This blogger’s comment: The CNBC report I Reblog below shows that Trump is self-contradictory as he is at a loss what to do. His Chinese counterpart Xi Jinping remains silent as he has full self-confidence. Xi’s comment that he believes that the US does not want decoupling means he is asking the US the question: Does the US want decoupling while he wants to be a friend. For friends, there have to be mutual respect and equality so that China will not accept humiliating terms. That is what makes Trump anxious.
Trump downplays possible G-20 meeting with Chinese President Xi: ‘It doesn’t matter’ if he shows up
Published Fri, Jun 14 2019 • 9:49 AM EDT|Updated an hour ago
- President Trump appears to downplay expectations about a possible meeting with Xi Jinping at the G-20 summit later this month.
- He now says “it doesn’t matter” if the Chinese president shows up or not.
- “If he shows up, good, if he doesn’t – in the meantime, we’re taking in billions of dollars a month [in tariffs] from China,” Trump tells Fox.
President Donald Trump on Friday appeared to play down expectations about a meeting with Xi Jinping at the G-20 summit later this month, saying “it doesn’t matter” if the Chinese president attends.
“If he shows up, good, if he doesn’t — in the meantime, we’re taking in billions of dollars a month [in tariffs] from China,” Trump said in a 50-minute telephone interview on Fox News’ “Fox & Friends.”
Trump’s remarks Friday morning seemed to clash with comments he made just a few days earlier on CNBC.
In that interview Monday, the president vowed to immediately slap tariffs on an additional $300 billion worth of Chinese imports if Xi didn’t attend the G-20 summit, which is scheduled for June 28-29 in Osaka, Japan.
Neither the White House nor the Council of Economic Advisors immediately responded to CNBC’s requests for comment on the president’s latest remarks.
Tariffs are typically paid by the entities that import the shipments. Tariff defenders, including White House trade advisor and China hawk Peter Navarro, argue that the exporting companies are the ones punished.
“So our people are not paying — you know there’s this big thing about tariffs, ‘Oh, our people pay’ — it’s a lot of nonsense. You know what happens, really? Companies move back,” Trump told Fox.
In May, Trump increased tariffs on Chinese imports by $200 billion after trade negotiations between the two economic superpowers fell apart.
The possible bilateral meeting at the G-20 summit was seen by current and former Trump administration officials as a high-stakes stepping stone on the path toward regaining the ground lost with China and eventually securing a deal.
“There won’t be a deal at the G-20,” Clete Willems, a former top Trump trade advisor, said in an interview Tuesday with CNBC’s Kayla Tausche. But a Trump-Xi meeting at the summit could “catalyze a productive period of negotiations where the deal closes.”
Source: CNBC “Trump downplays possible G-20 meeting with Chinese President Xi: ‘It doesn’t matter’ if he shows up”
Note: This is CNBC’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.
According to White House, US President Donald Trump called former US President Jimmy Carter in April 2019 in reply of Carter’s letter to him.
There has been no information about what Carter wrote to Trump about, but as revealed by White House Trump discussed with Carter on phone about his fear of China ‘getting way ahead’ of the US, it seems now that like lots of Americans, Trump has also fallen into Thucydides trap. Then Carter must have written to Trump about China’s rise. He perhaps tried to persuade Trump not to assault China with the trade war.
Carter knows that the trade war is not about trade deficit or the fabricated China’s theft or compulsory transfer of technology but China’s rise to surpass the US.
Carter said, “The main thing that he (Trump) emphasized to me was, the main purpose of his call, was to say very frankly to me on a private line that the Chinese were getting way ahead of the United States.”
Carter was not surprised by Trump’s words and gave the explanation that China focused on its own development without fighting any war since 1979 but in that period the US is always at war to impose its values on other countries.
Now, as the US is not able to attack China militarily, it attacks China with a trade war which is not aimed at stopping China’s rise instead of imposing its values on China.
Regarding China’s rise, Carter, a devout Christian, said in church on Sunday,“As you have heard to your concern perhaps, the Chinese are likely to be number one superpower economically within the next few years.”
He then asked what being a superpower meant? According to him, it’s “not just who has the most powerful military, but who is a champion of the finer things in life”, which should include peace, the environment, human rights and equality that all Christians should believe in.
With that view, Carter is certainly unhappy that Trump has broken peace in fighting a trade war with China and has withdrawn from the Paris Agreement on global warming.
He said China is investing its resources into infrastructure projects while the US has stayed at war. Obviously, he gave Trump the advice to withdraw from war and focus US resources on construction to make US economy grow. Will Trump, deep in Thucydides trap, listen to him?
Trump knows that he has not much ammunition to subdue China with his trade war. His threat of further tariff hikes reflects his weakness. As China does not want the trade war, there may be some agreement to end the trade war, but to win votes for his relection, Trump has to maintain his hostility against China; therefore, Trump and other Americans are bound to create further trouble for China. Judging by what Trump did at the beginning of his administration, perhaps he really wants to be China’s friend in order to exploit China’s vast market, but he has to wait until being reelected. By that time there may be another honeymoon between him and President Xi Jinping Who knows!
Article by Chan Kai Yee.
Chinese Gifted Strategist Sun Tzu’s Teaching
This blogger has mentioned Sun Tze’s teaching“In any war, win with ingenious surprise move while conducting frontal engagement. (凡戰者，以正合，以奇勝。)”
The surprise ingenious move can be a part of the frontal engagement or but the frontal engagement. For example, the D-Day Normandy landing operations on June 6, 1944. The frontal engagement was across the strait between allied and German troops. The allied troops might invade Calais or Normandy. The choice of Normandy for the site of landing operations was ingenious as German defense there was weaker. As Germany believed that Calais would have more probably been the site of invasion, As the time and date of the move were kept well in secrete, there was full surprise in the ingenious move.
In this case, the frontal engagement is itself an ingenious surprise move.
Therefore, Sun Tzu says that there is unlimited variation in the relations between frontal engagement and ingenious surprise move. A specific commander in a specific combat shall have the talents to design his ingenious surprise move in his specific combat.
According to Sun Tzu, one shall calculate his factors to win and lose a war. Only when his factors to win exceed those to lose can he start the war.
Trump believes that his tariff hikes on Chinese exports will subdue China as China is unable to retaliate with equivalent hikes as US exports much less to China.
That is a naïve calculation.
What counts is not the scale of tariff hikes but the amount of damages to one’s enemy compared with that of the enemy’s counterattack. That is very simple. In real war, what counts is not the comparison of the extent of fire power but the damages the fire power can do.
For example, in a combat in Korean War, US troops kept on air raids and artillery bombardments on the Chinese troops stationed on a hill. The Chinese troops hid in their tunnel and suffered no casualty. The only casualty brought about by US troops’ strong fire power was the death of three of the four members of an artist group who went to the tunnel through a long ditch to entertain the troops with their performance.
My older schoolmate Yu, the surviving artist, arrived at the tunnel alone. He did not know that his co-performers had all been killed but assumed that they had retreated as enemy shelling was too heavy. Yu, a lively boy 15 years old then, gave singing, dancing, rapping and joking performance alone and greatly pleased the troops. At that time, US air and artillery fire was so fierce that Chinese troopers were all confined in their tunnel like prisoners for days. It was really boring to stay in tunnel like that. Yu’s courage and performance greatly raised Chinese troops’ morale. He was honored as a war hero later.
When US army attacked after repeated air raids and bombardments, they suffer much more casualty from the much inferior fire power of Chinese troops’ mortars, guns and grenades.
US Tariff Hikes Fail to Hit
US troops’ problem then was that its much stronger fire power did not hit while Chinese troops much weaker fire power hit.
It is the same with Trump’s tariff hikes. Most of the goods under tariff hikes are indispensable for US consumers and there are no alternative sources of goods of similar quality at lower prices. China’s exports of those goods have not been affected prices of the goods hiked to include the tariff hikes, the US has to keep on importing such goods. As a result, US tariff hikes do not hit China. They, on the contrary hit US itself by hiking American people’s living costs.
China’s Retaliation Hits US Farmers Hard
China’s retaliation tariff, on the contrary, hurts its enemy without harming its own people. Its tariff hikes on US agricultural products, especially soybean hit US farmers hard but do not harm its own as it can find alternative sources for such imports.
Article by Chan Kai Yee
What Trump Initially Wanted Are the Transformation China Has to Undergo
As mentioned in last chapter, initially, Trump only wants reduction of trade deficit, equal treatment for US enterprises in China, protection of technology and intellectual property and no significant devaluation of Chinese currency.
If such had been the case, the trade war negotiations should have ended with a deal satisfactory to Trump long ago. China has promised to substantially increase its imports from the US, better protect intellectual property and allow the exchange rate of its currency to be determined by market. In particular, it has made great efforts to have quickly replaced its three laws on foreign investment with a new foreign investment law that allows foreign parties majority equity holding in their joint ventures with Chinese partners, etc.
The above concessions China has made are in fact what China has to do for its transformation from export- and investment-geared economic growth to innovation-, creation- and consumption-led economic growth. The difficulties the transformation may cause to enterprises and their employees prevent Chinese leaders from conducting the transformation as fast as they want. They have been forced to do so slowly step by step.
Trump’s trade war forced China to give the US the above-mentioned concessions immediately so that it enables Chinese leaders to overcome the resistance and carry out immediately at one stroke the transformation that is indispensable for China’s further growth.
Therefore, there must have been a happy ending of the trade war as the two sides each get what they want. It’s a win-win cooperation.
The Diametrical Change in Trump’s Attitude toward China
Before the trade war Trump showed his sincere desire for good relations with China. His daughter and granddaughter’s visit to Chinese embassy in Chinese New Year, Trump’s satisfactory telephone conversation, his hospitality to Xi when Xi visited the US and his grandchildren’s performance of Chinese song and poem when he visited China all proved that. As he wanted to be China’s friend there began a honeymoon between China and the US
However, the honeymoon did not last long.
At the beginning of his trade war against China, Trump refrained from large tariff hikes on most Chinese exports to the US. At that time, US Congress wanted to ban US supply of components to Chinese telecommunications giant ZTE due to its violation of US sanctions against Iran. As US supplies are indispensable for ZTE’s operation, the ban might have killed ZTE, Trump interfered and allowed ZTE to survive by paying a large amount of fine. He did so in spite of the prevailing hostility against ZTE in US Congress.
Now, however, Trump has not only imposed large tariff hikes on lots of Chinese exports to the US. He even places great pressure on Huawei in order to subdue China. His attitude towards Huawei was in sharp contrast to what he has done to ZTE. Huawei is a Chinese telecom giant similar to ZTE in scale and weight, but it has not done anything as serious as ZTE to upset the US. Trump, however, has tried hard to ban Huawei’s 5G not only in the US but throughout the world.
Moreover, he has even put Huawei on a blacklist to ban US supplies of components and technology to Huawei in order to kill Huawei.
What Has Caused the Diametrical Change in Trump’s Attitude
While Trump was making efforts to improve relations with China in order to exploit China’s vast market for US economic growth, Americans’ hostility against China was growing drastically as US media’s propaganda has spread the mentality of Thucydides trap widely among Americans.
There has emerged the widespread hostility against China in the US as described by US China expert Orville Schell, director of the Centre on US-China Relations at the Asia Society in New York, that Democrats, Republicans, the White House, the Pentagon, the State Department, senators and representatives’ offices have all joined together to target China.
For Trump being reelected is his top priority; therefore, he certainly has to follow the trend and target China. He first replaced his moderate Secretary of State Rex Wayne Tillerson with Michael R. Pompeo. He said that Pompeo has “a very similar thought process to his”. As Pompeo has turned out to be a China Hawk, what Trump said might mean that Pompeo was similar to Trump in being a China Hawk. Soon afterwards, Trump replaced his China-friendly National Security Advisor McMaster with John Bolton, a well-known China hawk.
In Trump’s national security strategy report to US Congress, he regarded China as major competitor and challenge in stead of a friend. The report was prepared by the then Secretary of Defense Jum Mattis, who must be quite hostile to China. Still, Mattis did not seem quite satisfactory in his attitude toward China. He was fired soon after the report.
The military veteran Mattis was replaced by Shanahan as acting Defense Secretary. Shanahan must be very satisfactory to Trump as his message to staff on his first day as acting secretary was “China, China, China”.
True enough, to please Trump, Shanahan has doubled US freedom of navigation operations in the South China Sea and even sent navy warships through the Taiwan Strait to provoke China. No wonder on May 9, 2019, President Trump announced his intention to nominate Shanahan as the Secretary of Defense.
With hard China hawks as his major assistants, Trump wants to prove that he is the flag bearer in US fight against China. He has greatly intensified the trade war he has launched with China and soon expanded the trade war into an economic war to attack a major Chinese telecom enterprise Huawei.
It seems that he has succeeded in rallying Americans around his banner against China and may thus win lots of votes for his reelection.
For example, in a rare bipartisan move, US Republican Senators Marco Rubio and Tom Cotton along with Democratic Senator Ben Cardin formally re-introduced in late May 2019 the South China Sea and East China Sea Sanctions Act, a punitive measure that aims to target Chinese individuals and companies.
The bill refers China’s “illegitimate activities” to “aggressively assert its expansive” claims in the hotly contested sea. It will certainly heighten tension between China and the US.
With that bill, American legislators want to step up their hostile activities against China with proposed sanctions on Chinese entities that are involved in China’s construction of and deployment of defense facilities on artificial islands as the bill regards such construction and deployment as China’s expansionist militarization of the contested sea area.
Article by Chan Kai Yee
As mentioned in my previous posts the concessions Trump asked China for: the reduction of trade deficit, equal treatment between foreign and Chinese enterprises, protection of intellectual property and decision of Chinese currency’s exchange rate by the market were the major content of Chinese President Xi Jinping’s predecessor Hu Jintao’s further reform and opening-up.
Hu had realized that China could no longer achieve economic growth with its old approaches of heavy investment to increase exports. First, the international market for China’s labor-intensive industries and products with low technology is saturated. Second, as CCP has raised workers’ living standards, their wages have been much increased to cause great reduction in the profit margins of China’s labor-intensive industries. China has to switch from export- and investment-geared economic growth to innovation-, creation- and consumption-led economic growth. The above-mentioned further reform and opening-up are indispensable for such a transformation.
China has to upgrade the technology of its labor-intensive enterprises. It has attained that goal in some enterprises but the workers unable to learn the technology have to be laid off to be replaced by employees with better education and skill.
Most of enterprises in labor-intensive industries are unable to upgrade their technology so that they have to move to areas with lower labor costs. They have to lay off their Chinese workers and employ local workers withe lower wages in the areas they have moved to so as to reduce their labor costs. There will be quite serious unemployment as a result.
The further reform, therefore, encountered serious opposition from the vested interests in those industries. The resulting unemployment problem also greatly worries the reformists.
Moreover, in order to urge enterprises, scientists, engineers and skillful workers to conduct innovation and creation, China has to treat state-owned, private and foreign enterprises equally to enable competition to force enterprises to improve. Xi knows that protectionism can only protect backward enterprises and cause them to lose the incentives for innovation and creation. However, that also encounters opposition from vested interests. Hu was unable to make progress in his further reform and opening up. Xi has also been unable to make progress fast enough due to the opposition and unemployment problem.
Under such circumstances, Trump’s trade war forces labor-intensive enterprises to upgrade or move to areas with lower labor costs. The misery of unemployment will be caused by Trump instead of the reform and opening-up
The introduction of competition with foreign enterprises and protection of intellectual property to satisfy Trump’s and other Western countries’ demand are what China has promised when its joined the WTO. Since China enjoys such treatment in Western countries, it certainly shall reciprocate. Chinese intellectuals are clever and hardworking. The pressure of competition will force them while the protection of intellectual property will encourage them to innovate and create.
Trump’s trade war provides Chinese President Xi Jinping with golden opportunity to speed up his further reform and opening-up. Xi certainly will delay the deal to end the trade war in order to keep the pressure until he has succeeded in moving abroad or upgrading labor-intensive industries, making Chinese enterprises accustomed to competition and have the urge for innovation and creation.
Article by Chan Kai Yee
People are puzzled that when a deal to end the trade war was in sight, China suddenly refused to accept the deal. Now, US President Trump wants to have a summit with his Chinese counterpart Xi Jinping at the G20 summit in Japan next month in order to seal a deal.
In its report “Trump-Xi trade war summit at G20 in Japan still up in the air as ‘conditions not right’” yesterday, SCMP quotes Trump as saying, “Maybe something will happen. We’re going to be meeting, as you know, at the G20 in Japan and that’ll be, I think, probably a very fruitful meeting.”
He has got no response from Xi for that so that whether there will be a meeting remains a question. Xi’s public response to Trump’s launching of heavy trade war attacks at China with great tariff hikes is to tell Chinese people to be brave in experiencing the hardship of the war like what Chinese revolutionaries did in their famous Long March.
Xi is not telling Chinese people to rest at ease that their government will make great efforts to reach a deal with the US so that they may not suffer. He is telling them to be prepared for a long war like the Long March that lasted for two years.
Trump is not prepared for that. He thought the trade war would be an easy win as China would suffer much more greatly than the US in the war. Therefore, he believed that China had no choice but to surrender. That was why US trade representatives drafted an arrogant text of the treaty for Chinese representative to sign. Xi certainly will not sign such a humiliating treaty as it means China’s surrender without fighting.
Xi’s efforts to reach a deal with the US aim at maintaining good relations with the US as a trade war will only hurt both sides. Trump misunderstood Xi’s good intention as weakness. He thought he might subdue China with economic pressure. Now he is at a loss to see that China remains firm in spite of the great tariff hikes and the threat of even greater tariff hikes.
When China was attacked by foreigners, Chinese people have always supported their government to fight back heroically. Therefore, Xi has Chinese people’s support and can afford a long trade war. Trump, however, does not have American people’s full support and cannot afford a long trade war. As a result, Xi is in an invincible position while Trump is not. However, Trump cannot accept a deal without victory. That will be the problem for a fast ending the trade war.
I am not optimistic about a fast amiable ending of the trade war. On the contrary, I think that failing to win the trade war, the US may even try a real war with China.
Comment by Chan Kai Yee on SCMP’s report, full text of which can be viewed at https://www.scmp.com/economy/china-economy/article/3011531/trump-xi-trade-war-summit-g20-japan-still-air-conditions-not.
I had a post yesterday titled “China’s Xi Urges People to be Prepared for Hardship, Troops, Real War” that China shall adopt Sun Tzu’s strategy of keeping invincible position and not missing the chance to defeat the enemy.
Xi urges people to be prepared for hardship precisely for gaining and maintaining an invincible position.
The hardship caused by trade war will not mainly be loss of profit for Chinese enterprises that mainly export their products to the US as they can move to Silk Road Belt to avoid Trump’s tariff hikes. However, most of their Chinese employees will be laid off; therefore the unemployment cause by the trade war will be the major hardship suffered by Chinese people.
Chinese government has the financial resources to provide unemployment relief to the unemployed but they will still suffer mentally even if not financially. That is why Xi told them to learn from the revolutionaries who suffered tremendous hardship in their Long March.
If those unemployed study hard to learn technology and skill to find jobs in enterprises prosperous due to their creation and innovation or can stand the hardship though unable to find new jobs, Trump’s trade war cannot hurt China so that China will have gained an invincible position in the trade war.
Trump, however, will maintain a losing position by subsidizing US farmers who have lost Chinese market for their products. If he wants to be in an invincible position, he has to find alternative market for US agricultural products, but he can’t as there is a surplus of agricultural products in the world. Russia, Brazil and even India are well able to take over US agricultural market share in China.
Reuters’ report “Trump predicts ‘fast’ trade deal with China” today quotes him as saying, “The $16 billion in funds (farm subsidies) will help keep our cherished farms thriving and make clear that no country has veto on America’s economic and national security,” but he is certainly clear that such subsidies will be a burden on the US that has already been hard up.
Therefore the report says that he predicts fast trade deal with China, but will China come to a deal so fast?
A war has already begun to make it impossible for the two enemies to become friends. There may be a deal to end the war, but China will continue to make efforts to make the US suffer by reducing US market share in China and the world, intentionally enhance its geopolitical influence through its BRI at US expense, etc.
Since the US has started a trade war to hurt China, China will hurt back whether or not there will be a deal to end the trade war.
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-aid-farmers/trump-predicts-fast-trade-deal-with-china-idUSKCN1ST2KI.