Donald Trump could be the best thing that’s happened to China in a long time

January 15, 2017

Donald Trump could be the best thing that’s happened to China in a long time

by Fareed Zakaria*

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Donald Trump has perhaps attacked no country as consistently as China. During his campaign, he thundered that China was “raping” the United States, “killing” us on trade and artificially depressing its currency to make its goods cheap. Since being elected, he has spoken to the leader of Taiwan and continued the bellicosity toward Beijing. So it was a surprise to me, on a recent trip to Beijing, to find Chinese elites relatively sanguine about Trump. It says something about their view of Trump, but perhaps more about how they see their own country.

“Trump is a negotiator, and the rhetoric is all part of his opening bid,” said a Chinese scholar, who would not agree to be named (as was true of most policymakers and experts I spoke with). “He likes to make deals,” the scholar continued, “and we are good dealmakers as well. There are several agreements we could make on trade.” As one official noted to me, Beijing could simply agree with Trump that it is indeed a “currency manipulator” — although it has actually been trying to prop up the yuan over the past two years. After such an admission, market forces would likely make the currency drop in value, lowering the price of Chinese goods.

Chinese officials point out that they have economic weapons as well. China is a huge market for U.S. goods, and last year the country invested $46 billion in the U.S. economy (according to the Rhodium Group). But the officials’ calm derives from the reality that China is becoming far less dependent on foreign markets for its growth. Ten years ago, exports made up a staggering 37 percent of China’s gross domestic product. Today they make up just 22 percent and are falling.

China has changed

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China has changed. Western brands there are rare, and the country’s own companies now dominate almost every aspect of the huge and growing domestic economy. Few businesses take their cues from U.S. firms anymore. Technology companies are innovating, and many young Chinese boasted to me that their local versions of Google, Amazon and Facebook were better, faster and more sophisticated than the originals. The country has become its own, internally focused universe.

This situation is partly the product of government policy. Jeffrey Immelt , the Chief Executive of General Electric, noted in 2010 that China was becoming hostile to foreign firms. U.S. tech giants have struggled in China because of formal or informal rules against them.

The next stage in China’s strategy is apparently to exploit the leadership vacuum being created by the United States’ retreat on trade. As Trump was promising protectionism and threatening literally to wall off the United States from its southern neighbor, Chinese President Xi Jinping made a trip through Latin America in November, his third in four years. He signed more than 40 deals, Bloomberg reported, and committed billions of dollars of investments in the region.

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Chinese global leadership on trade gaining support from ASEAN, Australia and New Zealand

The centerpiece of China’s strategy takes advantage of Trump’s declaration that the Trans-Pacific Partnership is dead. The trade deal, negotiated between the United States and 11 other countries, lowered barriers to trade and investment, pushing large Asian economies such as Japan and Vietnam in a more open and rule-based direction. Now China has offered up its own version of the pact, one that excludes the United States and favors China’s more mercantilist approach.

Australia, once a key backer of the TPP, has announced that it supports China’s alternative. Other Asian countries will follow suit soon.

At the Asia-Pacific Economic Cooperation summit in Peru in November, John Key, who was then New Zealand’s prime minister, put it simply: “[The TPP] was all about the United States showing leadership in the Asia region. . . . We really like the U.S. being in the region. . . . But in the end if the U.S. is not there, that void has to be filled. And it will be filled by China.”

Xi’s speech at the summit was remarkable, sounding more like an address traditionally made by an American President. It praised trade, integration and openness and promised to help ensure that countries don’t close themselves off to global commerce and cooperation.

Next week, Xi will become the first Chinese President to attend the World Economic Forum at Davos, surely aiming to reinforce the message of Chinese global leadership on trade. Meanwhile, Western leaders are forfeiting their traditional roles. Angela Merkel and Justin Trudeau announced last-minute cancellations of their plans to speak at the Swiss summit. Trump has only made sneering references to globalism and globalization, and no senior member of his team currently plans to attend.

Looking beyond Trump’s tweets, Beijing seems to have concluded that his presidency might well prove to be the best thing that’s happened to China in a long time.

*Fareed Zakaria writes a foreign affairs column for The Post. He is also the host of CNN’s Fareed Zakaria GPS and a contributing editor for The Atlantic. Follow @FareedZakaria

8 thoughts on “Donald Trump could be the best thing that’s happened to China in a long time

  1. Perhaps an overly simplistic view by FZ. Think man..

    Trump may appear to be a Fool, but his cabinet choices prove otherwise – conservative alt-right and bellicose. A businessman (lousy one at that) like this POTUS-elect aren’t just protectionist, but will use intimidation and war-mongering to externalize threat. Management is culled down to the lowest common denominator – Profit – whether economically or politically.

    PRC has at the moment, immense production overcapacity, that they are finding very difficult to shed – especially when countries like Vietnam, India, Poland (and other east European countries), where Western MNCs’ have established their manufacturing bases, come on-line. Besides, a resurgent Japan/Korea/Taiwan can take up the slack, should PRC-US start a trade war. As i said their economy is brittle and while nobody sane will suggest that PRC tanks – uncertainty is something the Chinapeks don’t like. But hey, shit happens!

    As for a shooting war – excuses will be made – especially with the help of the Russian Bear. It can be ‘accidental’ and most likely be in the SCS, NE Asia or over N. Korea. Take your pick. You see, Poker is a game played Open (American) or Closed (Russian). Mahjong is just too tedious, noisy and debilitating.

    And yes, we live in interesting times..

  2. This article is written well but not very well informed on Chinese thinking. My conversations with some leaders in China, and reading of the Chinese press from within the mainland and from Hong Kong, reveal a far less positive view of Trump and relations with the US. The Taiwan (“one China policy”) issue, missile defense in South Korea, and especially the South China Sea dispute are just three obstacles to US-China relations, and all of them threaten trade deals that Fareed Zakaria seems mostly concerned about. Trump’s erratic behavior and diplomacy by tweet make the Chinese nervous, as they do us.

    The China market is huge and we need them as much as they need us, for example, the three best-selling video game consoles of all time are not Wii or Xbox or Playstation. They are Chinese consoles that play Chinese-produced games.

    Take a look at the number of billionaires in his cabinet, it seems Trump is under the impression that billionaires generate an economy. That’s garbage. A bustling economy is what produces billionaires. Economists know that but amateurish politicians like Trump and Tillerson don’t.

    He who has a hammer sees nails everywhere. Trump Administration is not about trade/business opportunities. It is about power, plain and simple. That is the way he runs his Trump’s Inc. and that is his focus of international politics. Trump and Tillerson have no experience and no knowledge in politics and foreign relations and, worst of all, no inclination to admit to the fact.

    Trump says he is going to “make America great,” but he didn’t say which Americas he is going to make great; he didn’t say he is going to “make the United States of America great.” Most likely he would make Latin America great. My crystal ball says: “Trump’s legacy: The USA acceded dominance to China in trade in Asia and Latin America.” May be Europe, too, for Africa is already under China dominance in trade.

  3. The Chinese are still learning and improving and it will take a very long time before they can catch up with the US. Where things matter critically, everything they make is a duplication or clones of American, European and Russian inventions. Even
    their latest aircraft carrier is modeled after the Russian one.

    According to one report some 150,000 Indian students did post graduate studies in the US in 2015 whereas the number for PRC students was 350,000. Mammoth volume of trade alone cannot keep a country an economic power. It will be good as long as it lasts. But creations and inventions in continuum will endow a country unrivalled economic, military and geo-political power as the US remains today.

    To be a worthy economic power, economic development should be wholesome and all embracing. China concentrates in strategic sectors like build up of military capability, high speed transportation and huge infrastructure projects at the expense of consumer sector. Its consumer products (except for clothings possibly) are generally below world standards. People, when buying household items nowadays are wary of Chinese goods and look if they are made in Europe, Japan, Australia or South Korea. For a lot of them Chinese goods are No-No. So China has to bridge the slack to power ahead.

  4. China… crucial maybe… but Trump should start with Russia … make an unscheduled one day trip to Moscow on the third day after he takes office…and watch the world reaction…

  5. “..latest aircraft carrier is modeled after the Russian one.” Hawking

    Actually this PLAN Liaoning was a Soviet a ‘heavy aircraft-carrying cruiser’ called Riga (1988), later renamed Varyag (1990) and sold stripped down supposedly to be a floating Hotel and Casino in Macau (2002), like the ‘Kiev’ in Tianjin and ‘Minsk’ in Shenzen. PLAN just took over from there. So.., PRC’s sole ‘Aircraft Carrier’ is the result of ‘reverse engineering’ (i.e copy or intellectual copyright infringement) and is meant to be a training-evaluation ship with very limited operational and combat role. Even it’s jets are rip-offs of the Sukhoi-27K and Su-33s.

    No match for Malusia’s Scorpenes piloted by the ‘Blimp’, i tell ya!

    Despite the huge number of PRC’s so called PhD and post-grad students who had studied in the U.S and elsewhere returning to Commie-Land, they have not been able to produce any significant advanced research and are seen to be very mediocre technicians. Prosaic and mundane patents. Why is that?

    The really brilliant ones who can think outside the box, become ‘Westernized’ (bad word here..?) often become citizens of their host country. DARPA, NASA and private military contractors like Lockheed Martin-General Dynamics-Boeing, Northrop-Grumman-McDonnell Douglas, Raytheon, GEC, Lawrence Livermore, BAE etc employ them by the hundreds.

    Truly if PRC and the Chinese had ‘Brains’ they would not need to copy or reverse engineer everything! That’s why your i-phones and Samsungs remain popular, while high end Huaweis and Oppo become trash within a year or two. Any One owns a Great Wall or Chery auto? I’m downgrading..

  6. No one wants to spend to maintain an Aircraft Carrier. Five thousand personnel on the main Aircraft Carrier. Four destroyers. Four submarines. 24 hour overhead cover and a mother ship to replenish the fleet of the day to day non military needs. Now calculate the cost and multiply by seven.

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