Thursday, February 28, 2019

Time to rethink America’s relations with China

Late last year, a Hoover reportwas published on how Uncle Sam should deal with China’s presence in America and concluded that “constructive vigilance” was the indicated course of action.

Then this February, Asia Society released their report toward an effective and sustainable China policy, which they called “Course Correction.” This was supposed to be an update of the report published in 2017 to serve as advisory guide to help Trump craft his China policy as his administration came into power.

Comparing the two reports, the Asia Society report was a bit more specific and better written and less riddled with errors. But both based their reasoning and conclusions on the same fundamental premise, a dubious one to say the least.

Namely, the presumption of both reports was that the US can do no wrong and all Donald Trump had to do was to merely carry on the America’s mantle of exceptionalism.

If there were any criticism of Trump’s nonsensical trade war with China in the two reports, the rebuke was faint and bordered on being apologetic for mentioning it. Collectively, the authors showed no desire to prick Trump’s ego. Sprinkled throughout the text the reader could smell the paimapi*attaboy as they pat Trump on the rump.

Mind you, this was a president who had unilaterally decided to transfer nuclear weapon technology to Saudi Arabia for the sake of weapons sales and tore up a nuclear non-proliferation treaty in order to restart another arms race with Russia.

The second report did propose as a “novel” suggestion that the US engage China via “smart competition.” Whatever that was supposed to mean, the suggestion did not disparage the win-lose outcome that the Trump/Ross/Lighthizer team was seeking to extract from China.

Their reasoning has been that China had been taking advantage of the US since becoming a member of WTO and it’s time for payback. They thought raising tariff on imports from China would inflict hurt on China.

Unfortunately, consequences of tariffs are complex and damaging to all parties including unintended collateral damages. The export side and the import side have to work out how to share the burden of the added duty. Overall is that they will do less business while raising the cost to the ultimate buyer. Everybody loses.

Anyone familiar with game theory know that any win-lose arrangement is not a stable resolution but would devolve into a lose-lose endpoint. The only way for the US to really win is to make sure that both parties win and that’s called “smart collaboration.”

What’s in it for Uncle Sam to work with China?

China’s companies (SOE or not, what does it matter?) are already in the USto refurbish old bridges and replace dilapidated subway cars using American labor but with Chinese knowhow. They could do more if the American government weren’t so vigilantly against Chinese investments in the US.

Even if it’s a stretch to consider the US as part of the Silk Road, the always pragmatic Chinese would find a face saving but a mutually winning solution to get the job done. Surely, it’s obvious that Trump’s policy of letting the private sector do the work has not created any new jobs nor rectify any falling down infrastructure.

As for Huawei, whether and if any of their technology has been pilfered from others, that’s past history. Fact is no one can steal their way into becoming the world’s dominate telecom supplier. Huawei is now the leaderin 5G technology because they have made the necessarily massive investment to get there.

Trump Administration has gone to great length to try to stop Huawei’s progress and interrupt their market access. That’s just a temporary setback for Huawei in those parts of the world that remain intimidated by the US hegemony.

Much of the world’s other developing markets would rather have the 5G network now and reap the benefits of advanced technology. While not a developing economy, apparently Germany has decided to buy Huawei. They remember that it was the American intelligence and not the Chinese that listened in on Angela Merkel’s mobile phone.

By confronting Huawei, Trump will slow Huawei down but at the expense of American suppliers that sell into Huawei’s 5 G systems. The fewer systems Huawei install means fewer sales for Intel, Qualcomm and others.

Thus, in seemingly an attempt to gain a win-lose advantage, it will end up lose-lose. Huawei will lose some momentum for a while and the US will be without the ownership of the most advanced telecommunication network.

It’s entirely possible that the eventual end point will be a world divided in two. One part of the world will use Huawei’s 5G and evolving to 6G while the other part will be waiting for technological advances to arrive. When another provider does shows up, it won’t be American because the US doesn’t have any companies participating in this space.

Is China’s foreign policy in conflict with the US? Not at all. China does not post the PLA around the world and have built only one military base in Djibouti to support China’s naval ships sailing around the horn of Africa on anti-piracy patrol—no mere “freedom of navigation” exercises there.

Instead of exporting American troops to station around the world, China exports their capital and expertise to help countries in Africa and Latin America with infrastructure projects.

National security advisor John Bolton has gone to Africa to warn these countries of China’s so-called predatory financing and to wait for better packages from the US, which of course never materialized.

Secretary Mike Pompeo has also made the rounds around the world warning countries not to fall for China’s trap. He was met with stony resentment from African leaders and president of Hungary, “Are we too stupid to figure out what’s good for us?”

In comparing China vs. the US, Ecuador said China has never assassinated our government leader, has never had a military base on our land and has never removed leaders from our neighboring countries.

While John Kerry was the US Secretary of State, he said, “We want China to understand that this doesn’t have to be a rivalry…but it is much more important for us to find the ways to cooperate.” 

The irony now is that it is the US that does not understand.

*Chinese expression for patting the horse on the fanny, i.e., excessive flattery

CNBC on China in Africa - The human stories

China has transition from trade to Africa to make in Africa with Chinese investments. China has become Africa's major trading partner since 2009.

China sets up factories to design products for the local market, provide TV programs dubbed in Swahili

China producing green energy in Africa Wind mills can generate energy then convert into electricity and need transmission and management expertise. China’s infrastructure investments in Africa from 2005 to 2015 amounted to $50 billion

African presence in China, especially in Guangzhou.

China’s building of the Nairobi Monbasa railroad. Chinese have ten years to operate and train the local staff to take over the management and operation. Amanbo, e-commerce website in Africa to help Africans in e-commerce

Sunday, February 10, 2019

A commendable documentary on today's China

The links are the five segments by BBC on China, each about 12 minutes long, narrated by Michael Wood. Posted in December 2018, it is quite up to date. I recommend this to anyone interested in the portrayal of today's China without political bias.