One subject that was repeatedly raised during President-Elect Donald Trump’s campaign for the presidency was the topic of China. Specifically, Trump stressed how the U.S. needed to change its relationship with the “Middle Kingdom” of Asia in order to stop giving away the store when it comes to trade.
The issue of U.S. trade deficits with China has been a nagging one ever since 2001, when China was formally invited to join the World Trade Organization (WTO), with the full blessings of elite globalist President George W. Bush. The U.S.-Chinese trade deficit now stands at $365.7 billion.
As Donald Trump emphasized on the campaign trail, China is a problem that must be dealt with if the U.S. hopes to return to its glory days of being a manufacturing nation with a productivity-based economy rather than a service-oriented one.
With Trump already digging deep into the issues of American manufacturing and preserving jobs in America, it’s clear that trade negotiation, renegotiation and even other measures are on the horizon for his administration, and likely sooner rather than later. One scenario that trade analysts are hoping the U.S. can avoid in taking any future actions would be the sparking of a massive trade war.
But, as President-Elect Trump would likely be quick to point out, the U.S. is already effectively at war with China trade-wise. It’s a war we’re losing, and badly.
Every time a manufacturing company decides to relocate its production to China or decides to outsource its parts from that nation instead of the U.S., it hurts our economy and our labor force, even if such an act makes a few already wealthy people even wealthier.
Unlike globalist politicians, however, Trump’s goal is not to enrich a few select people at the top (who may not even be American); he wants all Americans to benefit from new regulations and new trade deals. And to that end, he’s going to tear up the Transpacific Partnership (TPP) free-trade agreement and where necessary, enact unilateral tariffs to protect American trade and American jobs.
To the horror of the Chinese, this might suddenly mean trade barriers and higher costs where previously the People’s Republic was allowed to “dump” their products on the American marketplace and compete unfairly via their unrealistically devalued currency. As of January 20, those days look likely to end.
But complicating matters is a spat that’s been growing over China’s occupation and enlargement of artificial islands in the South China Sea, some of which it’s building airfields and other military features on. The idea is that China would like to claim sovereignty over these islands and the territory that surrounds them so it can lay claim to the large oil deposits and enormous fishing grounds and shipping lanes that are prevalent there.
Other countries wanting to claim some of the territory for themselves include Taiwan, Vietnam, Malaysia and the Philippines, all of which have military presences there to some degree. The U.S. has been very vocal about wanting to navigate warships through the region on a regular basis, moves that China has said may not be permissible in the future.
The U.S. also has a diplomatic agreement to militarily intervene on Taiwan’s behalf in any case where that island nation was to be attacked by its larger nemesis. Of course, it’s not too difficult to see a dispute or incident in this geographic area having an impact on U.S.-Chinese trade or diplomatic relations.
Another subject that’s raised the ire of China in recent weeks is President-Elect Trump’s acceptance of a phone call from Taiwanese President Tsai Ing-wen on December 2. Due to China’s insistence that Taiwan is not a separate nation but rather a “rogue province” that has merely been allowed a small amount of independence, this act took on much greater significance in China than it did in the U.S. Chinese state media reacted coyly, saying that Taiwan had pulled a “little trick” on the United States. But this innocent wording may belie a reaction that may not nearly be so placid. China may instinctively sense that trouble is brewing for the relationship between itself and the United States.
Indeed, in recent days, the newspaper China Daily reported that the Beijing government will issue a penalty to an “unnamed U.S. automaker for monopolistic behavior,” apparently for instructing distributors to fix prices on some U.S. car models in China in 2014. Why this was being applied now so soon after Donald Trump’s telephone call (and election victory) is suspicious.
Zhang Handong, director of China’s National Development and Reform Commission, was quoted as saying that observers should not “read anything improper” into the timing, but some China analysts aren’t so sure.
Both Ford Motor Company and General Motors had no comment on the announcement. Currently, China is the world’s largest market for cars, and more than one-third of the 10 million autos General Motors manufactured in 2016 were purchased by Chinese buyers.
One other issue that has the potential to upend U.S.-Chinese relations is the status of Beijing’s trade with Europe. Unlike the U.S., the EU has had no qualms about slapping China with anti-dumping duties over some of its products, particularly steel, which Europe has claimed has been subsidized by the Chinese government and been artificially priced lower than EU steel, resulting in trade and job losses.
There are currently 51 anti-dumping duties against China in effect in the EU, and in a number of cases, the duties exceed 65 percent for certain goods.
For its part, China claims that it’s now been a member of the WTO for a full 15 years, and it says it’s entitled to be declared a genuine “market economy” by WTO rules, which would prevent it from being subject to such duties.
The catch is that even though WTO rules state that member nations should be accorded with this status after such a period, such countries need the written certification of other member nations. And in this case, numerous EU nations such as Spain and Italy are opposed to conferring this status to China. Not only would it have a negative effect on the EU, but EU-U.S. trade would be negatively affected as well. Therefore, the U.S. is opposed to granting this status in addition to many EU nations.
“China has not made the reforms necessary to operate on market principles,” an unnamed U.S. trade official said. “The United States is prepared to defend its right at the WTO to protect American workers and firms from the damaging effects of persistent distortions in the Chinese economy.” President-Elect Trump is unlikely to alter this position, and so, it remains to be seen what China’s next step regarding trade will be.
~ Conservative Zone
