by PETER LEE
There is a certain amount of “OMG how did we get here??” handwringing over the escalating trade war between the US and China. BS.
The decoupling strategy of the US China hawks is proceeding as planned. And economic pain is a feature, not a bug. Below is the script of a Newsbud China Watch episode I did on September 26, 2018, when the outlines of the US strategy were already clear.Some further comments.Failure of trade negotiations was pretty much baked in, thanks to Lightizer’s maximalist demands.And that was fine with the China hawks. Because their ultimate goal was to decouple the US & PRC economies, weaken the PRC, and make it more vulnerable to domestic destabilization and global rollback.If decoupling shaved a few points off global GDP, hurt American businesses, or pushed the world into recession, well that’s the price o’ freedom.Or at least the cost of IndoPACOM being able to win the d*ck measuring contest in East Asia, which is what this is really all about.Keeping the negotiations creeping along while encouraging the decoupling dynamic through tariffs & sanctions allowed the China hawks to dodge the onus of hurting the US economy for the sake of US hegemonic goals.Now, as we’re entering a phase of pretty much open economic warfare, maybe that mask is ready to drop.
One of those items of academic interest is whether Trump was ever interested in a trade deal & return to normalcy. I’m guessing Yes.
But the US military is pretty much Trump’s only solid Beltway constituency. They want a China confrontation & he went along, since the costs of the confrontation in his main political constituency, the stock market, seemed manageable.
The continual bait-and-switching on the trade deal (we got a trade deal; oops more tariffs!) is a classic from the Trump playbook: when your opposite number seems ready to deal, it’s time to squeeze harder.
This was catnip to the China hawks. As long as the negotiations dragged on, the decoupling dynamic could continue pretty much unexamined. Now maybe we’ve reached the point of no return, since it looks like the PRC has decided it’s more important to signal its capacity to take punishment than its eagerness to make a deal.Again, a happy day for the China hawks. It’s war! At least economic, for the time being. Now, if a recession does hit, one can consider it a signal that the US finance/business bunch have priced China out of their economic models.The next step beyond economic warfare is strategic/military rollback.Decoupling the US economy from China, squeezing China related expectations out of the market, and shifting to a war with China footing insulates the US military from economic and political pressures to pursue a more moderate course in East Asia.I expect IndoPACOM to agitate for an aggressive program–via its allies in the Philippine military–to confront the PRC over its artificial islands, especially Mischief Reef, in the South China Sea.
These facilities are a major affront to IndoPACOM’s manhood and must be removed. And that means war, or something close to it.
Remember, as IndoPACOM jefe Admiral Davidson put it: “China controls the South China Sea in all scenarios short of war.”
He’s not making these statements to signal American surrender, folks. IndoPACOM is China hawk HQ.As I’ve discussed elsewhere, the US has put its ducks in a row to provide military backing to anti-China moves that the Philippines initiates in the South China Sea. Also, assuming the elections in Taiwan go America’s way, the decoupling of the Taiwan and mainland economies will accelerate and military cooperation between Taiwan and the US and Japan will increase.Between the global economic slowdown and the regional military buildup, I guesstimate the cost of taking on the PRC at a trillion dollars over the next decade.But like they say, War with China: one trillion dollars. Postponing the loss of US hegemony in the Pacific: priceless. The September 26, 2018 script:
It’s not a trade war, it’s the long war. Cold War 2.0. With China.
Donald Trump introduced tariffs on another $200 billion dollars of Chinese goods. The Chinese responded but did not match, let alone escalate, with tariffs on $60 billion in US goods.
This round of US tariffs stopped at 10%, that’s short of pure apocalypse; that’s been put off until December, when the US will raise the rate to 25% if things don’t go Trump’s way.
U.S. businesses are starting to get a little nervous, since the PRC is apparently going to wait and see if the US Congressional mid-term elections deliver the promised blue wave of Democrats that will restrain Trump and maybe even impeach him, instead of hurrying to Washington to negotiate.
Per the Washington Post:
As the president pursues his uncompromising approach to China, business leadrs are growing increasingly frustrated. The U.S. Chamber of Commerce, National Association of Manufacturers and the National Retail Federation were among those blasting the administration’s use of tariffs as costly and counterproductive.
China Matters for more