Trump II will be USA´s Philip II

China will be the biggest beneficiary of the Trump presidency. By behaving like an international bully, by shouting America first, America first, China’s leaders will appear as a more appealing global alternative. If you were Peña Nieto today, after this wall debacle, would you not seek a stronger collaboration with China? By breaking NAFTA and asking for an outrageous 20% tax to build a useless wall, Trump is proving to be an extremely unreliable trade partner. We already have a fence and illegal immigration via the US Mexican border is at a 40 year low. And if you were a leader of one of the many Muslim nations, now one in five people in the planet, would you not also look at China with different eyes after your religion is put under “extreme vetting”?

We don’t hear anyone in Beijing shouting China first, China first. Right now we live in a world in which the biggest buyer in the planet is still the USA. But the relative importance of the USA, its leverage, is collapsing. Since 1950s the US weight in the world economy has gone from 32% to 18% and is rapidly falling. While China´s has gone from 2% to over 10% and in terms of the use and purchasing of many commodities China is by far the biggest international buyer.

What other nations used to admire about the USA was its defense of democracy, a system that most aspire to have, and that China does not have. But now Trump himself is helping hurt the one appeal that USA has vs China: democracy itself. His absurd assertion that voter fraud is rampant in the USA after he has won the election, an assertion that Republicans don´t support, makes people around the world feel that not even the USA is a democracy. This folly erodes the democracy vs autocracy argument helps China. Same with Trump´s love for autocratic Russia. If the US president loves Putin, where are defendants of the values of democracy? When the US president bans any help for family planning around the world it is easy for China to reduce women’s. mortality by replacing the USA as a donor and gain approval. When Trump calls foreigners rapists and asks for a deportation force to be organized what China does to Tibet for example, becomes less of an issue in comparison.

Lastly China is in an incredibly strong financial position to fight Trump right now. While the USA has a half a trillion yearly budget deficit, China generates a comparable amount in trade surplus. US has $19 trillion in debt. China no external debt and $3 trillion in reserves. If China started dumping the trillion plus dollars it has in US bonds and stopped buying more debt, USA would have to raise interest rates fast to get Americans to buy their own debt. High interest rates would push the USA into a recession. Moreover rising interest rates will make the US dollar so strong so quickly that whatever Trump believes he will achieve by tweeting to companies to keep producing in the USA, he will lose in the other companies who will flee the higher dollar at a faster rate. Attacking China now will be for Trump his Spanish Armada moment. He will be the Philip II of the USA thinking he will win and passing on the global power baton to China as Spain did to Britain.

So concretely the challenge with Trump is not only the racist, anti Latino, anti Asian, anti Muslim undertone of his America first cry. It is that his policies will hurt the US economy and enable the rise of China as the world´s indisputable power. We already saw a glimpse of this at Davos last week and there will be much more to come.

Original version

China will be the biggest beneficiary of the Trump presidency. By behaving like an international bully, by shouting America first, America first, China’s leaders appear as a more appealing global alternative. If you were Peña Nieto today, after this wall debacle, would you not seek a stronger collaboration with China? By breaking NAFTA Trump is proving to be an extremely unreliable trade partner. And if you were a leader of one of the many Muslim nations, with Muslims now one in five people in the planet, would you not also look at China with different eyes after your religion is put under “extreme vetting”?

We don’t hear anyone in Beijing shouting China first, China first. Right now live in a world in which the biggest buyer in the planet is still the USA. But the relative importance of the USA, its leverage, is collapsing. Since 1950s the US weight in the world economy has gone from 32% to 18% and is rapidly falling. While China´s has gone from 2% to over 10% and in terms of the use and purchasing of many commodities China is by far the biggest international buyer.

What other nations used to admire about the USA was its defense of democracy, a system that most aspire to have, and that China does not have. But now Trump himself is helping hurt the one appeal that USA has vs China: democracy itself. His absurd assertion that voter fraud is rampant in the USA after he has won the election, an assertion that is questioned by most Republicans don´t support, makes people around the world feel that not even the USA is a democracy. Eroding the democracy vs autocracy argument and helping China. Same with Trump´s love for autocratic Russia. If the US president loves Putin, where are the values of democracy?

Lastly China is in an incredibly strong position to fight Trump right now. While the USA has a half a trillion yearly budget deficit China generates a comparable amount in trade surplus. If China started dumping the trillion plus dollars it has in US bonds and stopped buying more debt USA would have to raise interest rates fast and go into a recession. Moreover rising interest rates will make the US dollar so strong so quickly that whatever Trump believes he will achieve by tweeting to companies to keep producing in the USA he will lose in the other companies who will flee the higher dollar at a faster rate. Attacking China now will be for Trump his Spanish Armada moment. He will be the Philip II of the USA thinking he will win and passing on the global power baton to China as Spain did to Britain.

So concretely the challenge with Trump is not only the racist, anti Latino, anti Asian, anti Muslim undertone of his America first cry. It is that his policies will hurt the US economy and enable the rise of China as the world´s indisputable power. We already saw a glimpse of this at Davos last week and there will be much more to come.