The US has a clause written in revised NAFTA agreement that “if one of its partners enters a free trade deal with a ‘non-market’ country such as China, the others can quit in six months and form their own bilateral trade pact.”
The US boasts that it is a toxic pill against China to be add to all its trade agreements with other countries, but even Canada, an NAFTA member, does not regard the clause as against China. Its Prime Minister Trudeau says Canada will work with China to eventually strike a free trade deal, according to Reuters’ report “Trudeau says Canada to work with China on eventual free trade deal” yesterday.
The US regards itself as world leader but pursues isolation. How can an isolated leader have others follow its leadership?
Comment by Chan Kai Yee on Reuters’ report, full text of which can be viewed at https://www.reuters.com/article/us-asean-summit-trudeau/trudeau-says-canada-to-work-with-china-on-eventual-free-trade-deal-despite-nafta-clause-idUSKCN1NK0CU.
I have described in my previous posts how the US made Russia nad China de facto allies. Now the US seems to repeat the process to turn Iran into China’s ally. As the US refuses to protect its European allies and as its Asian ally the Philippines is distancing itself from the US and seeking friendship with China, the US, posing as world leader, has few followers in the world while China’s followers are increasing in spite of Western media’s efforts to demonize China’s Belt and Road initiative. The media simply lack the common sense in describing China’s efforts to replace the US as world leader.
Reuters’ report “China says business ties with Iran no harm to any other country” today tells us how US sanctions cannot hurt Iran but will benefit China.
I believe that the US is helping China replace it as world leader. However, if China copied US predatory and coercive leadership, like the US it would have few followers.
China has made US and European sanctions against Russia fail and thus strengthened its de facto alliance with Russia. Now it will make US sanctions against Iran fail and win over Iran as its ally.
Sanctions against Iran will enable China to expand imports of Iranian energy and exports to Iran with Renminbi as the major trading currency. With a population 81 million and per capital GDP more than $19,000, expansion of Chinese market share in Iran will significantly offset China’s loss of US market share caused by Trump’s trade war against China.
Comment by Chan Kai Yee on Reuters’ report, full text of which is reblogged below:
China says business ties with Iran no harm to any other country
Reuters Staff August 11, 2018
BEIJING (Reuters) – China’s business and energy ties with Iran do not harm the interests of any other country, the country’s Foreign Ministry said, after U.S. President Donald Trump said companies doing business with Iran would be barred from the United States.
China has already defended its commercial relations with Iran as open and transparent as U.S. sanctions on Iran took effect despite pleas from Washington’s allies.
In a statement released late on Friday, China’s foreign ministry reiterated its opposition to unilateral sanctions and “long-armed jurisdiction”.
“For a long time, China and Iran have had open, transparent and normal commercial cooperation in the fields of business, trade and energy, which is reasonable, fair and lawful,” it said.
“This does not violate United Nations Security Council resolutions or China’s promised international obligations, nor does it harm the interests of any other country, and should be respected and protected,” the ministry added.
Using sanctions at the slightest pretext or to threaten anyone won’t resolve the problem, it said.
“Only dialogue and negotiations are the true path to resolving the issue,” the ministry added.
China, Iran’s top oil customer, buys roughly 650,000 barrels a day of crude oil from Tehran, or 7 percent of China’s total crude oil imports. At current market rates, the imports are worth some $15 billion a year.
State energy firms CNPC and Sinopec have invested billions of dollars in key Iranian oil fields such as Yadavaran and North Azadegan and have been sending oil to China.
European countries, hoping to persuade Tehran to continue to respect the nuclear deal, have promised to try to lessen the blow of sanctions and to urge their firms not to pull out.
But that has proven difficult, and European companies have quit Iran, arguing that they cannot risk their U.S. business.
Few American companies do much business in Iran so the impact of sanctions mainly stems from Washington’s ability to block European and Asian firms from trading there.
Reporting by Ben Blanchard
The US is now fighting trade wars with not only China but almost all other world economies with significant scale.
It seems that the US is conducting lose-lose trade wars everywhere. The US is increasing tariffs to reduce others’ exports so that others will do the same to reduce US exports. In such trade wars, both sides will suffer. We certainly will be worse off but we shall not be sad because our sadness cannot change the sad world situation. Sadness, however, is bad for our health and makes us miserable.
I myself am able to remain happy as I always find something funny in the bad news and thus be entertained by the news. I hope my readers will also be happy to enjoy the funny sides of bad news.
For example, Reuters’ report yesterday “Xi says China must lead way in reform of global governance”. The title itself is very funny. China leads way in reform? Does Xi mean that China shall be world leader? Is China strong and rich enough to be world leader?
Certainly, China knows it is not strong or rich enough to have the influence to be world leader.
How do you know that? I know that from the word “must”. It means that China, though not strong and rich enough to be world leader, but as the US has given up world leadership and global governance is now in chaos due to the various confrontations initiated by the US, China “must” manage to take the leading role in the world. The word “must” tells us how sad world situation is.
China has to strive to lead the way in reform of global governance due to the sad situation. That was why Xi said that it is necessary for the protection of China’s sovereignty, security and development interests according to Reuters report.
Xi is wise to know China’s sovereignty, security and development interests will be harmed if the world is in chaos due to poor global governance. That is why he puts forth the idea of the community of common destiny. The poor global governance caused by US withdraw from world efforts to stop global warming alone will cause disasters on a global scale.
It is also funny that journalists and analysts in well-know world media fear that China has the ambition to enhance its influence in the world. They are so anxious to maintain US world hegemony.
What’s good in US world hegemony? To have trade wars all over the world?
What’s bad in China’s influence? Win-win cooperation to benefit both China and its partners?
Reuters tries to make readers believe Chinese company paid a lot for equity in Sri Lanka government controlled companies for Sri Lanka to repay its debts owed to China. It simply ignores the fact that Sri Lanka said the funds were received by its treasury.
China paid a lot for the operation of a port company that loses money now. Why? It has the vision that the port will make Sri Lanka prosper in the future so that Sri Lanka will be good market for Chinese goods. China will transfer its industries to Sri Lanka and other countries in Silk Road economic belt to export goods to itself and developed countries including the US as Xi foresee China cannot maintain its trade surplus with the developed countries forever.
To pay for the imports from those countries, China has to develop technology-intensive industries for exports to those countries. That is one of the major aims of China’s Made in China 2025 plan.
You may be upset by lots of reports and analyses that demonize China by distorting China’s investment in Belt and Road projects as efforts to control others by excessive loans. You shall not be upset. Instead, you shall be entertained by their blindness in failing to see the truth. Perhaps, it’s not blindness. They distort the facts knowingly to earn a living.
Comment by Chan Kai Yee on Reuters’ report, full text of which can be viewed at https://www.reuters.com/article/us-china-diplomacy/xi-says-china-must-lead-way-in-reform-of-global-governance-idUSKBN1JJ0GT.
Jeremy Goldkorn June 20, 2018
Australia’s Lowy Institute has published the results of its 2018 public opinion poll: 42 percent of the survey respondents said Trump’s presidency is a critical threat to their country — higher than foreign political interference (41 percent) and China’s growing power (36 percent). Only 30 percent of Australians “have either ‘a lot’ or ‘some’ confidence in Donald Trump ‘to do the right thing regarding world affairs,’” while 43 percent are confident about Xi Jinping’s leadership.
Meanwhile, the South China Morning Post points out that while “many foreign nations expressed regret at the United States’ decision to pull out of the United Nations’ top human rights body, the move could be a boon for China as it leaves it with one fewer critic in the group.”
Xinhua News Agency is enjoying all of this: It has published a special feature (in Chinese) on Trump’s “withdrawal from the global community” (推出国际群 tuīchū guójìqún). Simon Rabinovitch, Shanghai correspondent for the Economist, tweeted about it:
Deep irony in some of the actions that China highlights. Take the TPP: America’s departure was a gift for China, reducing the threat of a united front against its trade practices. But now China describes it as an American betrayal of the international community. Win-win, as they say.
Source: SubChina “Xinhua News Agency cheers the decline of American leadership”
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.
The US has to pursue isolation as world leadership is too heavy a burden and it has to boost its economic growth to maintain its number one status in world economy. That is certainly a correct move, but it gives China opportunity to grab world leadership from the US.
I have repeatedly warned China not to try to replace the US as world leader as it has not been strong enough yet, but China’s Xi seems precisely doing the opposite – making great efforts to grab from the US world leadership at least in economy and diplomacy.
Is Xi stupid in doing so? China’s gifted strategist Sun Tzu teaches us to maintain invincible position while not miss the opportunity to win. One relies on oneself to be invincible but cannot make one’s enemy lose the war, if there are no factors for the enemy to lose the war. That is why Sun Tzu says that one can know victory but cannot make victory.
Indeed one can play tricks to make one’s enemy commit mistakes and lose the war like what China’s gifted strategist Sun Bin did in his famous Battle of Maling. But what if the enemy would not be duped?
At the beginning of the Korean War, China’ talented general Peng Dehuai copied Sun Bin’s trick. His troops encountered South Korean troops first but retreated instead of winning an easy first battle as he had to avoid giving his enemy the impression that his troops were capable to fight.
On the contrary, he told his troops to throw things away while retreating to give General McArthur the false impression that his troops were in panic as they were afraid of well-equipped US troops. As a result, McArthur advanced rashly and had his troops encircled by Chinese troops. Peng’s surprise offensive caused US troops to collapse and retreat as fast as they could to the south of Seoul. The victory was brilliant, but what if General McArthur had not been arrogant but had stopped his rash advance and, instead, built fortifications along the frontline to keep the large part of North Korea he had occupied. With poor weapons, General Peng simply could not break US troops’ defense.
McArthur gave Peng the opportunity to win and Peng did not miss the opportunity to win though his troops were much weaker.
Now, China is not strong enough to win, but the US is giving China the opportunity to win. Shall China miss the opportunity? I pointed out in my post earlier that Chinese President Xi Jinping is a man of quick decision and quick actions. I now realize that Xi is taking the opportunity to win. That is why China has suddenly taken the initiative to improve relations with Japan, India and Indonesia, the most important nation of ASEAN. (See Reuters’ reports “China’s Xi, India’s Modi seek new relationship after summit” on April 28 at https://www.reuters.com/article/us-china-india/chinas-xi-indias-modi-seek-new-relationship-after-summit-idUSKBN1HZ019, “China Premier Li says open to increasing Indonesia palm oil import quota” on May 7 at “https://www.reuters.com/article/us-indonesia-china/china-premier-li-says-open-to-increasing-indonesia-palm-oil-import-quota-idUSKBN1I80RH and
“Japan, China hail warming ties amid troubled history” on May 9 at https://www.reuters.com/article/us-japan-china/japan-china-hail-warming-ties-amid-troubled-history-idUSKBN1IA1GF.
The busy diplomacy shows Xi’s efforts to grab world leadership from the US as US retreat in the world is giving China the opportunity to win. Japanese PM Abe in particular has failed sadly to persuade Trump to return to the Trans-Pacific Partnership (TPP) and has now to focus on ASEAN + three (China, Japan and South Korea), where China will certainly be the leader.
Under such circumstances, China may not allow the US to defeat it in trade war or how can China make others believe that it is a real rival to the US?
Comment by Chan Kai Yee on Reuters’ reports
Bill Bishop of Sinocism January 19
The Chinese Communist Party emphasized its expanding global ambitions in a remarkable 5,500 character treatise on the front page of Monday’s “People’s Daily.”
“The world needs China, as all humans are living in a community with a shared future … That creates broad strategic room for our efforts to uphold peace and development and gain an advantage.” — Communist Party “manifesto” on China’s role in the world
Why it matters: This is further evidence of the seriousness of China’s broad global vision. President Xi Jinping sees a remarkable opportunity, enhanced by the Trump presidency and its “America First” policies, to reshape the global order in ways that legitimize the Chinese political system and create more strategic advantages for the China.
The Xi Era and its growing global ambition was ushered in during the 19th Chinese Communist Party Congress last fall, where Xi vowed to increase China’s global influence and reshape global governance. As Xi said in his report to the Congress: “It will be an era that sees China moving closer to center stage and making greater contributions to mankind.”
This week’s article — called 紧紧抓住大有可为的历史机遇期 or “Tightly grasping the very promising period of historical opportunity” and signed by the pseudonym “Xuanyan 宣言,” which means manifesto — called for the nation to grasp the historic opportunity now before the nation, according to state-run media.
•Noting the problems facing the world, such as a “democratic deficit,” “governance deficit,” “development trap,” wealth gap, terrorism and climate change, the article said “the drawbacks of capitalism-led political and economic systems are emerging; the global governance system is experiencing profound changes and a new international order is taking shape.”
Under the headline “Make China Great Again,” the South China Morning Post quoted the manifesto calling out the “drawbacks” of the the capitalist economic system and said “a new international order is taking shape,” with China facing an historic opportunity to “restore itself to greatness and return to its rightful position in the world.”
Be smart: China is not getting back into the business of exporting revolution as it did in the Mao-Era, and China’s style of Leninist-Mercantilism is unlikely to fit other countries. But Xi and the Communist Party’s Marxist theoreticians who believe in “historical determinism”, a phrase that appears repeatedly in the manifesto, see America’s retreat as a moment to increase China’s influence in the world.
Source: AXIOS “China wants to reshape the global order”
Note: SCMP’s article believes the People’s Daily article means China wants to replace the US as world leader. It quotes Jonathan Sullivan, director of the China Policy Institute at the University of Nottingham, as saying, “It reflects the Chinese leadership’s belief that right now is a huge opportunity for China to stake out a global leadership role.”
If China wants world leadership now, its leaders are stupid as China is far from strong enough to be world leader. I believe AXIOS’ note “Be smart” is more sensible. As I pointed in my previous posts, Xi Jinping Though on Socialism with Chinese Characteristics is but China’s declaration that China can say no. What China wants is but to enhance its influence in the world to put an end to US world hegemony and make the world a multipolar one.
Full text of SCMP’s article can be found at http://www.scmp.com/news/china/policies-politics/article/2128711/make-china-great-again-communist-party-seeks-seize.
Liu Mingfu is right that the US is declining, but he fails to see that so far the US remains the largest economy and militarily strongest in the world. Its currency, the US dollar, remains the major currency and its central bank, the Federal Reserve, the most influential in world financial sector. US decline has mainly been caused by the stupidity of its leaders and politicians instead of the decline of its enterprises, technology, etc. However, the tremendous successes of US enterprises in the world prove that the US does not lack administration and management talents. The problem is but that American talents prefer a career in business instead of political sector; therefore, when the US has declined further and been surpassed by China, great leaders and politicians may emerge and conduct reform to enable the US to rise again.
China Has Not Risen Sufficiently
On the other hand for a long time to come China lacks the strength to grab world leadership from the US. It needs a peaceful environment to grow further. If it has grown much stronger than the US it may be strong enough to replace the US as world leader. That will be a long time away. During the Cold War, the US had a much larger economy than the Soviet Union but was unable to subdue it and had to be satisfied with being the leader of only a half of the world and let the Soviet Union led the other half. Judging by that, China has to grow much stronger than the US both economically and militarily if it wants to replace the US as the only leader of the world.
However, why shall China be world leader in the first place? I don’t see the necessity for and benefit from world leadership though lots of Chinese have such a desire.
For economic leadership, China shall not only have a much larger economy but its currency shall replace the US dollar as the major currency in the world and its central bank the People’s Bank of China shall be more influential than US Federal Reserve. It takes much longer for Chinese currency and central bank to obtain such statuses than mere surpassing in size of economy.
Militarily, the US has a much powerful navy than China that can dominate the oceans. It takes at least 25 years for China to build a navy of similar size and strength.
The Thucydides Trap
A rising power’s peaceful efforts to peacefully surpass and replace an existing power as world leader is but a peaceful competition, but that is true in theory only. In reality, the existing power usually tries hard to contain the rising power and hinder its growth.
Upset by such containment and hindrance, the rising power often resists, confronts and challenges the existing power.
In 2015, Harvard political scientist and professor Graham Allison studied such conflicts between an existing dominant power and a rising power in human history and found that such conflicts often give rise to war. The first war given rise by such conflicts was the well-known Peloponnesian War in early Western history that rocked the entire Greece.
At that time the city state Sparta was the dominating hegemon in Greece. However, the fast rise of the city state of Athens made the existing dominant power Sparta worry that Athens would soon threaten its hegemony. Sparta launched a preemptive attack at Athens and thus began the three decades of the Peloponnesian War. In old time, it was a war of quite a large scale as other city-states in Greece were forced to take sides and drawn into the war.
Famous historian Thucydides later wrote that the Peloponnesian War was entirely due to ”the growth in power of Athens, and the alarm which this inspired in Sparta.”
Prof. Allison has identified such a scenario and calls it the Thucydides Trap. Basically, Prof. Allison’s theory of the Thucydides Trap states that when a rising power challenges the dominance of an established power, the dominant power is likely to respond with violence. It’s a model for predicting the possibility of war between two nations. However, awareness of such a possibility may cause country leaders to make efforts to avoid the war.
Therefore, if a rising power intends to or only gives the impression that it intends to be a rival to or even replace the existing dominant power, it has fallen into the Thucydides Trap. At first, the existing power usually tries to contain the rising power but mostly without success. Finally, it has to respond with violence.
Prof. Allison claimed that his research team at the Harvard-affiliated Belfer Center identified 16 cases over the last 500 years similar to the conflicts between Sparta and Athens. Twelve of the sixteen cases resulted in warfare.
The then Chinese leader Hu Jintao was perhaps aware of the trap though the term Thucydides Trap has not been invented yet. Hu pursued China’s peaceful rise for which good relations with the US is vital. Therefore, he banned reprint of Liu’s book. However, Liu’s idea for China to replace the US as world leader especially to surpass the US in military strength inspires alarm in the United States. In spite of Hu’s ban to please the US, the popularity of Liu’s book clearly shows Chinese people’s desire for China to replace the US as world leader. Such desire will finally be accepted by future Chinese leader though it was opposed by Hu at that time. As a result, the US fell into the trap and began its pivot to Asia to contain China.
US containment began with encirclement of China as described in my post “From Unrequited Love to China Can Say No” yesterday.
Article by Chan Kai Yee.