FacebookTwitterRedditEmail

Trump’s China Policy is Already a Disaster

Donald Trump’s December 2 phone call with Tsai Ing-wen, the president of Taiwan, sent shock waves through China and much of the world. For nearly four decades it has been Washington’s official policy to recognize only China, and not Taiwan. Trump has indicated that he thought he could threaten China with abandoning this policy, in order to bargain for other concessions.

This has to be one of the worst diplomatic miscalculations of all time for a president-elect, and we should add, his incoming administration ― since it was apparently not just another foot-in-mouth event for Trump but a deliberate strategy complete with lobbyist influence.

China considers Taiwan to be a breakaway province, and would go to war to prevent its secession, just as President Lincoln went to war to keep the South within the United States.

In fact, there were calls in the Chinese media for narrowing the gap between China’s nuclear arsenal and capability and that of the US. Don’t be fooled by the Chinese government’s relatively restrained reaction: they are giving Trump a chance to chart a different course before he takes office on January 20.

Bullying may have helped Trump in his real estate career, but it is not going to move China. The Chinese economy is now bigger than ours, on a purchasing power parity (PPP) basis, which is what matters when we are talking about such things as military expenditure: the cost of a Chinese-made plane or a Chinese pilot is considerably less than its dollar equivalent (at current exchange rates) in the US. When we had an arms race with the Soviet Union, its economy was a fraction the size of ours. If we have an arms race with China, we can forget about things like Medicare, which the Republicans already want to privatize.

Trump’s ostensible reason for the hard line against China is that he wants to negotiate a better deal for US manufacturing, including for workers in the US. The big complaint here is that China has manipulated its currency, keeping it undervalued against the US dollar. This would make US imports from China artificially cheap, and US exports more expensive. But there is an easy way to deal with this: as any economist knows, the US Treasury Department and Federal Reserve can move the value of the dollar against foreign currencies, like any other country. In fact it is even easier for us than for other countries, since the world accepts the US dollar as the major international reserve currency.

Blaming China for the value of the dollar against their currency is therefore mistaken. The reason that our government doesn’t intervene to push down the dollar is that powerful US transnational corporations (like Walmart) prefer an overvalued dollar because it makes imports and overseas labor cheaper for them. The financial sector also prefers it because it lowers inflation. These people don’t care about manufacturing jobs in the US. When our government has negotiated with China over economic issues, it has fought for things that profit US corporations, like more patent and copyright protection and greater access for US financial corporations.

Ironically, China has actually been intervening to keep its own currency from falling, and has burned through about a quarter of its international reserves (about $1 trillion) since June 2015 doing this. At this point, the Chinese would likely welcome US intervention in the same direction, at least to keep the dollar from rising further.

So we will soon see if the new US presidential administration actually wants to do anything to preserve US manufacturing jobs. In the meantime, picking a fight with China over Taiwan is about the worst way it could start out, short of actual warfare.

This column originally appeared in the Sacramento Bee.

More articles by:

Mark Weisbrot is co-director of the Center for Economic and Policy Research, in Washington, D.C. and president of Just Foreign Policy. He is also the author of  Failed: What the “Experts” Got Wrong About the Global Economy (Oxford University Press, 2015).

bernie-the-sandernistas-cover-344x550

April 25, 2019
Marc Levy
All My Vexes Are in Texas
Jim Kavanagh
Avoiding Assange
Michael D. Yates
The Road Beckons
Julian Vigo
Notre Dame Shows the Unifying Force of Culture, Grenfell Reveals the Corruption of Government
Ted Rall
Democratic Refusal to Impeach Could Be Disastrous
Tracey Harris
Lessons Learned From the Tiny House Movement
Evaggelos Vallianatos
Human Flourishing (Eudaimonia): an Antidote to Extinction?
Dana Johnson
Buyer Beware: Hovercraft Ruling Deals a Major Blow to Land Conservation in Alaska
Norman Solomon
Joe Biden: Puffery vs. Reality
Jen Marlowe
The Palestine Marathon
Binoy Kampmark
Lethal Bungling: Sri Lanka’s Easter Bombings
Michael Slager
“Where’s Your Plan?” Legalized Bribery and Climate Change
Jesse Jackson
Trump Plunges the US Deeper Into Forgotten Wars
George Wuerthner
BLM Grazing Decision Will Damage the Owyhee Canyonlands Wilderness
April 24, 2019
Susan Babbitt
Disdain and Dignity: An Old (Anti-Imperialist) Story
Adam Jonas Horowitz
Letter to the Emperor
Lawrence Davidson
A Decisive Struggle For Our Future
John Steppling
The Mandate for Israel: Keep the Arabs Down
Victor Grossman
Many Feet
Cira Pascual Marquina
The Commune is the Supreme Expression of Participatory Democracy: a Conversation with Anacaona Marin of El Panal Commune
Binoy Kampmark
Failed States and Militias: General Khalifa Haftar Moves on Tripoli
Dean Baker
Payments to Hospitals Aren’t Going to Hospital Buildings
Alvaro Huerta
Top Ten List in Defense of MEChA
Colin Todhunter
As the 2019 Indian General Election Takes Place, Are the Nation’s Farmers Being Dealt a Knock-Out Blow?
Charlie Gers
Trump’s Transgender Troops Ban is un-American and Inhumane
Barbara Nimri Aziz
Just Another Spring in Progress?
Thomas Knapp
On Obstruction, the Mueller Report is Clintonesque
Elliot Sperber
Every Truck’s a Garbage Truck
April 23, 2019
Peter Bolton
The Monroe Doctrine is Back, and as the Latest US Attack on Cuba Shows, Its Purpose is to Serve the Neoliberal Order
David Schultz
The Mueller Report: Trump Too Inept to Obstruct Justice
Geoff Beckman
Crazy Uncle Joe and the Can’t We All Just Get Along Democrats
Medea Benjamin
Activists Protect DC Venezuelan Embassy from US-supported Coup
Patrick Cockburn
What Revolutionaries in the Middle East Have Learned Since the Arab Spring
Jim Goodman
Don’t Fall for the Hype of Free Trade Agreements
Lance Olsen
Climate and Forests: Land Managers Must Adapt, and Conservationists, Too
William Minter
The Coming Ebola Epidemic
Tony McKenna
Stephen King’s IT: a 2019 Retrospective
David Swanson
Pentagon Claims 1,100 High Schools Bar Recruiters; Peace Activists Offer $1,000 Award If Any Such School Can Be Found
Gary Olson
A Few Comments on the recent PBS Series: Reconstruction: America After the Civil War
April 22, 2019
Melvin Goodman
The NYTs Tries to Rehabilitate Bloody Gina Haspel
Robert Fisk
After ISIS, a Divided Iraq, Wounded and Grief-Stricken
Binoy Kampmark
Julian Assange as Neuroses
John Laforge
Chernobyl’s Deadly Effects Estimates Vary
Kenneth Surin
Mueller Time? Not for Now
Cesar Chelala
Yemen: The Triumph of Barbarism
FacebookTwitterRedditEmail