Monday, December 23, 2019

A Clear And Present Danger

Nouriel Roubini -- a man who has a pretty good record when it comes to predicting the future -- writes that Donald Trump is making China great again, even as he touts "phase one" of a trade agreement with China:

The good news for investors is that the deal averted a new round of tariffs that could have tipped the US and the global economy into recession and crashed global stock markets. The bad news is that it represents just another temporary truce amid a much larger strategic rivalry encompassing trade, technology, investment, currency and geopolitical issues. Large-scale tariffs will remain in place and escalation may well resume if either side shirks its commitments.

But rather than working as allies, the United States and China are decoupling:

The US regards China’s quest to achieve autonomy and then supremacy in cutting-edge technologies – including artificial intelligence, 5G, robotics, automation, biotech and autonomous vehicles – as a threat to its economic and national security. Following its blacklisting of Huawei (a 5G leader) and other Chinese tech firms, the US will continue to try to contain the growth of China’s tech 
Cross-border flows of data and information will also be restricted, raising concerns about a “splinternet” between the US and China. And owing to increased US scrutiny, Chinese foreign direct investment in America has already collapsed by 80% from its 2017 level. Now, new legislative proposals threaten to bar US public pension funds from investing in Chinese firms, restrict Chinese venture capital investments in the US, and force some Chinese firms to delist from US stock exchanges altogether.
The 2017 White House National Security Strategy and the 2018 US National Defense Strategy regard China as a “strategic competitor” that must be contained. Security tensions between the two are brewing all over Asia, from Hong Kong and Taiwan to the East and South China seas. The US fears that Chinese president Xi Jinping, having abandoned his predecessor Deng Xiaoping’s advice to “hide your strength and bide your time”, has embarked on a strategy of aggressive expansionism. China, meanwhile, fears that the US is trying to contain its rise and deny its legitimate security concerns in Asia.
It remains to be seen how the rivalry will evolve. Unfettered strategic competition would almost certainly lead eventually from an escalating cold war to a hot war, with disastrous implications for the world. What is clear is the hollowness of the old western consensus, according to which admitting China into the World Trade Organization and accommodating its rise would compel it to become a more open society with a freer and fairer economy. But, under Xi, China has created an Orwellian surveillance state and doubled down on a form of state capitalism that is inconsistent with the principles of free and fair trade. And it is now using its growing wealth to flex its military muscles and exercise influence across Asia and around the world.

The way to deal with China's rise is to form strategic alliances. But Trump trashes alliances. He's a lone wolf who trusts no one:

The problem, of course, is US president Donald Trump, who does not seem to understand that “managed strategic competition” with China requires good-faith engagement and cooperation with other countries. To succeed, the US needs to work closely with its allies and partners to bring its open-society, open-economy model into the 21st century. The west may not like China’s authoritarian state capitalism, but it must get its own house in order. Western countries need to enact economic reforms to reduce inequality and prevent damaging financial crises, as well as political reforms to contain the populist backlash against globalisation, while still upholding the rule of law.
Unfortunately, the current US administration lacks any such strategic vision. The protectionist, unilateralist, illiberal Trump apparently prefers to antagonise US friends and allies, leaving the west divided and ill-equipped to defend and reform the liberal world order that it created. The Chinese probably prefer that Trump be re-elected in 2020. He may be a nuisance in the short run, but, given enough time in office, he will destroy the strategic alliances that form the foundation of American soft and hard power. Like a real-life “Manchurian Candidate,” Trump will “make China great again.”

As the House of Representatives warned last week, Trump is a clear and present danger -- not just to his own country, but to the world.

Image: Bloomsbury Publishing


Anonymous said...

It's not just Trump who's a clear and present danger to the world, it's the party he leads as well. As Noam Chomsky notes referring to the GOP's undermining of efforts to combat climate change and nuclear armament, "Has there ever been an organisation in human history that is dedicated, with such commitment, to the destruction of organised human life on Earth?"


Owen Gray said...

Chomsky clearly understands the dimensions of the problem, Cap. It's not enough to bring Trump down. The Republican Party will have to go with him.

The Disaffected Lib said...

Trump is nothing short of a presidential wrecking ball. Slapping sanctions on Europe and Russia over a natural gas pipeline that's really none of America's business is just the latest example of how Trump is alienating America's best political, defence and economic allies. He, and that idiot Navarro, launched a trade war with Beijing to restore America's manufacturing prowess. The Chinese hit back with sanctions on American farm produce - the heartland, Trump's "base." Trump flinched and cut a deal to get the agricultural tariffs lifted.

"Decoupling" has been a popular subject for American economists - Stiglitz, Dani Rodrik, Jeffrey Lehman, Roubini and dozens more. Trump wants to maintain American supremacy. China thinks it is entitled to write a few rules of its own. Europe is slowly realizing it has to defend its own interests and stop being Washington's loyal handmaiden. Europe can't trust Trump and, worse, it can't depend on Congressional Republicans to restrain him either.

Once the glue of globalism dissolves, what is left?

Owen Gray said...

That's precisely the question, Mound. As Yeats predicted, when things fall apart the centre cannot hold.

John B. said...

When it comes to western politicians and China, I submit that we have considerably more "clear and present dangers" than the Americans do - maybe more than any other country aside from Australia. Take your pick. It's a good thing for the world that, in that respect and if it ever did, Canada really doesn't count for shit anymore.

Owen Gray said...

Except that we're sandwiched between the United States and China, John. And we get squeezed -- which is what is happening now.