Determined to Fight Trade War with US China Is Forming United Front


United front is one of Chinese Communist Party’s three magic weapons in its war of resistance against Japan and civil war against KMT. China’s busy diplomatic activities to form a united front against US protectionism now raises the questions: Is China determined to fight the trade war with the US so that it is forming an international united front against US protectionism?

Reuters says in its report “China fans trade dispute with hefty deposit on U.S. sorghum imports” yesterday that China slaps 178.6 percent deposit on imports of U.S. sorghum in retaliation of US tariff increase on Chinese exports. China justified its move by the finding of its investigation on US dumping of sorghum, but media regards the move as an obvious counter measure against US sharp increase in tariffs on China’s solar panels and washing machines.

Chinese President Xi Jinping promised reform measures that may ease US complaints and thus gave rise to hope that there would not be a trade war between China and the US as Xi is making concessions to satisfy the US. The sorghum move proves that Xi’s policies aim at pleasing EU and Japan for the establishment of an anti-protectionism united front against the US. That perhaps will be China’s way to subdue the enemy with diplomacy.

Reuters says in its report “Exclusive: China seeks trade firewall with U.S. allies in rush of ambassador meetings – sources” on April 17, 2018, “China’s international trade representative held a series of meetings with the ambassadors from major European nations last week to ask them to stand together with Beijing against U.S. protectionism, according to four sources familiar with the discussions.” Xi’s promise at Boao Forum on further opening obviously aimed at winning over EU to join China’s united front against the US.

On the other hand, China’s sudden warming up of its relations with Japan is obviously China’s such diplomacy too. Chinese Foreign Minister Wang Yi’s sudden visit to Japan and his joint statements with his Japanese counterpart on opposition to protectionism proves that China has won over Japan as Japan is also US President Trump’s target of protectionism. Reuters covers Wang’s visit in its report “Japan and China’s foreign ministers pledge to pursue improved ties” on April 15, 2018 and “Japan, China agree trade war will harm global economy” on April 16, 2018.

Comment by Chan Kai Yee on Reuters’ reports.

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Great Chinese Emperor’s Way to Conquer Turkic Khanate


When the US challenged China with a trade war, Chinese President Xi Jinping made concessions to the US while Chinese media and other officials expressed their firm determination to fight. The following story about Emperor Taizong’s way to deal with enemy’s challenge will perhaps help readers understand Xi’s way.

When Emperor Taizong of Tang succeeded to the throne in 622, Tujue (the Turkic Khanate) was very strong. For decades China’s northern states when China was divided into a few states and China’s central government when China had been reunified into one empire had to enter into peace treaties with Tujue on humiliating terms of sending a princess to marry Tujue’s king and giving him lots of gold and silk. Emperor Taizong of Tang, one of the greatest emperors in Chinese history, drew up and carried out a plan to finally conquer Tujue. The following is my translation of the description of Taizong’s wise way to deal with Tujue invasion of China in 622 in Volume 191 of the Comprehensive Mirror to Aid in Government, a history book specially compiled for emperors to refer to in governing their empires:

Sili (Tujue King Jieli’s envoy) said with exaggeration, “Kings Jieli and Tuli have brought one million troops here.”

The emperor scolded him, saying, “We have concluded a peace treaty with your king, sent our princess to marry your king and given you countless amount of gold and silk once and again. Is your king not ashamed in unilaterally breaching the treaty and bringing your troops deep into our territories! You are barbarians but you still shall have human conscience. How can you entirely forget our great favor and boast your strength! I now will kill you first.” The envoy was scared and begged for mercy. Xiao Yu and Feng Deyi asked the emperor to be courteous to the envoy and release him. The emperor said, “If I release him now, the enemy would think that I am afraid of them and would rely on their strength to act more wantonly.” He then detained the envoy at the Edict Examination Bureau.

Then Emperor Taizong and five of his officials rode out of his palace on horseback directly to the bank of the Weishui River. He talked with Jieli (King of Tujue) across the river. He condemned Jieli for breach of the peace treaty between Tang and Tujue. The troops of Tujue were panic-stricken and all got down their horses and fell on their knees to salute the emperor. Soon various Tang troops came and the field was covered by flags, helmets and armors. Jieli looked scared when he found that his envoy did not come back but the emperor came with few entourages and that the Tang troops looked well organized. Emperor Taizong told the messengers from various troops to go back to deploy the troops while he alone stayed to talk with Jieli.

Xiao Yu thought that the emperor took the enemy lightly. He stopped the emperor’s horse and insisted on remonstrating with the emperor. The emperor said, “I have drawn up a plan through careful consideration that you are ignorant of. The reason why Tujue dared to come all out directly to the suburbs of our capital was because there was trouble in our country. They thought that as I had just succeeded to the throne, I was not able to resist them. If I had shown them that we were weak and closed our city gates to resist them, then they would have told their troops to loot at will and we would not have been able to stop them. That is why I come alone to show them that I take them lightly. On the other hand, I give a show of the strength of our troops to tell them we would certainly fight against them. This has surprised them and they are at a loss what to do. As the enemy has come deep in our territories, there is certainly fear in their hearts; therefore, we will surely win if we fight against them and the peace will be a stable one if we enter into a peace treaty with them. We depend on what I do now to subdue Tujue. You just wait and see.”

That very day, Jieli came to ask for peace. The emperor gave the order to accept his request. The emperor then returned to his palace. Two days later, he went to the west of the city, killed a white horse and entered into a peace treaty with Jieli on a temporary bridge. Tujue then withdrew its troops.

Xiao Yu asked the emperor, “Before entering a peace treaty with Tujue, the various generals vied with one another in asking for a battle against it, but your Majesty did not allow them to fight. We the officials also wondered what your Majesty would do. Soon the enemy retreated. What was your strategy in achieving that?”

The emperor replied, “I observed and found that Tujue troops were not well organized though they were large in number. What their king and officials wanted was only gifts of gold. When their king asked for peace, only he alone stayed at the west bank of the Weishui River while all his high officials came to have an audience with me. If I had made them drunk and arrested them and then attacked their troops, I could have defeated them like smashing rotten woods. I could have ordered Changsun Wuji and Li Jing to ambush the enemy in Youzhou (the border area with Tujue). When the enemy ran away, there would have been the troops in ambush before them and our major troops in their back. It would have been very easy to defeat them. I did not fight because I just succeeded to the throne, the situation in our county was not stable, our people had not become rich and we should let our people rest and foster them.  If we had fought against the enemy, we would have suffered quite a few losses and incurred deep hatred of the enemy. Then they would be afraid of us and be on their guard so that it would be difficult for us to achieve our goal to conquer them later. Therefore, we did not fight but gave them gold and silk. They naturally would retreat since they got what they wanted. They will become conceited and be unprepared. When we have build up our strength and found an opportune timing, we will annihilate them at one stroke. ‘To take it from someone, surely one must first give it to him’ (a quotation from Chapter 36 of Laozi’s Daodejing). (This blogger’s underline) That was my strategy. Do you understand now?”

Xiao Yu saluted the emperor again and said, “That is beyond my wisdom.”

Three years later Emperor Taizong conquered Tujue.

China is now moving its labor-intensive industries to Silk Road economic belt to avoid US tariff increase on Chinese products of those industries, making efforts to produce import substitutes to reduce its imports from the US. It will win its trade war with the US without tariff increases. That is what China is doing to subdue the enemy without fighting according to China’s gifted strategist Sun Tzu’s teaching.

Article by Chan Kai Yee


Some love and some meh for Xi’s speech on trade and tariffs


Jeremy Goldkorn April 10, 2018

Love and meh for Xi’s speech on trade and tariffs

Speaking at the Boao Forum for Asia on Hainan Island, Xi Jinping vowed “to open the country’s economy further and lower import tariffs on products including cars, in a speech seen as an attempt to defuse an escalating trade dispute with the United States,” according to Reuters.
•The markets loved Xi’s speech: “Stocks are rising sharply on Wall Street Tuesday after Chinese President Xi Jinping offered possible concessions in a trade dispute with the U.S.,” says the Washington Post.
•Elon Musk, whose Tesla cars will benefit if import tariffs fall, loved Xi’s speech and tweeted: “This is a very important action by China. Avoiding a trade war will benefit all countries.”
•Some cold water for investors, if not for Musk, in a tweet thread from Bloomberg correspondent Michael McKee: “Lots of talk about Xi Jinping calming markets. Reality: investors are hearing what they want to hear. We’re months away from the possible imposition of tariffs. We’re years away from implementation of Xi’s promised reforms.”
•Ford, GM, and Fiat Chrysler Automobiles already have plants in China, so tariff reductions will not affect them. McKee notes: “Lower tariffs primarily would benefit Mercedes, BMW, which export U.S.-built large and luxury cars to China, and Tesla.”
•“Neither side is ready to stand down” was the conclusion drawn from Xi’s speech and tweeted by Shawn Donnan, world trade editor at the Financial Times.
•Trump heard a different message and tweeted: “Very thankful for President Xi of China’s kind words on tarrifs [sic] and automobile barriers…also, his enlightenment on intellectual property and technology transfers. We will make great progress together!”
•Xi’s whole speech in Chinese is available on Xinhua.

Source: SubChina “Some love and some meh for Xi’s speech on trade and tariffs”

Note: This is SubChina’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


China’s still not scared of a trade war


Jeremy Goldkorn April 9, 2018

I am itching to call it a trade war, but it still remains a war of words. CNN is calling it a “trade battle,” and offers this helpful timeline of the events that have led us to this point.

Meanwhile, as we noted in our Friday newsletter for Access members — China’s weapons in the duel against Trump — there is a new social media campaign encouraged or orchestrated by the People’s Daily called “China’s not scared!” #中国不是吓大的#.

The government could easily nurture truly massive popular support if a real trade war breaks out, judging from the enthusiasm of the public response. Further reading:
•China is studying yuan devaluation as a tool in trade spat / Bloomberg
•China elites seek to de-escalate trade tension before Xi speech / FT (paywall)
•Conservative Koch brothers network breaks with Trump over brewing trade war with China / CNBC
•Kudlow says China has not wanted to ‘talk in earnest’ amid tariff threats / CNN

Source: SubChina “China’s still not scared of a trade war”

Note: This is SubChina’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


China Determined to Fight Trade War?


Reuters seems to believe so in its report today titled “China blames U.S for trade frictions, says negotiations currently impossible” as it quotes Chinese Foreign Ministry spokesman Geng Shuang and Vice Commerce Minister Qian Keming’s hardline responses.

I believe that China is bluffing. China’s GDP growth may not be slowed by the trade war according to some Chinese economists, but there will certainly be some hardship. If China can avoid through talks and some concessions that China can afford, why not?

US complaints mentioned in the report are irrelevant. If China believes that the restrictions it has imposed on foreign enterprises and the failure to protect foreign intellectual property are good for China’s interests, why does China not keep them? China shall protect its interests. Whether the US is upset or not is irrelevant. Only when US tariff increase can bring more harms than the benefits China can get from the restriction and non-protection will China change its policies to please the US.

However, China now wants to remove the restrictions to introduce competition in order to make its own enterprises stronger and to enable Chinese enterprises to develop abroad. China wants international protection of the intellectual property it has developed and will develop on its own now. If it fails to protect others’ intellectual property, how can it expect that others will protect its own intellectual property?

The restrictions and non-protection benefit China in the past but the removal of restriction and the protection of intellectual property will benefit China in the future.

From this perspective, we see that American politicians and media are fond of the trade war as they look backwards while China wants to avoid the trade war as it looks forwards.

The future belongs to China whether there will be a trade war between the US and China or not.

Comment by Chan Kai Yee on Reuters’ report, full text of which can be viewed at https://www.reuters.com/article/us-usa-trade-china/china-blames-u-s-for-trade-frictions-says-negotiations-currently-impossible-idUSKBN1HG0WB.


Real Trade War with the US Has Begun though Not Announced


Reuters says in its report “Trump predicts trade concessions by China, despite rising tensions” yesterday, “U.S. President Donald Trump predicted on Sunday that China would take down its trade barriers, expressing optimism despite escalating trade tensions between the world’s two largest economies that have roiled global markets in the past week.”

According top Trump administration officials, the US asks China to reduce import tariffs on cars, buy more US semiconductors and allow foreign majority ownership of financial services firms.

China has offered to buy more US semiconductors, been considering to cut tariffs on cars and on March 26, Chinese Premier Li Keqiang promised once more that China will ease foreign business’s access to China; therefore, Trump knows for sure that he will get what he wants without a trade war.

Why then has he threatened a trade war with China?

He wants to give the impression that he has succeeded in forcing China to yield due to his hardline approach and thus win popularity, i.e. he wants popularity to enable him to win the next election.

A US president has to win a second term and ensure his chosen successor is elected to continue his policies. Otherwise, even if he has earnest desire to achieve something for his country’s long-term benefit and even if his policies are really good, he will not able to successfully implement them.

China is different, it is able to carry on its policies for decades so that it will soon achieve the goal of becoming moderately well-to-do with four decades of incessant efforts.

Chinese leader Xi Jinping has an ambitious goal of realizing his China dream for China’s grand rejuvenation. To achieve that goal, he has to conduct economic expansion abroad with his Belt and Road initiative and enable China to make high-technology products with his “Made in China 2015” program.

Since the US has challenged China with a trade war, Xi will regard as China’s priorities to move China’s labor-intensive industries to countries with lower labor costs to substitute their exports for China’s and carry out the “Made in China 2025” program to remove China’s dependence on import of high-tech products.

In addition, to avoid the risks of depending on food import, he will certainly speed up the water diversion project to turn Xinjiang desert into farmland.

The above-mentioned long-term efforts are true trade war attacks at the US in China’s unannounced trade war with the US.

China’s real unannounced trade war with the US has already begun!

Trump’s real efforts for next election have begun but not his threatened trade war with China!

Comment by Chan Kai Yee on Reuters’ report, full text of which can be viewed at https://www.reuters.com/article/us-usa-trade-china/trump-predicts-trade-concessions-by-china-despite-rising-tensions-idUSKBN1HF0NE


Trade War Helps China’ Transit from Export- to Innovation-Led Growth


CCTV primetime news airs footages on Chinese Minister of Commerce’s and Foreign Ministry spokesman’s strong responses to US trade war, stating China will fight to the bitter end at whatever cost.

Why has China responded so strongly in public?

The trade war will bring great long-term benefit to China though there will be some short-term pain.

China’s old model of export- and investment-geared economic growth has given rise to excessive industrial capacities and debts for investment in obtaining the capacity for export. The excessive debts may give rise to crisis of default that may slow down Chinese economy for many years. Therefore, Trump’s high tariff on Chinese exports will help China dispose excessive capacity and prevent the lending of new loans for such investment.

China wants to switch to its new model of innovation-, creation- and consumption-led economic growth. The high tariffs that China will impose on US high-tech goods will protect China’s high-tech industries. That is what China cannot do as it advocates free trade, but US trade war with China provides China with justified excuse to do so.

China is lucky that when it has difficulties in eliminating excessive capacities and debts, the US launches a trade war to help it. Elimination of excessive export capacities will certainly cause short-term pain, but it is what China has to suffer even if Trump does not start the trade war.

When China cannot impose high tariffs to protect its high-tech industries as it opposes protectionism, Trump launches a trade war with China to provide China with justified grounds to increase tariffs as retaliation to protect its high-tech industries.

Article by Chan Kai Yee.