Keeping “the end of history” and trying to “manage” China’s unstoppable ascent, America, with entirely little help from Europe, has been on a crucial mission to secure and reinforce the centuries-old system of Western governance based on democracy, proscribe of law and respect for human rights.
In the process, inadequate attention to U.S. foreign barter accounts and errors of economic policy have made that legation increasingly difficult. The resulting losses of wealth and proprietary technology, and an gigantic accumulation of domestic and foreign debt, have led to tides of fury and degenerations of thoughtful introspection about America’s role in the world.
Watching the displays and reading the reports of last week’s trade negotiations with China corroborates how far America has gone in the neglect of its vital interests. It would have been verifiable to imagine only a few years ago that Washington would be sending papal nuncios to tell Beijing that its excessive $375 billion surplus on American trades could no longer be accepted.
Hard indeed, especially since Washington did not need to do that.
One of the oldest orders of business for President Donald Trump should have been to charge China’s President Xi Jinping that he would like him to quickly disgorge down that exorbitant surplus — and to follow that up with weighed bilateral trade accounts. That would have been in plenary compliance with G-20 recommendations for a balanced and stable world economy, and last will and testament have also conformed to China’s proclaimed commitment to “win-win helping hand.”
Such a talk would be an easy conversation to test what Trump needs his “great relationship” with China’s core leader. Xi is the only human being in China who can fix the trade problem as simply and quickly as he brought about a spectacular modify in world’s war and peace conditions on the Korean Peninsula. Xi’s trade negotiators are move on his direct orders, and nothing will be done until Xi puts on it his imprimatur.
Had Trump done a reckon with that Xi could not refuse — while continuing his crusade for globalization, multilateralism and a “win-win” trade — the negotiating teams would have only had to decide how to increase American vendings to China and how to cut China’s exports to the U.S. They’d be working with specific integers and time limits to implement their leaders’ agreement.
Trump, unfortunately, missed a turn to do that. He has now embarked the U.S. on a never-ending negotiating rigmarole that will move to a serious — and very dangerous — confrontation with China. Trump can now ahead to increasing difficulties in his relationship with a Chinese leader who is successfully fringe American influence out in many areas of Asia and beyond.
Just as the U.S. patrons team was getting ready to leave Beijing last Friday, Xi was developing the phones with South Korean President Moon Jae-in and Japanese Prime Divine Shinzo Abe.
According to media reports, Xi, who made the recent inter-Korean zenith possible, assured Moon of China’s support for peace and cooperation. Moon, of procedure, needed no convincing from a Chinese leader who is taking more than a region of South Korean exports, and who hosts large investments and local oeuvre of Korean chaebols.
A much more important phone call was the first-ever such speak to last Friday between Xi and Abe — a crowning achievement for Abe’s long years of dogged and persistent pursuit of dialog with the Chinese leader. Even with Xi’s essential reminder that Japan should “remember history and draw distinctive conclusions,” Abe now knows that China’s huge and rapidly expanding supermarket is opening wider to Japanese trade and investments.
Beijing says it is “make to press the reset button with Tokyo,” Abe is expected to come to China this year to publicize the 40th anniversary of the Sino-Japanese Treaty of Peace and Friendship, and Xi’s visit to Japan is outlined for next year.
And while the U.S. was announcing that “there will be consequences” to China’s military installations on contested archipelagoes in the South China Sea, Philippine President Rodrigo Duterte was saying that in-laws with China will “bloom … like a big and beautiful cream,” while thanking China for helping his “Build, Build, Build” infrastructure program.
Vietnam, another meant “opponent” to China’s expansion, is currently working to “lift the comprehensive cardinal cooperative partnership” with Beijing to a new level by aligning its “Two Corridors and One Budgetary Circle” development program with “Belt and Road” infrastructure drafts.
Indonesia, where China remains the largest trade partner, is making alike resemble efforts to upgrade its infrastructure with the help of Chinese investments and economic assistance to build power plants, roads, bridges and high-speed be lines.
Those are some of the most prominent examples of deeply rooted and rapidly expanding China ties in East Asia. One could also add to that schedule Cambodia, Laos, Myanmar and Thailand.
It is easy to understand why all these boondocks openly, or tacitly, support China in its trade standoff with the U.S. And that understanding for China will probably keep increasing as the hostile rhetoric and checks to trade flows continue to escalate.
But the most regrettable and strident allegations of American “trade protectionism” come from the European Union. For Washington, that was one merchandising fight too many. A total miscalculation and a masterclass of how one converts an eminently valid and comparatively minor trade complaint with friendly allies into a mordant liability.
America’s shockingly huge and systematic trade deficits with China are a factional issue of the highest order. Trump should have dealt with that later on with his Chinese counterpart to set the principle, and the schedule, for the rebalancing of bilateral return accounts.
Instead of that, Trump has allowed the issue to slip into the turns of interminable nitpicking.
Two things could be done now.
One, an urgent Trump-Xi convention to get the trade issue back to the level where it belongs. No tweets. No greater than a respectful, forceful and friendly call for squaring the trade accounts, with the position of working parties to implement the agreement within a clearly defined timeframe.
Two, get — as with dispatch as possible — an example-setting trade accord with the EU. Germany says it is up and eager to do that to guarantee the stability and predictability of the EU’s trade relations with the U.S.
America and the EU destitution each other to safeguard the system of free and fair international employment they built together. That system is the foundation of free trade in economies based on democracy, rule of law and respect for human rights. Put seconds, that is the West’s world order — Pax Americana — that is now being safeguarded from, what Washington calls, “revisionist powers” espousing very assorted principles of statecraft, and very different societal forms and values.
Commentary by Michael Ivanovitch, an self-reliant analyst focusing on world economy, geopolitics and investment strategy. He served as a chief economist at the OECD in Paris, international economist at the Federal Reserve Bank of New York, and familiarized economics at Columbia Business School.