Welcome to the 69th edition of Trade War.
Chinese predictions of American decline are being tested by successes in the early days of the Biden administration. A new survey of countries show widespread growth in positive sentiments towards the U.S., with the notable exception of China.
China pushes to join the trade group successor to the Trans-Pacific Partnership while continuing Trump-era tariffs hurt U.S. consumers. Meanwhile, Chinese tech tycoons resign and more party cells open in private companies.
China’s declarations of America’s decline premature?
China’s declarations of America’s decline may be premature, says Brookings Institution China scholar Ryan Haas in a conversation with Stanford University political scientist Oriana Skylar Mastro.
“The first few months of the Biden Administration have challenged the preferred narrative of the Chinese that the U.S. is in terminal decline,” says Haas. “The U.S. economy is poised to be the leading growth engine of the world economy this year. The United States is making progress repairing its alliance relationships.”
Playing the China Card
Here is Haas’ latest piece, Playing The China Card, where the Brookings scholar argues “any effort to lean on the external threat of China as a basis for overcoming domestic divisions at home is unlikely to succeed and likely to harm U.S. interests at home and abroad.”
Collaborative Biden approach pays off in global sentiment...
Since Biden took office, a new survey shows that global sentiments towards the U.S. have improved in countries around the world with the glaring exception of China, reports global data company Morning Consult.
In the 14 countries surveyed, including Germany, France, Canada, Brazil, Japan and Russia, positive views of the U.S. have gone up by an an average of nine percentage points since Biden became president.
“People in many nations around the world are, I think, hopeful, that the election of Joe Biden marks a rejection of Trump’s ‘America First’ bullying and go-it-alone international policies and a return to a more collaborative, pro-democracy approach to international affairs,” David Farber, a University of Kansas professor, told Morning Consult.
But 3/4 Chinese negative towards U.S., up 9 points
The big outlier: China. “Nearly 3 in 4 Chinese adults hold unfavorable views of the United States, up 9 points since Biden’s inauguration. The figure is driven by 47 percent of Chinese adults who hold “very unfavorable views,” up 7 points over the same time period.”
China pushes to join TPP trade agreement successor
China is making a big push to join the successor trade agreement to the Trans-Pacific Partnership, originally promoted by the U.S. to balance China’s growing power in the Asia-Pacific region, reports Bloomberg News.
“Then-President Barack Obama [said] in 2016 that the U.S., not China, should write the regional rules of trade. His successor Donald Trump pulled out of the deal in 2017, with Japan leading the revised and renamed pact to a successful conclusion the following year,” the financial news service reports.
The new trade agreement, called the Comprehensive and Progressive Trans-Pacific Partnership, groups countries including Japan, Australia, Canada, Mexico and Vietnam.
“If it does join, China would become the largest economy in the partnership and further cement its position at the center of trade and investment in the region. Beijing already helped lead a separate regional trade deal known as RCEP to a successful conclusion last year,” Bloomberg writes.
Trump tariffs on China punish American consumers
The costs of Trump-imposed tariffs, which cover about half of all bilateral trade with China, is overwhelmingly being picked up by the U.S., a new Moody’s Investors report shows, writes The Hill.
“For Chinese products that saw tariff rates rise to 20 percent, about 95 percent of the cost ended up being paid by U.S. consumers. But when China imposed retaliatory tariffs on U.S. exports, a significant portion of the cost fell on American businesses,” The Hill writes.
“The reason for the disparity has to do with the kinds of goods that were targeted by each side in the trade war, and how some are easier than others to source elsewhere.”
Another China tech tycoon resignation…
Facing growing government scrutiny, the founder of TikTok parent company ByteDance is the latest tech tycoon CEO to announce his resignation, reports Wall Street Journal reporter Liza Lin.
The decision to step down by the 38-year old founder Zhang Yiming, the largest shareholder in the $180 billion company, follows earlier resignations by the top executives at Ant Group and e-commerce company Pinduoduo.
“Once seen as powerful and untouchable for their contribution to innovation and economic growth, China’s largest internet companies have increasingly come under intense scrutiny by authorities, with regulators coming down since late last year hard on areas such as anti-monopolistic practices and data privacy,” writes Lin.
And Bytedance warned on improper data collection
And lo and behold, barely a day after the Bytedance founder steps down, his company has been warned by China’s cyberspace authorities for improperly collecting data, tweets the Journal’s Lin.
Almost half of private companies have party branches
The proportion of private enterprises in China with party branches rose from 27% in 2002 to 48% in 2018,.reports Sixth Tone.
“As a unit of organization, grassroots party cells are rooted in the battles fought by the Communists for control of China in the 1920s and 1930s, which convinced Mao Zedong that it was necessary to “establish branches of the CPC at the level of companies” in the army to better secure its obedience to the CPC,” writes He Xuan, an economist at Guangdong University of Foreign Studies.
Today the effort to expand the CPC inside companies “reflects how the party continues to see grassroots branches as an effective way of growing its governing resources and consolidating its ruling status,” economist He writes.
“Yet the CPC also views the branches as a win-win proposition for private firms, a belief often shared by private entrepreneurs themselves. Setting up party branches integrates private enterprises into China’s political system— often in mutually advantageous ways — and party organizations are seen in some corners as a potential solution to widespread problems like weak corporate cultures, backward corporate governance mechanisms, poor business confidence, and labor conflicts.”
Notable/In Depth
Does China’s hyper industrial policy actually work or is it a mistake for the U.S. to try to imitate it, is the question considered in this piece by journalist and author Michael Schuman in the Atlantic.
A smiling photo of Xi Jinping and Biden from nine years ago is a reminder of just how drastically the U.S.-China relationship has changed.
Even as Beijing faces a demographic time bomb, it is wary of ending all birth restrictions, fearful that it could lead to poverty and unemployment in rural China, reports Reuters.
An illuminating thread by a top China energy analyst on how Beijing has responded to the pandemic by stimulating its economy by supporting polluting heavy industry and construction, rather than household incomes.
Chinese edition book review
Thanks to Hong Kong's independent Citizen News for reviewing《低端中國》the Chinese edition of "The Myth of Chinese Capitalism” (Chinese).
I get the impression that a lot of this obsession over how China views American power is far more about US insecurity than anything else. In-so-much as the Chinese view long-term trends as being in their favor, they look at factors far beyond a year or 2's GDP growth. That's why I always felt it was quite silly for US foreign-policy apparatchiks to get their panties in a twist last year with their "our economy's a mess, China's looking down on us!" nonsense. Its also why I can't help but chuckle at the flip-side "we're back b*tches!" and how Zhongnanhai is now collectively shivering at all this "renewed American resolve". Ryan Haas, usually a much better pundit/researcher, is one of the more renowned such bed-wetters, although I have seen such views espoused by members of Biden's team as well (Doshi, Sullivan, etc).
China views its 4.5x population advantage, its vast and solid trading networks and its higher potential growth rate (owing to its distance from the Tech frontier) as the sources of its confidence. Not the fact that America's economy shrank by 5% last year. Likewise, they won't start cowering just because America's 2021 rebound growth pushes close to their 5-7% range.
As a rule of thumb, I tend to discount geopolitical/IR theories if they can be condensed down to childish tv tropes. And this particular fable is a Made-in-the-USA doozy. It wouldnt be out of place in a Superman sketch: Superman is down. Bought low by the villain's deviousness and his own fatal character flaws. But then he draws on his infinite reserve of innate goodness, moral iron and the villain's hubris to snatch a come-from-behind win!