America’s relationship with China is antagonistic at an economic and even military level, but for Donald Trump personally, there is something far more interesting transpiring. When asked about the possibility of Chinese President Xi Jinping remaining in power for the indefinite future after his erstwhile term limit has been removed, Trump stated,
“He (Chinese President Xi Jinping) is now president for life. President for life. No, he’s great… And look, he was able to do that. I think it’s great. Maybe we’ll have to give that a shot some day”.
While Donald Trump’s tariffs on steel and aluminium, combined with sustained US threats to block the access of other Chinese imports to the US market have elicited strong responses from Beijing, when it comes to Trump and Xi, the former seems to greatly admire the latter. In many ways this isn’t surprising. Xi Jinping is among the most admired political leaders in recent history because of his tremendous accomplishments, obvious intellect and his dignified patriotism. What is surprising is that a leading US politician should be so forthcoming in expressing his admiration of the Chinese President, as Sinophobia continues to grow in many areas of elite US circles, in spite of America’s growing economic dependence on China.
If Trump were to somehow match his win-win attitude that clearly loves the United States while also admiring China’s President, with a win-win attitude in terms of negotiating trade deals with Beijing, Trump would likely be far more popular in certain Chinese circles than he is today.
The problem is two-fold. First of all, Donald Trump is not as powerful a man as many (including himself) think he is. As free trade and small government advocate, former Congressman Dr. Ron Paul recently said,
“I don’t think presidents really have much control. I think the deep state – the people behind the scenes and the shadow government, who control the monetary system, who control our foreign policy and the welfare state, and are connected to the media and the military-industrial complex. – I don’t think the presidency is as important as it’s made out to be. But everybody talks about it; it’s a political thing, and they keep churning the issue and directing everybody to ask ‘is Trump a good guy or a bad guy, and are we going to impeach him or what’s going to happen’, rather than [asking] what kind of philosophy do we have: why do we have this philosophy of welfare-warfare, spend money, run up debt and let the central bank print all that money.
They don’t even talk about it; the major parties, including Trump, they sign even more controls on us when it comes to FISA courts and spying on us. In spite of the fact that government officials like the FBI and others actually spy on our own president, he supports this; he passes and signs bills on that. So that really raises questions about ‘does the president really have much to say’, and I think he has much less to say than a lot of people believe. I believe that if he had stuck to his guns and had a different relationship with Russia and started bringing troops home and not aggravating things, he wouldn’t have been tolerated. Something would have happened”.
The other clear reason that Trump is unable to engage in a win-win relationship with China is that while China is a culture based on forthrightness, respect and pragmatism, New York business culture is based on deceit, bullying, innuendo and egotism. Clearly, Donald Trump’s business background has not given him the requisite tools to automatically deal harmoniously with China. That being said, Trump clearly thinks his nation could somehow legitimately compete with China, where today, he correctly says the US is losing. The difference between the Trump view and the real facts regarding China vis-a-vis the United States is that China’s success has nothing to do with America’s failures.
China created a successful model for the 21st century century during the rule of Deng Xiaoping which began in 1978. Deng’s model has successfully been built upon by Xi Jinping whose Socialism With Chinese Characteristics For A New Era, looks to expand on past successes to build a moderately prosperous society where innovation and production are both equally important. China has outdone the US due to a more effective business model, a better education system and a culture that values hard work more than that of the modern United States.
“China is currently the largest single holder of US debt, at over 1 trillion US Dollars. Thus far, Beijing and Washington have an unspoken agreement that in return for China’s friendly trade policies in Washington, Beijing will continue to be a good faith holder of US debt. If China released the debt onto international markets, this would trigger a rise in the value of the Chinese Yuan while also lowering the value of the Dollar. This would not be to China’s advantage in the short term, insofar as it would make Chinese goods less desirable in the US market place. But if China were to be systematically priced out of the US market place due to tariffs, China might just pull the proverbial trigger, having lost the central rationale for holding so much of America’s debt. At such a point, China could then reap the rewards of a strong Yuan, including its increased value as an international reserve currency in addition to an enhanced domestic purchasing power.
As for Chinese exports to the wider world other than the US, a China with an incredibly strong Yuan could always do what Japan did in the 1980s and artificially lower the price of its goods on the international market place in order to compensate in terms of volume, for goods whose price would otherwise be too expensive for certain markets. In any case, it is not likely that the Yuan would automatically skyrocket to 1980s Yen levels even if China sold off US bonds en masse and China already has many successful free trade or near free trade agreements with countries across the world that unlike the US, remain satisfied with mutually beneficial arrangements.
There is a way to avoid such an economic confrontation, but it would require the United States to abandon both classical laissez-faire dogmas, as well as the protectionist dogmas of Donald Trump. According to the above mentioned scenario, which is becoming more likely with every new tariff the US proposes, the US economy would be hit hard for one simple reason: the US does not produce enough high quality goods to be internationally or even domestically competitive in the event of artificially or organically losing easy access to competitively priced imports.
Ironically, if the US had a strong, confident, quality orientated domestic industrial base, it could actually benefit from a lower dollar for the same reason that all large exporting nations can benefit from a weak currency – it makes the goods more attractive in affluent markets abroad. The problem is that over the last four decades, America’s domestic production base has been decimated in terms of output capability as well as quality control.
The reason for US industrial decline was a perfect storm of governments failing to invest in domestic private sector industry, while happily taxing them out of a competitive position, combined with an American labor union policy which was hostile both to private management as well as to political opponents. By contrast, West German trade unions used a model where union representatives sat on the board of major companies and therefore had responsibility both to the workers and to the overall corporate health of major industrial producers.
In China’s market socialist model, while free enterprise is allowed at structural level, on a macro-economic level, the profits generated by Chinese industry are re-invested into the nation for the benefit of multiple sectors ranging from infrastructure, to health and housing to new industrial endeavours.
No single model can be interpolated onto another with perfect results and therefore it would be naive to suggest so. In the case of the US, what is needed is a more harmonious relationship between domestic producers in the private sector, government and workers organisations. In the US, there is a kind of phobia of government investment into companies and when such things do happen, it is usually to bail out a company on its last legs, rather than to rejuvenate a company in need of modernisation. Likewise, among US labor unions, there is a kind of allergic reaction to the kinds of quality control that exists in Germany. This is one of the reasons that German cars remain the most sought after in the world, while US cars continue to languish in consumer opinion polls.
Ironically, there is one industry in the US that does run effectively on a model where government, management and the work force coexist on generally good terms. This is the defence industry. Here, government funds many research and development programmes, fulfils many orders and promotes products abroad, while the workforce is well paid, highly trained and due to the sensitive nature of the defence industry, has to go through special clearances in order to demonstrate both company and national loyalty.
There is no reason why the US automotive, computing, electronics or textile industries could not work on the exact same model, minus the security clearances. If there was a US Senate Automotive Services Committee that suggested General Motors (GM) produce a certain kind of cutting edge, high quality care and invest in its development, and if GM had this incentive to find a domestic workforce that was incredibly skilled, hard working and well paid, all of the sudden one would see a US consumer product that would be attractive in both domestic and international markets. Imagine if all the seriousness devoted to Capitol Hill hearings on national defence, instead defined Congressional hearings on getting the US to make cars that people want to drive and audio/visual equipment people want to listen to and watch? It would represent a pivot from hostile practices in the name of war, to constructive practices in the name of prosperity.
While it is true that in the defence industries, Russia and China sell their weapons for lower prices than the US, this has not stopped the US from selling many weapons abroad. Likewise, the cost of a Mercedes-Benz has not prohibited Mercedes vehicles from being purchased in high quantities throughout the world.
As China’s workers begin earning even better pay and as automation takes over factories throughout the world, there is likewise no reason why the US could not enter into profit sharing agreements between the management of automated factories and American workers facing lay-offs due to automation. This way one would still be saving production costs due to automation, but one could ameliorate the problem of industrial unemployment by giving former workers a combination of shares in the company as well as a regular living wage that is related to the profits of said factory.
The US might never be able to match China in terms of overall output and with China becoming a leader not only in quantity but also quality, China is without a doubt going to be the industrial king of the 21st century. Yet, this has not made Japan, South Korea, Germany or other major producers give up entirely. It is ironically in the US, a nation whose pop culture invented “the power of positive thinking”, that when it comes to industrial innovation and embracing hybrid economic models, deep pessimism sets in.
At the end of the day, any product that is somewhat reasonably/competitively priced and is of high quality or unique in nature, will sell. There will always be a market for quality and unique goods and in an age where global purchasing power is diversifying in geographical terms.
The US could and should accept geopolitical decline while embracing economic renewal. To the ordinary person, they would have more money in their pocket, domestically produced products that the world actually covets and enjoys and moreover they would be able to enjoy these goods in a more peaceful world.
Sadly, the US is as allergic to peace as it is to the economic innovation that could result from pivoting its defence industry model to the consumer/civilian sector”.
Rather than attempting to complete with the Chinese President he clearly admires, Donald Trump can and should embrace Xi’s model of win-win cooperation and allow the United States to re-develop its internal model while cooperating with China, a country which can now export its own methods and innovations to the US, just as the west once exported its methods to East and South East Asia in the middle of the 20th century.
If the zero-sum New York state of mind could even partly give way to the Beijing theory of win-win, the US and China would be able to resolve many of their disputes. Sadly, those around Donald Trump have an even more profound zero-sum mentality and unlike Trump, have nothing positive to say about China’s successful leader. Under such conditions, healthy admiration have turned to jealously as Trump will likely never be able to do for his country what Xi has done for his.