CAN AMERICA GET WHAT IT WANTS WITH TOUGH CHINA POLICY?
President Trump received Chinese Vice Premier Liu He on January 31 following two days of US-China cabinet-level trade talks at the White House. “I think we’ve made tremendous progress,” an upbeat Trump told the press, noting that Liu, who headed the Chinese delegation, promised China will buy 5 million tons of soybeans from America. “That’s going to make our farmers very happy,” the president beamed. “That’s a lot of soybeans.”
Trump also said Chairman Xi Jinping reassured him of Beijing’s commitment to working out sound countermeasures to prevent vast volumes of opioid painkillers from being smuggled into the US. This in fact was a promise Xi had made on December 1 in Buenos Aires during the last US-China summit. Trump, a known teetotaler who never smokes, detests this type of highly addictive hard drugs, an overdose of which can lead a user to death in the worst case.
At this stage of the US-China trade negotiations, Trump’s joy is Beijing’s torture. The main points over which US Trade Representative Robert Lighthizer pressed the Chinese to the limit this time were a drastic reduction of US trade deficits with China, prevention of forced transfer of American technology, and ending intellectual property theft on the part of China. Another focus of the negotiations was how to establish a credible monitoring system, under which mutual agreements will be rigidly enforced.
Actually, an increase in American export of soybeans to China, which delights Trump, is only a small part of the whole scope of US-China trade. In fact, trade experts argue strongly that increasing soybeans and natural gas exports is not so critical as checking China’s industrial and technological policies constituting the foundation of Beijing’s “Made-in-China 2025” initiative.
I read an article in the January 31 edition of The Wall Street Journal advocating America increasing market penetration into the service sector, one of its strongest areas. This would include such industries as finance, insurance, engineering consulting, and software development. But the article noted the US is faced with a “Great Fire Wall” of Chinese resistance in these industries.
As is obvious from the bitter experiences of Facebook, Google, and YouTube in China, information services is obviously the last market China is willing to open. If China were to succumb to America’s demand to open this sector, the Chinese people would undergo quite a sea change in terms of their mindset and lifestyle, which would likely lead to an acceleration of a collapse of the one-party rule of the Chinese Communist Party.
China’s Structural Economic Slowdown
Professor Shi Yinhong, Director of the Center on American Studies at Renmin University in Beijing, shared an intriguing opinion about this point in a recent article in the conservative mass circulation Japanese daily Sankei Shimbun. He noted that America’s demand for an ultimate structural reform in China and a monitoring system to ensure its effective enforcement has the high possibility of infringing on China’s sovereignty as well as interfering with its domestic order. That in fact is precisely what America is aiming at and what China fears most.
America’s China policy today is extremely severe. Just before the trade talks in Washington, the Department of Justice announced that a federal grand jury in New York had indicted Meng Yongbo, chief financial officer and vice chairman of China’s giant telecom equipment manufacturer Huawei. The US government has formally asked Canada to extradite Meng to the US.
Ottawa has no choice but meet the extradition request under the terms of an agreement with Washington. Professor Yoichi Shimada of Fukui Prefectural University believes Meng could be sentenced to the maximum penalty of 60 years in prison following her deportation to the US, explaining:
“Hinting at a lengthy prison term, the US authorities will try to make her confess to unlawful acts committed by Huawei and the Chinese Communist Party. If she doesn’t cooperate, she may have to be prepared to stay in an American prison even after she reaches the age of 100. If, on the other hand, she decides to play ball, the US is expected to protect her and provide funds sufficient for her and her son to live in the US the rest of their lives. Under no circumstances will Washington allow Beijing to wrest 5G leadership away from it.”
Shimada stresses that Weng’s case is as serious as—or perhaps more serious than—the ongoing bilateral trade negotiations for both the US and China. At this juncture, the US is concentrating its effort on putting the screws to China in trade, military affairs, human rights, and international relations. Does China stand a chance to get the better of America in this ongoing “new cold war”?
China has announced that its economic growth rate in 2018 was up 6.6% from 2017. Although China admitted it was the lowest growth rate in the past 28 years, there are indications that the growth rate was actually much lower. Professor Xiang Songzuo, Deputy Director of the International Monetary Institute at Renmin University, puts real growth at a stunning 1.67%, and maintains that if a different method of calculation had been used, the rate would have been negative.
Given Xiang’s calculations and the well-known low reliability of China’s statistics, it is quite possible that the Chinese economy last year actually registered a much lower growth rate than has been officially recognized.
The slump of China’s housing, which has generated roughly a quarter of the nation’s GDP, is acute. Major real estate companies are said to have reduced house prices by 30% last year. A substantial markdown is a matter of concern for the industry for this year, too, as banks are ridden with vast non-performing loans. Local governments are debt-ridden, unable to provide funds to small and medium corporations. There appears no remedy for the Chinese economy, which has slipped into a serious structural slowdown.
China has Whole World against It
In addition to this slowdown, China apparently lost much of the credibility that its bold “One Belt, One Road” international initiative once had. The debt trap behind the program has already been uncovered in many participating countries, with a growing number now ready to opt out of it. Professor Tadae Takubo, a respected international strategist who serves as Deputy Director of the Japan Institute for National Fundamentals, a privately-financed Tokyo think tank that I head, remarked:
“As former Prime Minister Yasuhiro Nakasone (1982-87) once said famously, the key element of a nation’s foreign policy is making sure not to turn international public opinion against you. Today’s China is turning virtually the whole world into its enemy.”
Debt traps are not the only means through which China wrests land away from other nations. Its behavior in the South China Sea demonstrates that Beijing never hesitates to resort to every measure necessary to get what it wants, including military power. The world has come to grips with that fully. That is why Britain and France have been taking part in America’s “freedom of navigation” operations since last summer.
China has made an enemy of practically the whole world. If it continues to try to forge ahead with its high-handed ways, the US will likely step in to check it. With Trump in charge, however, one never knows how things will play out. He is the biggest element of concern.
On January 31, a stunning total of 43 out of 53 Republican senators voted to oppose the move of Trump’s Middle East policy. On December 19, Trump abruptly declared he would pull US troops out of Syria, and on the following day he announced the resignation of Defense Secretary James Mattis after he voiced his opposition to the plan in a letter to Trump. Then on December 27, obviously sensing Mattis’s resignation had put him in a disadvantageous situation, Trump suddenly flew to Iraq with his wife Melania to make a surprise visit to the US troops at Al Asad Airbase. Informed sources now view Trump’s basic policy of withdrawing from Syria and Afghanistan as unchanged, although he may make some adjustments—in terms of the timing, for instance.
By withdrawing US troops prematurely, Obama made a blunder in his Iraq policy. Trump now seems to be making the same mistake as his predecessor. If Trump takes the wrong step at this point, the Middle East will be thrown into greater confusion, seriously undermining his own political standing at home. When that happens, China will undoubtedly be the one that will be laughing, while the rest of the world is thrust into a real crisis. (The End)
(Translated from “Renaissance Japan” column no. 839 in the February 14 issue of The Weekly Shincho)