Today, in my opinion (and Donald Trump’s) we have one major foreign policy problem: Not Iran or Korea, but China, or to be more specific, the Chinese trade imbalance. As in, we buy their exports and they buy our debt obligations.
For the purposes of this discussion, I will ask the reader to stipulate that the hollowing out of America’s manufacturing base by the Chinese is a bad thing for our economy, and that a principal cause of the imbalance is China’s mercantilist currency and policies. (These policies are probably in China’s interest, but not ours.)
China supports the export sector and discourages imports by overvaluing the RMB versus the dollar and the euro. In addition, they pose innumerable and inscrutable nontariff trade barriers to US manufactured goods.
All US administrations and both political parties have agreed that US policy must be aimed at inducing China to float the RMB to float and for it to be made convertible. (In other words, there should be a free cross-border market in RMB and RMB-denominated financial assets.)
But the US has never actually stuck it to the Chinese, despite twenty years of whining and pleading. Why is this?
The reason is that the Chinese are smarter and wilier than we are. Diplomatically, China makes Britain look like Belize. China has been engaged in active diplomacy for 3000 years, and they have the written records to prove it. They had diplomats before the dawn of European civilization.
The Chinese are masters of the art of distraction. To analogize: Let’s say that I have built my house on my neighbor’s property line, and he knows it and is not happy. What do I do? Well, if I’m China, I park my cars on his grass, give loud parties, and paint my house purple. When he knocks on my door to complain, I make sure that he plenty to complain about. He’s so worked up over the parked cars, the loud music and the horrible paint that he never gets around to the property line issue. (The Soviets were pretty good at this sort of thing too.)
In China’s case, they know that we are steamed up about the disappearance of our manufacturing industry. So what is their response?
They pay the Kims to build rockets, make big explosions inside their mountains, and to move “fuel rods” around. If things die down, they ask the Kims to fire at villages, fishing boats and submarines, or to shoot at tourists, or border guards.
The Chinese have great fun watching as Jimmy Carter and Hillary Clinton shuttle back and forth to Beijing to deal with each new Chinese-manufactured Korean “crisis”.
China also claims the entire South China Sea, and builds aircraft carriers and stealth fighters to protect them, causing regular “incidents” with foreign craft.
China demonstrates her ability to shoot down satellites.
She makes friends with Iran and vetos sanctions so that we wil use our “diplomacy” to induce them to go our way.
She plays games in Africa in order to keep the CIA busy.
And finally, and most diabolically, China create human rights abuses in her own country, just as the Soviets did. Instead of saying “let’s talk about trade imbalances”, we play into their game by saying “let’s talk about human rights in China”. That is precisely what they want to talk about, because it has no economic consequence and it distracts our fruit-fly-like attention span.
You cannot win when the other guy says “do what I want or I’ll torture this puppy” when he has 1.2 billion puppies to torture. You cannot win this game. We say that we do not negotiate with terrorists, pirates or hostage-takers because it only encourages them. And yet we have spent decades negotiating with the Chinese about taking their own people hostage.
American diplomacy in China should be one note: trade, and then trade, followed by trade. Not DPRK, not the Spratley’s, not weapons systems or satellites, not Iran, not Africa and certainly not Chinese human rights.
And we can also play their own nefarious games. Don’t bloviate about trade because it is a waste of time; just take hostages. Accuse them of WTO violations, impose countervailing tariffs and antidumping duties. When they complain, close the Bank of China in New York for two months for foreign exchange irregularities and money laundering. When they complain about that, expel 500 “diplomats”, 1,000 “students” and 5,000 “businessmen” for spying. When they complain about that, turn off all of their satellites for 12 hours by “mistake”. Have the longshoremen close our Pacific ports (like they’re doing already). There is no end to the ways that we can harass China.
I am not up on the legislative activity on China, but I do know that Senators Lieberman, Schumer and Graham periodically introduce punitive legislation in connection with “currency manipulation” which they always allow themselves to be persuaded to withdraw. Passing their bill (25% tariff) would certainly be a start. This should not be a partisan issue.