are thinking: President Trump and his family have done a lot of business with China, too. So why single out the former New York City mayor?

Here’s why: First, I strongly agreed that it was unacceptable for presidential daughter Ivanka Trump to stay involved in any way with her fashion business after her father’s election, especially since it sourced products from China and sought to sell in the Chinese market. She finally agreed with this (widespread) view and shut down the brand in mid-2018. So that’s one big difference between the Trumps and Bloomberg, since the latter is still making big bucks in China.

More important, though – with Trump tariffs still in place on literally hundreds of billions of dollars worth of prospective Chinese exports to the United States, and the President having made life tough for China in numerous other major ways ranging from prosecuting telecommunications giant Huawei to strongly supporting Taiwan in word and deed, can anyone seriously believe that Mr. Trump has been soft on Beijing?

Bloomberg, by contrast, clearly has, and his record of panda-hugging is not only several years old, but has continued unabated during his run for the White House. The aforementioned Post article spells out in detail the pro-China positions he’s taken, which include opposition to the Trump tariffs (without explaining how he’d deal with Chinese trade abuses he’s acknowledged) and the insistence that China’s communist leader Xi Jinping “is not a dictator” (made as Beijing was cracking down on Hong Kong’s democracy protests and imprisoning on a massive, concentration camp-like scale members of the country’s Muslim Uighur minority group.

And when his ongoing business dealings with the Chinese are examined in detail, it’s easy to see why Bloomberg has worked so hard to remain in Beijing’s good graces. For example, as the Post reported, Bloomberg ”expanded one of his company’s financial indexes, which could steer $150 billion into China while earning his firm an undisclosed amount in fees.”

In effect, this move awarded the Chinese government and the various commercial and financial entities it controls a Good Housekeeping Seal of Approval valued immensely by big institutional investors who control trillions of dollars worth of savings around the world.

Moreover, according to Post reporter Michael Kranish, “mainland China accounts for 1 percent of Bloomberg LP’s [$10 billion in annual] revenue and Hong Kong for another 4 percent.”

As for those China conferences, the Financial Times revealed that

“live events now make up nearly 15 per cent of all revenues for the news division that sits within the billionaire’s financial data company.

“This has grown from less than 1 per cent in 2014, thanks largely to the success of one event: the New Economy Forum. Mr Bloomberg launched the conference last year, aimed at connecting global business leaders with the Chinese elite.

“Only in its second year, the NEF already makes up about 65 per cent of all live events revenue for Bloomberg Media, according to a spokesperson.”

And if you still doubt China’s importance to Bloomberg’s coffers, consider that, as Kranish wrote, Bloomberg “has led efforts since 2015 to make it easier for U.S. companies to trade in Chinese currency, a move embraced by China’s largest banks” – which are of course all run by the state.

Bloomberg’s successes in public opinion surveys anyway has led to charges that he’s trying to buy the presidency. At least equally important to ask is whether the Chinese have bought Bloomberg.

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

Tags

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

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

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

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

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

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

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

That’s what my humanitarian instincts tell me.

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

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

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

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

(What’s Left of) Our Economy: Trade War(s) Update

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Argentina, Bloomberg.com, Brazil, business investment, China, CNBC, consumption, currency manipulation, debt, Democrats, digital services tax, election 2020, EU, European Union, export controls, Financial Crisis, France, Huawei, internet, investors, manufacturing, production, steel, steel tariffs, tariffs, Trade, Trade Deficits, trade enforcement, trade war, Trump, Wall Street, Wilbur Ross, Xi JInPing, {What's Left of) Our Economy

The most important takeaway from this post about the current status of U.S. trade policy, especially toward China, is that it may have already been overtaken by events since I began putting these thoughts together yesterday.

What follows is a lightly edited version of talking points I put together for staffers at CNBC in preparation for their interview with me yesterday. I thought this exercise would be useful because these appearances are always so brief (even though this one, unusually, featured me solo), and because sometimes they take unexpected detours from the main subject. .

Before presenting them, however, let’s keep in mind this new Bloomberg piece, which came on the heels of remarks yesterday by President Trump signaling that a trade deal with China may need to await next year’s U.S. Presidential election, and plunged the world’s investors into deep gloom. This morning, however, the news agency reported that considerable progress has been made despite “harsh” rhetoric lately from both countries. It seems pretty thinly sourced to me, and the supposed course of the trade talks seems to change almost daily, but stock indices are up considerably all the same.

Moreover, even leaving that proviso aside, what I wrote to the CNBC folks yesterday seems likely to hold up pretty well. And here it is:

1. The President’s latest comments on the China trade deal – which he says might take till after the presidential election to complete – seriously undermines the claim that he considers a deal crucial to his reelection chances because it’s likely to appease Wall Street and thereby prop up the economy. Of course, given Mr. Trump’s mercurial nature, and negotiating style, this latest statement could also simply amount to him playing “bad cop” for the moment.

2. His relative pessimism about a quick “Phase One” deal also seems to reinforce a suggestion implicitly made yesterday by Commerce Secretary Wilbur Ross when he listed verification and enforcement concerns as among the obstacles to signing the so-called Phase One deal. I have always argued that such concerns are likely to prevent the conclusion of any kind of trade deal acceptable to US interests. That’s both because of China’s poor record of keeping its commitments, and because the Chinese government is too secretive and too big to monitor effectively even the most promising Chinese pledges to change policies on intellectual property theft, illegal subsidies, discriminatory government procurement, and other so-called structural issues.

3. Recent reports of the United States considering tightening (or expanding) restrictions on tech exports to Chinese entities like Huawei also support my longstanding point that the US and Chinese economies will continue to decouple whatever the fate of the current or other trade talks.

4. In my opinion, the President is absolutely right to play hard-to-get on China trade, because Chinese dictator Xi Jinping is under so much pressure due to his own weakening economy, and because of the still-explosive Hong Kong situation.

5. I’ll be especially interested to learn of the Democratic presidential candidates’ reactions to Mr. Trump’s latest China statement, as well as the announcement of the reimposed steel tariffs on Argentina and Brazil, and the threatened tariffs on French “digital services” [internet] taxes. With the exception of Massachusetts Senator Elizabeth Warren and Vermont Senator Bernie Sanders, the candidates’ China policies seem to boil down to “Yes, we need to get tough with China, but tariffs are the worst possible response.” None of them has adequately described an alternative approach. The reactions of Democratic Congress leaders Nancy Pelosi in the House and Charles Schumer will be worth noting, too. The latter has been strongly supportive of the Trump approach in general.

6. The new steel tariffs, as widely noted, are especially interesting because they were justified for currency devaluation reasons, with no mention made of the alleged national security threats originally cited as the rationale. Nonetheless, I don’t believe that they represent a significant change in the Trump approach to metals trade, because the administration has always emphasized the need for the duties to be global in scope – to prevent China from transshipping its overcapacity to the US through third countries, and to prevent third countries to relieve the pressures felt by their steel sectors from Chinese product by ramping up their own exports to the US. Obviously, all else equal, countries with weakening currencies (for whatever reason) will realize big advantages in steel trade, as the prices of their output will fall way below those of competitors’ steel industries.

7. Regarding the tariffs threatened in retaliation for France’s digital services tax, they’re consistent with Trump’s longstanding contention that the US-European Union (EU) trade relationship has been lopsidedly in favor of the Europeans for too long, and that tariff pressure is needed to restore some sustainable balance. In this vein, I don’t take seriously the French claim that the tax isn’t targeting U.S. companies specifically. After all, those firms are the dominant players in the field. Second, senior EU officials have started talking openly about strengthening Europe’s “technological sovereignty” – making sure that the continent eliminates its dependence on non-European entities in the sector (including China’s as well as America’s). The digital tax would certainly further the aim of building up European champions – and if need be, at the expense of US-owned companies.

By the way, this position of mine in no way reflects a view that more taxation and more regulation of these companies isn’t warranted. But it’s my belief that these issues should be handled by the American political system.

Also of note: Trump’s suggestion this morning that the French tax isn’t a big deal, and that negotiations look like a promising way to resolve the disagreement.

Finally, here are two more points I wound up making. First, I expressed agreement that the President’s tariff-centric trade policies have created significant uncertainties in the economy’s trade-heavy manufacturing sector in particular – stalling some of the planned business investment that’s essential for healthy growth. But I also noted that much of this uncertainty surely stems from the on-again-off-again nature of the tariffs’ actual and threatened imposition.

As a result, I argued, uncertainty could be significantly reduced if Mr. Trump made much clearer that, whatever the trade talks’ fate, the days of Washington trying to maximize unfettered bilateral trade and investment are over, and a new era marked by much more caution and many more restrictions (including tighter export controls and investment restrictions, as well as tariffs), is at hand.

Second, at the very end, I contended that President Trump deserves great credit for focusing public attention on the country’s massive trade deficits in general. For notwithstanding the standard economists’ view that they don’t matter, reducing them is essential if Americans want their economy’s growth to become healthy, and more sustainable. For as the last financial crisis should have taught the nation, when consumption exceeds production by too great a margin, debts and consequent economic bubbles get inflated – and tend to burst disastrously.

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: The Offshoring Lobby Admits Americans are Standing Tall in the China Trade War

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2020 elections, capex, Charles Koch, China, CNBC.com, consumers, Democrats, inflation, manufacturing, national security, recession, slowdown, Trade, trade war, Trump, Xi JInPing, {What's Left of) Our Economy

Another trade war myth bites the dust! And its demise is especially big news, given that its killers are some of the leading myth-makers.

Specifically, as reported by CNBC,com, top officials of a major lobbying campaign aimed at forcing President Trump to overturn his tariff-heavy trade policies, and in particular, to make nice with China, have openly admitted that the ace-in-the-hole they thought they held turned out to be joker. According to a CNBC posting yesterday, the political network funded partly by billionaire libertarian Charles Koch has concluded that their efforts to restore the pre-Trump, offshoring-happy, U.S. trade policy status quo have failed because it completely misread the American public’s willingness to pay an economic price for combating China’s trade predation.

This news comes on the heels of ongoing evidence that, contrary to widespread predictions from economists, think tank hacks, globalist politicians, and the Mainstream Media reporters who keep taking their cues from all these trade zealots, raging American inflation has not been ignited, business investment has not been paralyzed, domestic manufacturing has not suffered a death blow (though it’s been in a shallow recession for a year), and the economy has not plunged into recession (though growth has slowed).

The advertising-focused Koch drive sought to convince President Trump to back off his strategy of trade pressure by exploiting the selfishness of U.S. consumers in particular and the supposed vulnerabilities of the U.S. political system. The apparent central assumptions (and they’ll be familiar to anyone who’s been following Mainstream Media coverage of trade issues): Affluent, and indeed spoiled, Americans have much less tolerance for economic pain than their long impoverished Chinese counterparts; and China’s dictators will find it much easier to resist any public pressure that did develop than American leaders. Therefore, the Koch operatives reasoned, stoking fears that Mr. Trump’s tariffs would supercharge retail prices in particular and kill jobs by prompting retaliatory Chinese measures and slumping American capital spending would set off a political firestorm that the President would need to extinguish if he hoped to win reelection.

But at a briefing it held in New York City yesterday, a Koch official told reporters that “The argument that, you know, the tariffs are adding a couple thousand dollars to the pickup truck that you’re buying is not persuasive. It doesn’t penetrate with the people that are willing to go along with the argument that you have to punish China.”

Nor did the Koch campaign make this decision lightly. The CNBC.com piece noted that “the network came to this conclusion after conducting weekly focus groups on trade policies.” Also cited in the post was a recent national poll showing that “63% of registered voters believe tariffs will ultimately hurt the United States more than China, but 67% of the electorate is convinced it’s necessary to confront China over its trade practices.”

In other words, the American public is wiser and more farsighted than the U.S-owned businesses that have worked overtime to help strengthen the Chinese economy – including by voluntarily transferring to the Chinese the technology they need to upgrade their mechanisms of repression and modernize their military. And everyday Americans are much smarter than those companies that China has begun victimizing once Beijing concluded they’d outlived their usefulness, but that keep hoping against hope that enough boot-licking will save their corporate skins in the Chinese market. Because the American public evidently understands that U.S. prosperity and national security alike require reversing these China-enabling policies, and that slightly more expensive imports from China are a small price to pay for preserving and achieving these goals.

Ironically, the poll indicates that the Koch campaign (along with similar efforts) has succeeded in one respect: It represents some evidence that Americans believe that their country is more vulnerable to a trade war than China – even though the Chinese economy is much more trade dependent, and even though, as noted above, the United States keeps growing (albeit more slowly), and its overall inflation remains subdued by any reasonable standard.

Maybe that’s why the Koch network says it’s far from giving up, and is considering delivering the same message with different tactics. Two seem especially promising to these Friends of China:

>“putting together a team of almost 100 business leaders to call on the Trump administration and lawmakers to end the trade war with China”; and

>educating “100,000 activists in at least 35 states about the potential negative impact of using tariffs to battle China. Those volunteers will then be expected to start reaching out to their congressional leaders. The network hopes these activists can convince lawmakers on Capitol Hill to stand up against the administration’s current trade policy. The latest phase of the Koch campaign is expected to cost the network millions of dollars.”

Of course, short of a major economic downturn, if the Koch network has already established that the public is rejecting its advertising-carried China fear-mongering, it’s unclear why President Trump would be more responsive to the 100 business leaders than he’s been to date? And why would most Members of Congress not already backing China coddling pay more much attention to the 100,000 activists?

That’s a question that also needs to be asked by some other major actors in the U.S.-China trade war: the majority of current Democratic presidential candidates, who clearly believe that there’s lots of voter China-related trade whining that they can turn into votes, and ultimately into victory over Mr. Trump; and Chinese dictator Xi Jinping himself, who just as clearly believes that if the President is defeated, he’ll be back to dealing with Uncle Sucker on trade – and so many other fronts.