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Foreign Policy

Change of Guard in Washington Could Mean Reset for China Relations

Aug 26, 2020
  • George Koo

    Retired International Business Consultant and Contributor to Asia Times

Two recent developments presage a forthcoming regime change in Washington—a change that needs no help from the National Endowment of Democracy, whose mandate to incite change of governments does not include the US, in any event. 

The surprised arrest of Steve Bannon just this past week could signify the loosening of another cotter pin in the Donald Trump machine. Bannon, former campaign strategist and intimate advisor for Trump, has been charged with embezzlement and money laundering. He is the latest (and 7th person) to join President Trump’s inner circle of convicted felons

Will Bannon squeal? 

The federal prosecutors charged Bannon and three other conspirators with skimming millions from the fund raised to build a private version of the border wall facing Mexico. If convicted, Bannon could be in for 10 to 20 years in the slammer. 

According to one version of their relationship, Trump is estranged from Bannon for not sharing a “license fee” from stealing his idea of the wall and for taking the limelight away from the Donald. A displeased Trump called the private wall project “showboating.” Thus, Bannon may not be able to count on a presidential pardon to get out of jail. 

His other option is to sing loudly to the federal prosecutors in exchange for a lighter prison stay. By telling them all he knows about the nefarious shenanigans of Trump and his inner circle of crooks, the wheels of the Trump campaign could be coming off even before the November election. 

The other major development is the formal nomination of Joe Biden as the presidential candidate for the opposition party. His acceptance speech was forceful, forward thinking and hard hitting. He showed none of the signs of a doddering old man that Trump liked to attribute to him. 

Instead, Biden spoke about what he would do as president to bring pandemic under control, put the economy on sound footing, face climate change as opportunities for new high-paying jobs and continue to fight for racial justice. Not once in his 25-minute address did he brag about wonderful he was. The difference between him and Trump, to use Biden’s words, is the difference between light and dark. 

As the incoming president, Biden will face the daunting task of undoing the damage wreaked by four years of corrupt and incompetent misrule. 

Despite the stock market hitting new highs, the American economy is in terrible shape. Unemployment is at the record high and small businesses are being forced out of business at unprecedented rate. 

Biden will need China

In his acceptance speech, he made only one glancing reference to China and did not join the demonizing rhetoric favored by Trump’s team. Perhaps he understood that to restore the economy, the Biden administration will need to work with China. 

China is the second largest economy and is the first to recover from Covid 19. China and the US economies are closely intertwined. China’s recovery will have a pull-through effect for the recovery of the American economy. 

Provided, of course, if Biden can undo Trump’s zero-sum confrontation with China, a confrontation that never made sense from inception. Imposing import duty on Chinese goods is supposed to penalize the Chinese manufacturers. Instead, it’s the American consumer that is penalized by having to pay more for their purchases of imports from China. The net impact is to raise the cost of living for all Americans. 

Increasing the cost of goods from China was supposed to encourage the relocation of manufacturing back to America. Since the labor intensive, low value manufacturing shifted to Asia decades earlier, the Trump tariff simply forced the offshoring manufacturer to look for other low-cost countries, such as Vietnam and Bangladesh. American worker continues to be among the highest paid in th world and expecting offshore production to move back is naïve or delusional. 

The Trump administration waged the trade war as if China was not supposed to retaliate but China most certainly did. Consequently, American farmers are paying the price for losing access to their largest market. After two years of reduced sales and income, some have gone bankrupt and others are wondering how to survive another planting season. 

Up to now, State Secretary Mike Pompeo has pushed China to the brink of war based on three doubtful if not wildly off-based premises: 

(1)   Even though Pompeo can’t point to specifics, China is a threat to US national security because Pompeo says so. The US has greatly increased its naval presence in the South China Sea. If one of the ships were to run aground on an island occupied by the People’s Liberation Army, it could be just the pretext Pompeo needs to charge China with initiating a hostile provocation. 

(2)  Any advances in technology from China are based on intellectual property stolen from the US, even for technology that does not exist in the US. To support his accusations, Pompeo is not embarrassed to cite, as evidence of Chinese infraction, disputes over 20 years old that were settled amicably at the time. 

(3)  Nation-wide “black lives matter” protest in the US notwithstanding, China’s alleged human rights abuse justifies making China an enemy of America. Pompeo based his accusation heavily on the claim that China has one million Uyghurs in concentration camps in Xinjiang. This patently ridiculous charge came from one alleged observer of doubtful veracity reinforced by Uyghur dissidents living in Washington. 

What China can bring to the party 

Pompeo’s China strategy has been an unequivocal disaster for America. Biden has the opportunity to refute the confrontational approach, make a bold move and hit the reset key in the relationship with China. He doesn’t have to go soft on China and he doesn’t have to coddle the Beijing leadership. He just needs to see reality and not engaged in make believe. 

Biden should consider the benefits of getting along with China instead of incurring the cost for continuing to demonize China a la Pompeo and Trump. 

First, cancel the trade war would immediately normalize the bilateral trade and help restore the economy. 

There are Chinese companies with billions to invest in the US just waiting for a more receptive Washington. Many of these investments would involve transferring their manufacturing know-how along with capital to make products for the US market. Needless to say, these investments would be made in America and create jobs for American labor. 

Some Chinese companies are already in the US to work on infrastructure projects and assembling state-of-the-art subway cars to replace dilapidated cars more than 50 years old. They could do a lot more if political leaders of both parties in Washington could refrain from their xenophobic rant. 

Part of Pompeo’s drive to decouple the two economies is to obstruct the normal operation of a leading technology company from China, namely Huawei. The US has arrested the daughter of the founder, and denied market access to Huawei not only in the US but in as many other countries as those that will follow the US lead. 

When none of these actions seem to stop Huawei, the US has denied semiconductor technology to Huawei. This has ominous consequences. 

In the short term, American semiconductor companies stand to lose multiple billions in revenue to one of their major, if not the largest customer. 

Over the long term, some say in 3 to 5 years, Huawei will find ways to work around the American technology. When they do, American companies will not only lose an important customer but will face a formidable competitor in the form of an entire ecosystem of Chinese companies in the semiconductor industry that partnered with Huawei. 

Huawei is not the only Chinese company that is technologically more advanced than US companies. Use of smart phone for mobile payment, use of artificial intelligence for facial or voice recognition are some other examples. It will be a waste of valuable resources for the US to suppress these advances using the whack a mole approach. 

Collaboration between two technologically advanced countries can be mutually beneficial as each give and receive. Qualcomm, for example, was the recipient of $1.8 billion in license fee from Huawei for the most recent year. 

China has been working to combat climate change in the last four years that Trump has not. Controlling the emission of greenhouse gases is of common interest for both countries. The US can benefit from China’s advances in environmental control to create new green technology-based jobs. 

China has more than four times the population than the US. By and large, the Chinese are well educated and motivated and over 90% of the people believe in their one-party government. It’s inevitable that the Chinese economy will surpass the American economy. Washington needs to get used to the idea. 

A bigger economy does not automatically mean that China will assert dominance over the US. China has learned from 5000 years of experience that peace leads to stability which leads the society to prosperity. Even when China’s GDP exceeds the US in the next few years, the individual Chinese citizen will be nowhere near as wealthy as an American. 

China’s priority will continue to raise the income of its citizens. Differences in ideology is not a matter China cares about nor will compete or fight the US over. 

Most recently, Pompeo demanded that the UN Security Council extend a ban on arms sale to Iran. Only Dominican Republic supported the US. China and Russia voted no. France and UK, the other permanent members of the council, along with Germany and other eight other members abstained, in effect also a no. It was the most insulting slap in the face the US has experienced since the founding of the United Nations. 

China will continue to want to collaborate with America. It will be good for America if Biden can find ways to work with China. Seeing the US getting along with China will help restore the world’s confidence that the US has reverted to being a reasonable and rational world leader again, and the Biden administration can look to regain the respect that Pompeo had so easily squandered. 

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