China Trade Policies

It seems to me….

It’s really important for all of us to understand that healthy trade relationships between the U.S. and China are important.” ~ Dennis Muilenburg[1].

The Pacific will be the arena that defines the 21st century[2]. According to the World Bank, in just 10 years, four of the five largest economies in the world will be in the Asia-Pacific region and the U.S. will be able to help shape the 21st century only if it remains a vital Pacific power.

It is necessary to strengthen Asia’s complex legal, security, and practical arrangements that have underscored four decades of Asian prosperity and security. This necessitates bolstering freedom of navigation, free trade, multilateral groups and institutions, transparency and accountability, and such diplomatic practices as peaceful resolution of disputes. This can only be done with multi-nation cooperation; the U.S. needs to end its go-it-alone policies.

The Trump administration should stop treating Europeans as free-riders on U.S. power who constantly exploit us. On trade, especially, the EU is a powerful potential ally in getting China to abide by global norms. The U.S. should also work more closely with European governments to set up common standards of transparency, graft-busting, and the prevention of influence-peddling. At a time when standards for IT and artificial intelligence risk splitting into a Chinese camp and a U.S. one, Europe can help find a middle path.

The U.S. is the country with the largest market and trade is one of our most vital priorities. It consequently has the most leverage and, as foreign officials have often complained, it uses that power demanding exemptions and exceptions few other countries get. The Trans-Pacific Partnership (TPP) was no different.

The TPP was the sine qua non of Washington’s pivot to Asia as it would have simultaneously worked at many levels: economic, political, and strategic. It would have boosted growth, shorn up U.S. alliances, sent a powerful signal to China, and most importantly, written the rules of the 21st century in ways that were fundamentally American. The U.S. withdrawal from the TPP opened the door and China is stepping forward to replace it. This step will only encourage China to take a more active role in areas of U.S. interests including South America.

The Republican Party has entirely reversed itself on two of its core beliefs, immigration and trade, going from a party of openness to one that wants walls and tariffs. The TPP was under assault from every quarter in the U.S. For workers, the TPP’s gains far outweighed its losses. Without it, China will draft those rules in ways that are not beneficial to the U.S.

U.S. foreign policy toward China had been remarkably consistent over the past 40 years and eight presidents, and until Trump became President, Washington had sought to integrate China into the world economically and politically. This policy had been good for the U.S., good for the world, and extremely good for China[3].

The largely successful foreign policy of the Obama administration was constantly criticized by right-wing extremists for having wisely refrained from exercising the military option they routinely advocated. There admittedly were significant failures; e.g., drawing a ‘red line” and not reacting when it was crossed; but the U.S.’s international favorability rating significantly improved under Obama from what it had been under his predecessor. It is unfortunate that trend is once again being reversed under Trump.

Republicans persist in viewing the world from the past remaining trapped in a perspective where the U.S.’s primary adversary remains the Soviet Union, failing to recognize that Russia is now only a second-rate power (granted one with a nuclear arsenal). In the 2012 Presidential campaign, John Huntsman was the only Republican candidate that acknowledged the new world order; essentially no one did in the 2016 Presidential election. While there certainly will be areas of friction, our primary foreign policy emphasis should be Southeast Asia, especially to counter the rising influence and affluence of China. Now is the time to recognize that political shift and reach cooperative agreement with nations in that area rather than risk competition and possible future conflict.

Neoconservatives and some Pentagon officers voice alarm over a perceived developing Chinese threat though it is more likely to rely on its economic and political skills to achieve its objectives rather than resort to military force. To some extent, much of this reaction is primarily psychological projection. Many people had assumed that given its enormous arsenal of strength, China would begin to assert itself geopolitically and, to some extent, it has done so, especially in Southeast Asia, but China has also become a status quo power, comfortable with the world in which it has grown rich, and wary of overturning the global system into which it is now integrating. The U.S. needs to reverse its normal policies and respond instead to a Chinese asymmetrical strategy of expanding their economic and political sphere of influence which eventually could result in gradual U.S. regional impotence.

While the U.S. economy remains 40 percent larger than China’s in terms of personal GDP, China’s top-down control of its economy and state-owned enterprises means it can harness its economic power and channel it in ways of which Washington can only dream.

It’s unfortunate that the U.S. has its weakest President at the same time that China has its strongest. As the world continues to fragment, the Chinese governing model will continue to gain appeal for other governments, if not for their citizens. International demand remains for a successful governing model for developing markets across Asia and Africa at a time when the U.S. and European variants are looking increasingly dysfunctional.

There are potential economic problems. China’s build-up of debt is of enduring concern. Productivity growth in the developed world remains weak. Outside the U.S., wages are still growing slowly. And in the U.S., surging business confidence has yet to translate into surging investment. Trump’s claims to have magically jump-started job creation are sheer braggadocio. As of October 2018, the U.S. economy has added jobs for 90 successive months in a row, long prior to him assuming office. While it is entirely reasonable for him to want to claim responsibility, the only thing he actually can claim is having not yet ruined it.

China is shifting its strategy away from manufacturing. China’s next five-year plan focuses on innovation. The government is expected to create programs to subsidize innovation by both small and large companies substantially funding the information and communications technology sector and other industries considered “strategic”.

China’s rise has become self-sustaining. A huge and increasingly affluent domestic market will make exports less vital to growth. China is quickly relinquishing old industries, such as making inexpensive socks, and building more modern ones, like biotech and telecom equipment. Overproduction of steel and other materials is rapidly declining. Environmental amelioration is accelerating. There is significant justification as to why many other world leaders find Xi Jinping’s geopolitical vision inspiring.

In terms of relative purchasing power, China currently spends more on research and development than the European Union. And according to the Organisation for Economic Co-operation and Development, it is on track to surpass U.S. spending by 2020. In the past decade China’s contributions to the world’s total volume of research articles has surged from 13 to 20 percent, and today only the U.S. generates more high-quality scientific papers. It now lays claim to the world’s longest electric high-speed rail network, the largest radio telescope, and the top two fastest supercomputers. It is launching a carbon-emissions cap-and-trade market this year that will dwarf the planet’s largest one in the E.U. Also, as the top producer of rare earth metals for high-tech manufacturing, China leads the world in solar, wind, and hydropower capacity and is or soon will be the strongest market for goods such as electric cars, nuclear reactors, smart devices, industrial robots, and 3-D printers. Rapidly rising wages are creating strong incentives for best-practice applications of robotics and China’s companies are becoming cutting-edge innovators in artificial intelligence, space exploration, electric vehicles, and renewable energy.

A strong U.S. advantage has been our native innovation. China already recognizes it does not have an innovation culture and has more than 300,000 students in the U.S. – not only studying at our universities to get STEM degrees essential for tech jobs, but at increasingly younger ages to develop the ability to problem-solve, probe, and create. China now has more K-12 students in the U.S. than all other nations combined.

China should be recognized as a growing competitor trying to surpass the U.S. in innovation. China’s weakening manufacturing infrastructure is less a threat to us than their increasingly intense focus on innovation. It would be erroneous to not take China’s overall innovation strategy seriously. It’s not about manufacturing, as Trump foolishly believes; it’s about who will lead the world as this century’s leader in innovation.

That’s what I think, what about you?

[1] Dennis Muilenburg is chairman of the board, president and chief executive officer of The Boeing Company.

[2] Zalaria, Fareed. Obama Is Now Alone In Washington, Washington Post, https://fareedzakaria.com/2016/09/01/obama-is-now-alone-in-washington/, 1 September 2016.

[3] Zakaria, Fareed. China is not the world’s other superpower, The Washington Post, http://fareedzakaria.com/2013/06/05/china-is-not-the-worlds-other-superpower/, 5 June 2013.

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About lewbornmann

Lewis J. Bornmann has his doctorate in Computer Science. He became a volunteer for the American Red Cross following his retirement from teaching Computer Science, Mathematics, and Information Systems, at Mesa State College in Grand Junction, CO. He previously was on the staff at the University of Wisconsin-Madison campus, Stanford University, and several other universities. Dr. Bornmann has provided emergency assistance in areas devastated by hurricanes, floods, and wildfires. He has responded to emergencies on local Disaster Action Teams (DAT), assisted with Services to Armed Forces (SAF), and taught Disaster Services classes and Health & Safety classes. He and his wife, Barb, are certified operators of the American Red Cross Emergency Communications Response Vehicle (ECRV), a self-contained unit capable of providing satellite-based communications and technology-related assistance at disaster sites. He served on the governing board of a large international professional organization (ACM), was chair of a committee overseeing several hundred worldwide volunteer chapters, helped organize large international conferences, served on numerous technical committees, and presented technical papers at numerous symposiums and conferences. He has numerous Who’s Who citations for his technical and professional contributions and many years of management experience with major corporations including General Electric, Boeing, and as an independent contractor. He was a principal contributor on numerous large technology-related development projects, including having written the Systems Concepts for NASA’s largest supercomputing system at the Ames Research Center in Silicon Valley. With over 40 years of experience in scientific and commercial computer systems management and development, he worked on a wide variety of computer-related systems from small single embedded microprocessor based applications to some of the largest distributed heterogeneous supercomputing systems ever planned.
This entry was posted in AI, AI, Artificial Intelligence, Asia, Automation, Cap-and-Trade, China, Climate Change, Communications, Computer, Computing, Economy, Education, Electric Vehicles, Energy, Environment, EU, European Union, EVs, EVs, Exploration, GDP, Global Warming, Gross Domestic Product, Infrastructure, Investment, Jon Huntsman, K-12, Manufacturing, Markets, Markets, Military, Nuclear, Obama, OECD, Organization for Economic Cooperation and Development, Organization for Economic Cooperation and Development, Organization for Economic Cooperation and Development (OECD), Pentagon, Railroads, Railways, Renewable, Research, Research, Robotics, Robotics, Robots, Russia, Solar, South America, Soviet Union, Space, STEM, STEM, Technology, Technology, Technology, TPP, Trade, Trade, Trans-Pacific Partnership, Transportation, Trump, Wind, World Bank, World Trade Organization, Xi Jinping and tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

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