Newsletter 151 - February 12, 2023
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Welcome to the 151st edition of Trade War.
To start, I’d like to highlight what I expect to be a great talk happening this Monday Feb. 13th at 2 pm ET, and which I am moderating.
University of Miami’s June Teufel Dreyer, an expert on Chinese domestic and foreign policy, Taiwan, and Indo-Pacific security, will be speaking on the downed Chinese balloon and its diplomatic aftermath, Chinese intelligence gathering, the future of U.S.-China relations and Indo-Pacific security.
On to the news ~
In his State of the Union, Biden talks tough on China, and taunts Xi. Washington sanctions six Chinese entities for their involvement in spy balloon business. And Group of Seven member states mull sanctions on Chinese companies supporting Russian military.
Thousands of elderly retirees protest over cuts to their medical benefits in Wuhan, Hubei. Aging population exacerbates financial strain on local governments. And Beijing warns cash-strapped local governments it will not bail them out.
And 22 U.S. states consider restrictions on foreign ownership of farmland, a trend gaining momentum following the spy balloon incident.
In SOTU address, Biden talks tough on China
In his State of the Union address on Tuesday night, coming just days after the Chinese spy balloon was downed by an American jet, U.S. President Biden took his time but eventually went after China and Xi Jinping,
Fixing on the idea that no other leader would want to change places with Xi Jinping, he delivered an impassioned and off-script riff.
“Name me a world leader who’d change places with Xi Jinping,” Biden shouted, while waving his finger. “Name me one, name me one.”
(The “East is rising and the West is declining,” (Chinese) is probably as close as Xi Jinping has gotten to dissing his U.S. rival.)
Without mentioning the spy balloon directly, Biden certainly had it in mind. “I am committed to work with China where it can advance American interests and benefit the world. But make no mistake: As we made clear last week, if China threatens our sovereignty, we will act to protect our country. And we did.”
That last comment elicited a loud chant of "USA, USA, USA!" from the audience, more reminiscent of enthusiastic American sports fans cheering the home team in the World Cup, then a presidential address.
In the speech Biden raised the issue of which country will dominate in advanced semiconductors, the matter at the heart of the U.S.-China technological competition. "We came together and passed the bipartisan Chips and Science Act," Biden crowed.
With partial credit due to Beijing and its wolf warrior diplomats, a rare bipartisan issue has solidly taken hold in Washington: opposition to China's rise. That explained the loud applause from members of both parties when Biden highlighted the Chips Act. But in a move that surprised me a little, Biden spent more time touting all the jobs that would be created, rather than how it would ensure the U.S. didn’t fall behind China in innovation and advanced technology.
"You remember the jobs that went away" Biden said, "jobs are coming back ... because of choices we made in the last few years."
Obviously, China is broadly seen amongst Americans as the biggest culprit when it came to decimating manufacturing jobs, rightly or wrongly. But are the jobs really coming back from China? I’m still not a believer that we will see serious and sustained "reshoring" when many other equally cheap (or even cheaper) countries exist, from Mexico and Indonesia to Vietnam and India.
In fact, despite the obvious political value of touting the return of jobs to America, Biden’s own officials know that just because manufacturing leaves China, there’s no guarantee it will come to the U.S. It was Treasury Secretary Janet Yellen who popularized the phrase "friend-shoring," or moving manufacturing from rivals like China to countries considered US allies.
That may well be a good thing - but it won’t bring the jobs back.
Elderly retirees protest after medical benefits slashed
Thousands of elderly retired Chinese have taken to the streets in Wuhan, Hubei to protest