New Order 2017: Trump, Putin & Xi Jinping (Pt 1- The Donald)
On the 20th of January 2017, we will enter a brave new world. The leader of the free world will be a populist and a billionaire businessman who has promised aggressive reforms.
But what does this mean? The appointment of Peter Navarro to lead a new White House office, the National Trade Council (NTC) is one of a number key indicators that signal the direction of the Trump administration. Peter Navarro, who served as senior economic advisor to the President-Elect during his campaign is an outspoken China critic.
Peter Navarro is seen as one of the key architects of the populist economic message. However, he is no sinologist (China Scholar) Rather the Harvard-educated economist is one of the growing number of political economists who started paying closer attention to China. He subscribes to what Beijing diplomats would call “China Threat Theory”.
As part of Navarro’s conversion of sinology included the completion of two published works. Death by China and Crouching Tiger: What China’s Militarism Means for the World. As the titles suggest, they deliver pessimism regarding future relations between the USA and China.
Death by China looks at currency manipulation, abusive trade policies and poor manufacturing standards whilst Crouching Tiger considers the the possibility of armed conflict between the USA and China. It suggests the USA should engage in a policy of hard power and military preparedness rather than relying on economic engagement alone.
This moves from the accepted UK wisdom, as suggested by political economist Will Hutton. A clue into his thinking can be taken from The Writing on the Wall: “The United States is not an obvious candidate to be the anchor of an open world trading system, even if it has benefited. The United States has a long-standing and powerful protectionist tradition. The problem at the heart of The United States relationship with the rest of the world is whilst preaching multilateral openness, free trade and finance whilst engaging with protectionism.”
Will Hutton goes into argue that the key to China’s success, whether it will overtake the United States or whether it will run into problems is how much it goes through its own ‘Enlightenment’. Moving towards a freedom of press, freedom of ideas and the creation nimble, economic innovation.
With this in mind, conventional thinking on China has been challenged in recent years. Whilst the Chinese have moved towards some bizzare form of authoritarian economic capitalism, what remains are human rights violations, a censorship of press and publishing. In the UK we have seen first hand the economic impact the Chinese state has on us, with the buy-out of huge UK based assets and the almost obliteration of the UK steel industry. The questions has to be asked, is Chinas’s self-proclaimed ‘peaceful rise’ a reality or is The Trump Administration’s China Threat Theory the reality.
Is Beijing worried? Chinese state paper The Global Times suggested the appoint would risked a “full-blown conflict between the two heavyweight countries.”
The New Populists
Onlookers in the United States have sneered at Trump’s appointments and rhetoric. But Donald Trump made promises to the American people he now has to keep. But Trump recognises the changing world around him, and we should (from the UK) accept them as well. That’s not to suggest for a moment we adopt Trump’s politics or protectionism and division.
Nearly a decade after the economic collapse of 2007/2008 the largest western democracies have now called for populism. The UK with Brexit and Scotish independence and in the USA with Trump. The failure of capitalism is so big that it is causing the very breakup of nation states. But not China and not another authoritarian country, Russia. (more later)
Wilbur Ross will act as Trump’s commerce secretary. Ross, a fellow billionaire is seen as another capitalist who favours protectionism over free trade. But that’s not to suggest that Trump will be moving away from conservative or neo-liberal policies. Take, for example, Gary D. Cohn, the president of Goldman Sachs who will lead the National Economic Council. Hell, Authur Laffer, is rumoured to be in touch with most of Trump’s economic advisory team, it’s likely that the inventor of the Laffer Curve, used by 1980’s neo-liberal governments the world over to reduce tax rates will influence a the White House.
the question is, will it be hard for Trump to balance the Republican Parties desire for Conservative neo-liberal policies with Conservative protectionist policies. This is made more challenging by the fact that on paper the USA has strong economic growth and technical full employment. Yet, like in the UK, American’s feel their living standards are in decline and the fight worsens for them. Like in the UK, they blame globalisation. Competition from far away lands and open borders with lax immigration policies.
Populism needs a common enemy, in the UK it’s the EU. In the USA it’s neighbour Mexico, it’s arch rival China and it’s the old rival Russia. But are the Chinese worried? The China Daily proclaimed on Thursday: “China needs to face up to the reality that the Trump team maintains a hard-line attitude toward China. It must discard any illusions and make full preparations for any offensive move by the Trump government.”
The populist enemy and the one-China policy
It’s not just economic and battles that might take place between the USA and China. China has already been forced to cut diplomatic ties with the president-elect over the one-China policy. Where President-elect Trump questioned whether the USA should do away with the policy of failing to recognising Taiwan as a legitimate government. This came after Trump accepted a call from Taiwanese president Tsai Yingwen, the incident lead to a Chinese spokesman saying: “The one China policy was America’s promise and we want them to fulfil that promise.”
The incident told us that Trump doesn’t like being pushed around, and not by the Chinese. In response, he told the press: “I don’t see why we have to be bound by the one-China policy unless we do a deal with them on other things, which includes trade.”
The One China policy ensures that any state wanting diplomatic ties with China must cut ties with Taiwan. Who officially call themselves the ‘Republic of China’ following the Chinese civil war.
[more to follow]
