How to win the Cold War with China–Dr. Fareed Zakaria

October 15, 2018

How to win the cold war with China–Dr. Fareed Zakaria

The Trump administration’s most significant and lasting decisions will be about U.S. policy toward China. Far more consequential than even the Supreme Court’s composition or immigration policy is whether the 21st century will be marked by conflict or cooperation between the two most prosperous and powerful countries on the planet. The last time there was such a question — when Britain confronted a rising Germany 150 years ago — it did not work out so well.

Image result for Trump vs China

Since the end of the Cold War, we have lived in an era of almost no genuine great-power competition, which has led to the emergence of a dynamic global economy and a huge expansion of international trade, travel, culture and contact. All this happened under the United States’ uncontested supremacy — military, political, economic and cultural.

That age is over. Twenty-five years ago, China made up less than 2 percent of the global gross domestic product. Today that figure is 15 percent, second only to the United States’ 24 percent. In the next decade or so, the Chinese economy will surpass the size of America’s. Already, nine of the 20 most valuable technology companies in the world are based in China. Beijing has also become far more active on the global stage, ramping up its defense spending, foreign aid and international cultural missions. Its Belt and Road Initiative, infrastructure investment in dozens of countries, will ultimately be at least seven times larger than the Marshall Plan, if not far more, in inflation-adjusted terms.

The Trump administration has many of the right instincts on China. Beijing has taken advantage of free trade and the United States’ desire to integrate China into the global system. The administration is right to push back and try to get a fundamentally different attitude from China on trade. But instincts do not make for a grand strategy.

Were Washington to be more strategic, it would have allied with Europe, Japan and Canada on trade and presented China with a united front, almost guaranteeing that Beijing would have to acquiesce. It would have embraced the Trans-Pacific Partnership as a way to provide Pacific countries an alternative to the Chinese economic system. But in place of a China strategy, we have a series of contradictory initiatives and rhetoric.

President Trump’s Trade Gangster–Peter Navarro

If there is one person in the White House whose ‘to do’ list you want to avoid, it’s Peter Navarro. They call him the ‘most dangerous’ man for the global economic order. He is radical, determined and wields enormous influence on US President Donald Trump– source–

In fact, the administration seems divided on the broader issue of U.S.-China relations. On one side are people such as Treasury Secretary Steven Mnuchin, who want to use tough talk and tariffs to extract a better deal from China, while staying within the basic framework of the international system. Others, such as trade adviser Peter Navarro, would prefer that the United States and China were far less intertwined. This would undoubtedly mean a more mercantilist world economy and a more tense international order. There is a similar split among geo-politicians, with the Pentagon being more hawkish (not least because it ensures huge budgets) and the State Department more conciliatory.

Vice President Pence recently gave a fiery speech that came close to declaring that we are in a new Cold War with China. An outright labeling of China as the enemy would be a seismic shift in U.S. strategy and would certainly trigger a Chinese response. It could lead us to a divided, unstable and less prosperous world. Here’s hoping the Trump administration has thought through the dangers of such a confrontational approach.

Image result for mike pence

History tells us that if China is indeed now the United States’ main rival for superpower status, the best way to handle such a challenge lies less in tariffs and military threats and more in revitalization at home. The United States prevailed over the Soviet Union not because it waged war in Vietnam or funded the contras in Nicaragua, but because it had a fundamentally more vibrant and productive political-economic model. The Soviet threat pushed the United States to build the interstate highway system, put a man on the moon, and lavishly fund science and technology.

The former head of Google China, Kai-Fu Lee, has written an important book arguing that China is likely to win the race for artificial intelligence — the crucial technology of the 21st century. He points out that China’s companies are highly innovative, its government is willing to make big bets for the long term, and its entrepreneurs are driven and determined.

Tariffs and military maneuvers might be fine at a tactical level, but they don’t address the core challenge. The United States desperately needs to rebuild its infrastructure, fix its educational system, spend money on basic scientific research and solve the political dysfunction that has made its model less appealing around the world. If China is a threat, that’s the best response.

6 thoughts on “How to win the Cold War with China–Dr. Fareed Zakaria

  1. To me, the Cold War is real in that the confluence of internal strife within both America and China makes the cold war a convenient way out for politicians in both nations to gain legitimacy. It is no playing of words. It is playing of minds of the people by their own political elites.

    Yet, the silver lining in my mind is that both America and China is big enough to sustain a cold war without sinister effects for the people of both land.
    Not all wars lead to sheer destruction.
    Americans civil war brought about emancipation.
    China’s war of spring autumn brought about flowering of hundred schools of thoughts.

    This Stanford Professor has documented more of this train of thought.

    Furthermore, I actually see opportunities for many nations in the world to gain from this friction. One of which is Malaysia, if Malaysia weren’t so Welayu. There is nothing healthy in a nation for a 93 yo to rule.
    It just hope the 93 yo sees how the nation is sick with feudal Lords.

    As an American, I am worried. America is losing the world and have nothing much to gain in the recent events. Political elites from both aisle is losing the trust of the people. All of this chat of war with China has nothing substantial meaningful to gain. America is regressing. Perhaps, one good thing that could come about is that my Evangelical American brethren would wake up from our dispensational premilinialism worldview. Grace does not mean we could be spared from strife, while others suffer, as we shrug from our need to carry the world’s problem in our shoulder.

    For the Chinese, I sincerely hope a cold war could open up room for reasonable dissent within the high walls of a very ancient world, providing herself an opportunity to reflect and dig deeper into her own hundred schools of thoughts. One of which is Mozi’s.
    If not, at least let this song from Beyond sung as it is in its’ Cantonese version.

    The song was so 1992 and yet so 2018.長城_(Beyond)

  2. There will be no cold war with China. Only 20% of China GDP come from trade. They can survive even under total trade shut down.

  3. Ha, ha! Din, I don’t know if it’s a New Cold War. But I expect a protracted trade war, as Jack Ma says, that might go as long as 20 years. Donald Trump says he is winning “bigly”, and that the Chinese are desperate for negotiation. In the mean time his men are traveling to Beijing frequently trying to bring the Chinese back to the negotiation table. Who is desperate by the the way?

    Last Tuesday Trump repeated his threat of an all in “show hand” to slap tariffs on the remainder US$267 billion of Chinese imports if Beijing retaliates for the recent levies the US has imposed in an escalating trade war. After he puts in all his chips and runs out of Chinese goods to impose tariffs, then what?

    So far China has been pretty restrained in this trade war, and has not used their heavy weapons like rare earth and dumping the US bonds they hold. Obviously they are using the “rope a dope” strategy to appear weak to convince Donald Trump to attack and fall into a trap. This “rope a dope” was popularized by boxer Muhammed Ali, a tactic of protecting one’s self during combat while an opponent wears himself out, and then unexpectedly lashing out. Top Chinese leaders have been extremely busy since June traveling around to explore new markets and inviting foreign leaders to China to convince them China’s market is opening up. In the contrary, the Trump administration is doing nothing much besides renegotiation with Mexico and Canada.

    Since the third round of negotiations in June, Xi Jinping has realized that Trump’s trade war with China was not about trade at all. The central issue is about Made in China 2025 (MIC2025), the national economic plan of China. Trump wants total surrender from China to give up its national economic plan. Xi pulled his team out from any further negotiations. And he is digging in for a protracted trade war.

    Speaking to the Study Times, a weekly newspaper affiliated with the Party School of the Central Committee of the CCP, Zhao Changmao, the former deputy head of the Central Party School, which is the leading academy of the Communist Party of China, laid out China’s options on the table:

    “China only has two options: Give in to America’s bullying … or let the other side know that Chinese people are not easily pushed around. This trade war is different. It’s a strategic game concerning the country’s fate.

    “[We] have no reason to compromise. [We have to] take the moral high ground, further open the economy and make more friends internationally. [We should also] take targeted measures to hurt the US, [but we] need … to be prepared to accept a heavy cost for fighting with the world’s number one country.”

    On the same day a new round of US tariffs on US$200 billion worth of Chinese goods took effect, China issued a white paper, “The Facts and China’s Position on China-US Trade Friction”, to clarify its stance on the ongoing Sino-American trade conflict and provide the facts about bilateral economic exchanges. Throughout the trade talks, the US has not shown any sincerity in the negotiations. Donald Trump administration has continued with its maximum pressure and blackmailing policy to force China into submission. The US moves will worsen the trade row and dim the trade prospects of not only the two sides but also the world as a whole.

    More than other things, the timing of the white paper, which coincides with the imposition of new US tariffs on Chinese goods, is worth pondering. Overall, it aims to demonstrate that China is prepared for the escalation of the Sino-US trade conflict but also remains committed to negotiations on the grounds of equality and reciprocity.

    In the face of uncertainty, a recent front-page article in People’s Daily called upon Chinese citizens to deepen reform and opening-up, and meet the challenge of the times. In addition, the adjustments to macroeconomic policies, which lean toward more proactive fiscal policy and easy monetary policy, together with the appeal of the State Council, China’s Cabinet, to tap the huge consumption potential, show that China is taking necessary measures to deal with the possible escalation of the Sino-US trade conflict. Which means China is bracing for the worst while hoping for the best.

    Besides, the white paper is clearly targeted at readers outside the US. Whether or not the Trump administration accepts it and changes its protectionist stance is another matter. As the white paper says, China is firmly committed to mutually beneficial cooperation with developed and other developing countries, and will continue to strengthen economic exchanges with countries other than the US.

    And that China has issued a white paper on the trade conflict shows it is more proactively and constructively managing trade disputes. It also shows China is determined to safeguard the multilateral trade system and rules. The white paper is not only a response to the US’ protectionist moves and bullying tactics, but also an answer to the future of globalization, which is now at a crossroad.

    There are four factors in the white paper that deserve our special attention. First, China has drawn a red line in bilateral economic exchanges – that is, China’s national dignity and core interests should be always safeguarded and never be subjected to the whims of trade disputes.

    Second, China will continue to promote the reform and improvement of the multilateral trading system centered on the WTO, as the system faces serious challenges. As a major country, China could and should shoulder the responsibility of helping upgrade the multilateral trading system and maintain the stable operation of the world economy.

    Third, in the days ahead China will focus on deepening reform and opening-up, which have helped it achieve high-speed growth for decades. It will stick to the original course of deepening reform with or without the trade conflict.

    Fourth, China will strengthen cooperation with countries other than the US. It is true that China remains committed to developing Sino-US economic and trade relations. Yet China alone cannot uphold Sino-US ties. As such, it must be prepared for a cooling-down of bilateral trade ties, and enhance collaboration with other economies, including the European Union, Japan and Canada, to offset the trade conflict’s negative impact.

    Despite Donald Trump’s declaration that the “trade war with China is easy to win”, it is too early to say which side has the upper hand in this trade conflict. In fact, no one will emerge winner in a trade war. As the disputes drag on, the US economy will suffer major setbacks and American consumers will be forced to bear the brunt. And history has shown China’s capability to weather tough economic storms is well known. As Mahathir said in the video you previously posted: “… China has been poor before. China will survive….”

    Let’s wait and see what will happen after the Trump-Xi meeting at the G-20 this November. Part of Trump’s tough stance on the Sino-US trade conflict is to win him more support at home. Will he back down if the Republicans lose big in the midterm elections? Xi is an ultra-nationalist; he will not buckle. After all, what is at stake is his vision of the future, embossed with Chinese characteristics for a new era.

    Honestly, I won’t be surprised that, after his meeting with Xi, Trump would suddenly decide it is time to fold and say he won. He loves Xi and he loves him back. Grab a superficial token and build it as a great hard won trophy!

  4. Current global trade is based on raw materials are welcome but manufactured goods will face some taxes to protect domestic manufacturers
    In this regard, U S has the lowest tariff for imported manufactured goods. Now let us negotiate.

  5. The US using the trade deficit as an excuse to contain China. Because of Made in China 2025, the US felt threatened by China’s intention to be the leader in key tech such as AI, robotics, new IT, numerical control tools, aerospace and high-tech ships.

    It is being disingenuous and a hypocrite by only focusing on merchandise trade deficit, but conveniently forget about trade in services where it has consistently had huge surpluses.

    Trade imbalance should never be seen bilaterally, but multilaterally because of globalisation and the inter-dependence of trade linkages. Example given by Yukon Huang – China makes about $25 from manufacturing iPhone parts, other countries like Korea, Japan, Taiwan about $200 and the Apple takes in about $250 in pure profit from the sale of 1 iPhone. But the entire $500-600 is attributed to China’s export.

    The US has had trade deficit for more than 40 years running. Got nothing to do with China, or Japan previously. As long as the world uses the USD as the world currency and as long as Americans do not save enough and spend beyond its means, it will always have a deficit. The deficit just means the rest of the world financing US consumption. The remedy is inside the US, not outside. The US has trade deficits with more than 90 countries.

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