Welcome to Trade War Newsletter 17. This week calls in the U.S. for a much more confrontational approach to China have been growing. GOP Sen. Tom Cotton of Arkansas has been pushing some of the most extreme views, calling China’s government “deliberately malevolent” and suggesting Chinese students’ visas to the U.S. should be limited.
Meanwhile, in a recent commentary in the Washington Post Utah Senator Mitt Romney has accused China of “dishonesty” while calling for a more united response from countries in facing China’s “global industrial predation.”
Deliberately malevolent
Along with calling the Chinese Communist Party both “criminally negligent” and “deliberately malevolent” in its its dealing with Covid-19, Sen. Cotton now is taking aim at Chinese science students who want to study in the U.S., saying their visas must be much more carefully scrutinized.
Claiming that among the students are the “Chinese Communist Party’s brightest minds” who after training in the U.S., have gone back to China to “design weapons and other devices that can be used against the American people,” Cotton called it a “scandal,” for America’s universities, in an interview with Maria Bartiromo of Fox News.
Shakespeare and the Federalist Papers
“If Chinese students want to come here and study Shakespeare and the Federalist Papers, that’s what they need to learn from America. They don’t need to learn quantum computing and artificial intelligence from America,” Cotton said.
Global industrial predation
Sen. Romney weighed in with a commentary in the Washington Post, with only slightly less bombast, writing that “Covid-19 has exposed China's dishonesty for all to see. And it is a clarion call for America to seize the moment,” in large part by working more closely with allies against that country’s “global industrial predation."
“We must align our negotiating strategy and policies with other nations that adhere to the global rules of trade. This means narrowing trade disputes with our friends and uniting against China's untethered abuse,” Romney writes, with some eminently reasonable advice that also could be seen as a slap at the go-it-alone tendencies of Trump.
Predatory practices
“China must understand that it will not have free, unfettered access to any of our economies unless it ceases to employ anti-competitive and predatory practices,” the senator writes. Romney “stresses uniting with allies and free nations on a common approach to China,” tweets China expert Scott Kennedy of Washington-based think tank CSIS.
The GOP’s 57-page memo
“The National Republican Senatorial Committee has sent campaigns a detailed, 57-page memo authored by a top Republican strategist advising GOP candidates to address the coronavirus crisis by aggressively attacking China,” reports Politico. “The memo includes advice on everything from how to tie Democratic candidates to the Chinese government to how to deal with accusations of racism.”
“My opponent is soft on China”
As the memo itself summarizes this approach:
“SHORT VERSION ● China caused this pandemic by covering it up, lying, and hoarding the world’s supply of medical equipment. ○ China is an adversary that has stolen millions of American jobs, sent fentanyl to the United States, and they send religious minorities to concentration camps. ● My opponent is soft on China, fails to stand up to the Chinese Communist Party, and can’t be trusted to take them on. ● I will stand up to China, bring our manufacturing jobs back home, and push for sanctions on China for its role in spreading this pandemic.”
[Wow… Let’s see how bringing manufacturing jobs back home goes—maybe should adjust talking point: “I will stand up to China, bring our manufacturing jobs to Southeast Asia and maybe even Mexico"?]
Opposing Visions
“Even with an apparent truce in the trade war, the tension between the U.S. and China in the economic and political realms remains huge,” I say in an interview with The Diplomat. “Any future U.S. president will deal with the difficult reality that the two countries have opposing visions of their respective futures, and each would like to undermine the other.”
Tripling down
So might China respond to bad economic times by further reforming and opening its economy as some apparently are hoping? Not going to happen, CSIS’ Kennedy writes in a commentary. “Given this set of dire challenges, one might expect—or hope—that China’s leaders finally see the wisdom of embracing full-scale market reform,” Kennedy notes. Instead, he expects a “tripling down” on its present path of big infrastructure investments, more high-tech goals, more support for SOEs, and its continued push for international economic dominance.
Waiting for Godot
“Waiting for Chinese market liberalization under Xi Jinping is akin to the fruitless task of characters in the Samuel Beckett play, “Waiting for Godot,”” Kennedy writes.
-5.0% to +5.0%
Meanwhile, showing how little certainty there is about China’s economy can recover, Reuters reports that economist predictions for the second quarter range from a five percent drop to five percent growth. “So helpful” quips the China Beige Book in a tweet.
Very good at the subtweet
Interesting, slightly heated Twitter exchange about the relative impact of the trade war vs. the dollar on exports, between two people whose analysis I highly value.
Notable/In Depth
Trade Talks Podcast has an episode looking at the supply change of one product—cosmetics—and how it is affected by Covid-19.
How global supply chains are shifting with Covid-19 and the Trade War, from a very recent talk by yours truly given via zoom at the Overseas Press Club of America.