Sun, Nov 04, 2018 - Page 6 News List

Xi’s ‘dream’ might be a nightmare

By Lin Tai-ho 林泰和

In March, US President Donald Trump signed the Memorandum Targeting China’s Economic Aggression and fired the starting gun on the US-China trade war.

In contrast to previous steps taken by Washington, the memorandum adopts an all-encompassing approach to US national security considerations.

It marks perhaps the most significant turning point since the idea of a constructive and cooperative US-China relationship was floated between the two countries.

Ever since then-US president Richard Nixon initiated formal diplomatic relations and cooperation with Beijing in the 1970s as a way to contain the then-Soviet Union, China’s economy has gone from strength to strength.

At the time, Washington hoped to use economic cooperation as a means to transform China into a market-economy democracy. Things did not go according to plan.

Decades of stratospheric economic growth has instead solidified the Chinese Communist Party’s autocratic form of government. As the nation’s financial situation became more robust, the party consolidated political power and poured the proceeds of economic growth into building up military might.

The essence of the trade war is the Trump administration’s labeling of China as a “strategic competitor.”

The US administration’s National Security Strategy and three associated strategic reports refer to China as challenging US national interests and as a revisionist power that employs a state-run economic model and seeks to drive the US out of the Indo-Pacific region.

China’s strategy of economic coercion weaponizes trade to force competitor nations to compromise or give in to its demands.

Like a bully, China acts to intimidate its rivals and the intimidation stops only when they give in to Beijing’s demands.

Since July, Washington has slapped 25 percent tariffs on US$50 billion of Chinese goods. A further US$200 billion of Chinese imports are subject to 10 percent tariffs. On Jan. 1 next year, this will rise to 25 percent.

If Beijing retaliates, Washington has threatened to slap an additional US$267 billion of tariffs on Chinese goods. At present, the US punitive duties levied against Chinese goods total US$250 billion, equal to nearly half the value of total Chinese exports to the US last year.

In retaliation, China imposed 10 percent tariffs on US$60 billion of US imports. To date, China has imposed or threatened to impose tariffs on a total of US$110 billion of US goods, equal to 70 percent of US exports to China last year.

Washington is mulling whether to adopt additional measures that would exert further pressure on China. Options include incorporating a so-called “poison pill” clause into trade deals to freeze China out of creating its own deals with US trading partners, or moving to blacklist China as a currency manipulator.

The tactical goal behind Trump’s trade war is to balance the US trade deficit, while the wider strategic goal is to weaken the foundations of China’s rise and its economic expansion.

A rebalanced trade relationship would put a brake on China’s economic growth and its military expansionism, but would also completely eliminate jitters in the US over the national security implications of China’s rise.

Chinese President Xi Jinping (習近平) has jettisoned former Chinese leader Deng Xiaoping’s (鄧小平) policy to “conceal one’s ability and bide one’s time” and instead is seeking to forcefully oust the US from its dominant position in the Indo-Pacific region.

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