Sunday 24th of November 2024
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wrongheaded in principle, but destined to fail in practice....

China’s economy is slowing down. Current forecasts put China’s GDP growth in 2023 at less than 5%, below the forecasts made last year and far below the high growth rates that China enjoyed until the late 2010s. The Western press is filled with China’s supposed misdeeds: a financial crisis in the real-estate market, a general overhang of debt, and other ills. Yet much of the slowdown is the result of US measures that aim to slow China’s growth. Such US policies violate World Trade Organisation rules and are a danger to global prosperity. They should be stopped.

 

By Jeffrey D. Sachs

 

The anti-China policies come out of a familiar playbook of US policy-making. The aim is to prevent economic and technological competition from a major rival. The first and most obvious application of this playbook was the technology blockade that the US imposed on the Soviet Union during the Cold War. The Soviet Union was America’s declared enemy and US policy aimed to block Soviet access to advanced technologies.

The second application of the playbook is less obvious, and in fact, is generally overlooked even by knowledgeable observers. At the end of the 1980s and early 1990s, the US deliberately sought to slow Japan’s economic growth. This may seem surprising, as Japan was and is a US ally. Yet Japan was becoming “too successful,” as Japanese firms outcompeted US firms in key sectors, including semiconductors, consumer electronics, and automobiles. Japan’s success was widely hailed in bestsellers such as Japan as Number One by my late, great colleague, Harvard Professor Ezra Vogel.

In the mid-to-late 1980s, US politicians limited US markets to Japan’s exports (via so-called “voluntary” limits agreed with Japan), and pushed Japan to overvalue its currency. The Japanese Yen appreciated from around 240 Yen per dollar in 1985 to 128 Yen per dollar in 1988 and 94 Yen to the dollar in 1995, pricing Japanese goods out of the US market. Japan went into a slump as export growth collapsed. Between 1980 and 1985, Japan’s exports rose annually by 7.9 percent; between 1985 and 1990, export growth fell to 3.5 percent annually; and between 1990 and 1995, to 3.3 percent annually. As growth slowed markedly, many Japanese companies fell into financial distress, leading to a financial bust in the early 1990s.

In the mid-1990s, I asked one of Japan’s most powerful government officials why Japan didn’t devalue the currency to re-establish growth. His answer was that the US wouldn’t allow it.

Now the US is taking aim at China. Starting around 2015, US policy-makers came to view China as a threat rather than a trade partner. This change of view was due to China’s economic success. China’s economic rise really began to alarm US strategists when China announced in 2015 a “Made in China 2025” policy to promote China’s advancement to the cutting edge of robotics, information technology, renewable energy, and other advanced technologies. Around the same time, China announced its Belt and Road Initiative to help build modern infrastructure throughout Asia, Africa and other regions, largely using Chinese finance, companies, and technologies.

The US dusted off the old playbook to slow China’s surging growth. President Barrack Obama first proposed to create a new trading group with Asian countries that would exclude China, but presidential candidate Donald Trump went further, promising outright protectionism against China. After winning the 2016 election on an anti-China platform, Trump imposed unilateral tariffs on China that clearly violated WTO rules. To ensure that WTO would not rule against the US measures, the US disabled the WTO appellate court by blocking new appointments. The Trump Administration also blocked products from leading Chinese technologies companies such as ZTE and Huawei and urged US allies to do the same.

When President Joe Biden came to office, many (including me) expected Biden to reverse or ease Trump’s anti-China policies. The opposite happened. Biden doubled down, not only maintaining Trump’s tariffs on China but also signing new executive orders to limit China’s access to advanced semiconductor technologies and US investments. American firms were advised informally to shift their supply chains from China to other countries, a process labeled “friend-shoring” as opposed to offshoring. In carrying out these measures, the US completely ignored WTO principles and procedures.

The US strongly denies that it is in an economic war with China, but as the old adage goes, if it looks like a duck, swims like a duck, and quacks like a duck, it’s probably a duck. The US is using a familiar playbook, and the Washington politicians are invoking martial rhetoric, calling China an enemy that must be contained or defeated.

The results are seen in a reversal of China’s exports to the US. In the month that Trump came into office, January 2017, China accounted for 22 percent of US merchandise imports. By the time that Biden came into office in January 2021, China’s share of US imports had dropped to 19 percent. As of June 2023, China’s share of US imports had plummeted to 13 percent. Between June 2022 and June 2023, US imports from China fell by a whopping 29 percent.

Of course, the dynamics of China’s economy are complex and hardly driven by China-US trade alone. Perhaps China’s exports to the US will partly rebound. Yet Biden seems unlikely to ease trade barriers with China in the lead-up to the 2024 election.

Unlike Japan in the 1990s, which was dependent on the US for its security, and so followed US demands, China has more room for maneuver in the face of US protectionism. Most importantly, I believe, China can substantially increase its exports to the rest of Asia, Africa, and Latin America, through policies such as expanding the Belt and Road Initiative. My assessment is that the US attempt to contain China is not only wrongheaded in principle, but destined to fail in practice. China will find partners throughout the world economy to support a continued expansion of trade and technological advance.

 

* Syndicated column “The New World Economy,” appearing in The Korea Herald and other publications

 

https://johnmenadue.com/the-us-economic-war-on-china/

 

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dead horseshit.....

 

By Ronald C. Keith

 

There is a curious Chinese saying that cautions against “calling a stag, a horse”. As the Qin empire disintegrated, the wily Prime Minister Zhao Gao fed the second Qin dynasty Emperor (221-206 BC) false reports of imperial military victories. Lining up all the ministers at court, Zhao showed them a stag and demanded that they swear the stag was a horse. Most agreed. The few who boldly refused were executed.

Indeed, politics can interfere with clear communication, an essential aspect of good governance, not to mention the conduct of diplomacy. At the recent 2023 ALP National Conference, the Michael Wright/Josh Nelson amendment sought to expunge mention of nuclear submarines and AUKUS participation from the Party’s National Program. The media hyped the ensuing argy bargy as evidence of political division, but ultimately there was no policy change.

Freemantle MP Josh Nelson spoke to problems of nuclear waste and the danger of Australia’s precipitous incorporation into a platform focusing on war with China. Pat Conroy, the Minister for Defence Industry, pooh-poohed the critics as apologists for “appeasement”. Defence Minister Richard Marles and PM Anthony Albanese argued that AUKUS participation supported Australia’s mature sovereign independence, and the related reset of the national economy would create new opportunity for jobs and high-end technical cooperation with allies. Furthermore, the new nuclear submarines would not carry nuclear weapons, and their operation would be consistent with Australia’s commitment to the Non-Proliferation Treaty. “Deterrence” had become necessary in light of regional uncertainties. Referring to just taking a “small step”, Marles rather ambitiously claimed that AUKUS will establish new “strength”, upholding peace against war.

“Deterrence” is too often a deceptively simple cost-benefit calculation, complicated in practice by changing politics and interests. The Oxford Concise Dictionary of Politics offers the following definition: “The policy of attempting to control the behaviour of other actors by the use of the threats.” “Deterrence” requires that all the actors understand each other’s objectives and know what they are doing. In his classic, The Calculus of Deterrence, Professor B.M. Russett advised that effective deterrence is predicated in a deep understanding of the projected enemy’s interests, priorities and strategic objectives and that the threat of deterrence must be communicated clearly despite the white noise of world politics.

The Western liberal democracies often proceed without a “deep understanding” of China as a threatening enemy. They loudly cite China’s disruption of the international “rules-based order”, its heightened aggressive tendencies and military expenditures, not to mention attempts to make the world kowtow to Chinese civilisation. China must be deterred! However, in his report to the 25 October 20-22 National Party Congress, Xi Jinping had urged a “wholistic approach” to analysing geopolitics. Underscoring his own pragmatism, he cited Western imagery of the “black swan” and “grey rhinoceros” and urged his own Party to study hidden trends that could suddenly have a high impact on China. The greater part of his speech, however, reflected his idealistic belief in “rejuvenation”, whereby China underwrites “a major-country diplomacy with Chinese characteristics on all fronts” in order to facilitate “the future of humanity” on the basis of a “true multilateralism”. Western analysis presumes China’s utter lack of responsibility and has all but ignored Xi’s protestations that China, will, with “an open mind”, “respect the concerns of people from all countries [to play] a part in resolving the common issues, facing humanity.”

AUKUS “deterrence” is a stumbling block to peace. On the plus side, there is a rough parallel between Foreign Minister Penny Wong’s 17 April 2023 National Press Club approach “to cooperate where we can and disagree where me must” and the Chinese approach, “seeking common ground, while reserving differences”. Minister Wong warned that all parties are compromised in any pathological trend, focusing too exclusively on great power competition for primacy. Such competition “…diminishes the power of each country to engage other than through the prism of great power.” The Chinese would immediately agree. However, AUKUS exists because China exists as an enemy autocracy. Notwithstanding the sophisticated rationality of Penny Wong, her government continues to endorse an AUKUS strategy of deterrence that seeds the competitive proliferation of alliances, a regional arms race and never-ending military exercises. The current morbid subscription to “deterrence” is working against inclusive balanced regional cooperation. Is this in Australia’s own national interest? Australia’s number one customer is becoming Australia’s number one enemy. It is no surprise that Beijing sees Australian participation in AUKUS “deterrence” as part of a Western strategy to create a “Pacific NATO”. This is more than a wrinkle. What have we got– a “horse” or a “stag”? Australian policy has yet to deal with the inconvenient contradiction that lies at the heart of AUKUS “deterrence”.

 

https://johnmenadue.com/aukus-as-morbid-deterrence/

 

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onions and chips....

The patience of US executives over business conditions in China is “wearing thin” because Beijing has failed to provide a predictable and fair business environment, a top official in President Joe Biden’s administration has warned.

US Commerce Secretary Gina Raimondo critiqued China’s treatment of American businesses in a CBS News interview on Sunday, four days after returning from a trip to Beijing. Despite claiming “progress”in trying to help mend strained Sino-US economic relations, she said “there can be no trust” until Chinese officials follow through on their pledges to address Washington’s concerns.

“We want a large and stable economic relationship with them, but they have to play by the rules,”Raimondo said. “And we are always going to act in our own American self-interest.”

Raimondo became the fourth high-level US official to travel to Beijing this summer as the Biden administration seeks to repair a relationship that has been fractured in recent years by the Russia-Ukraine conflict and rising tensions over Taiwan. She’s also the first US commerce secretary to hold talks in China in five years. She claimed that she made the trip because the Chinese business environment has become increasingly hostile for US corporations, which have been subjected to unfounded raids and fines in recent months.

“They are going to make a business decision to do business in other countries unless that improves,” Raimondo said. “And so, I was very clear with China that we need to – patience is wearing thin among American business. They need and deserve a predictable environment and a level playing field. And hopefully China will heed that message so we can have a stable, growing commercial relationship.”

Raimondo said she “didn’t sugarcoat anything” in her talks with Chinese leaders. For instance, she said she brought up the fact that her email was hacked before her trip to Beijing. “They suggested that they didn’t know about it, and they suggested it wasn’t intentional,” Raimondo said in a separate interview with CNN. “But I think it was important that I put it on the table and let them know that it’s hard to build trust when you have actions like that.”

READ MORE: China issues trade war warning to US

The US commerce czar acknowledged that Washington is in a “fierce competition with China at every level,” but she told NBC News that the rivalry must be managed to avoid conflict. Although she insisted that the US isn’t trying to “decouple” from China economically, she rejected an appeal from Beijing to ease export controls on advanced semiconductors with possible military applications.

“We are not going to sell the most sophisticated American chips to China that they want for their military capacity,” Raimondo told NBC News on Sunday. “But I do want to be clear: We will also still continue to sell billions of dollars of chips a year to China because the vast majority of chips that are made are not the leading edge, cutting edge that we’re talking about.”

READ MORE: China is run by ‘bad folks’ – Biden

 

 

https://www.rt.com/news/582305-us-commerce-secretary-says-businesses-lose-patience-with-china/

 

 

RAIMONDO FORGOT RULE NUMBER ONE: DESTROY CHINA....

 

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waste of time....

 

What scares investors away from China?


Beijing has made itself ‘uninvestable’, US commerce czar admonishes after her country deployed sanctions, embargoes, and the military to do just that

 

By Timur Fomenko, a political analyst

 

Hawkish US Secretary of Commerce Gina Raimondo has recently undertaken an official visit to China. She is the fourth such US official to visit in the past few months, marking a stabilization – but not a breakthrough – in ties between the two powers. Here, she berated China for making its market “uninvestable”for US firms and called “on Beijing to act to reduce the risk of doing business in the country.”

This is ironic for too many reasons to list. The most obvious one is that the Biden administration recently released restrictions on US inbound foreign investment into China’s high-tech industries, including semiconductors, quantum computing, supercomputing and artificial intelligence. Although the measures are considered narrow, they are nonetheless the opposite of confidence-inducing, as Republican critics have already argued they are not enough and have demanded they be widened.

This in itself tells a story about America. China isn’t making itself ‘uninvestable’; the US is doing it by deliberately creating a toxic geopolitical environment. The US does not want to see inbound investment into China and – through the stroking of tensions and military uncertainties – is heightening the risks of such investments. This makes Raimondo’s trip to Beijing immensely hypocritical.

Washington’s narrative on China, peddled through compliant media, is that Beijing is primarily responsible for scaring foreign investors away due to its increasing centralization under the rule of Xi Jinping. China is being described as isolationist, rigid, unreasonable and ‘in decline’ and accused of ‘unfair’ economic practices. If only Beijing would open up more and let all these investors in, right? Everything would be fine, and the US-China economic relationship would get back on track, wouldn’t it?

 

Possibly, but only if the US had not: 1) Placed hundreds of billions of dollars in tariffs on Chinese exports, which it refuses to remove, even with high levels of inflation; 2) Opportunistically blacklisted products from entire regions of China, such as Xinjiang, on the premise of ‘human rights abuses’; 3) Put Chinese technology companies on the commerce department ‘entity list’ prohibiting US companies from exporting to them, then blacklisted the entirety of China’s semiconductor industry and forced third-party countries to do the same. 

On top of all the sanctions, the US is deliberately militarizing China’s entire periphery with military bases and stoking up tensions with Taiwan, capitalizing on global uncertainty following the Ukraine war. Last but certainly not least, the mountain of news articles and commentary demonizing, attacking, accusing and doom-mongering about China grows every single day. Can the US honestly say with a straight face amidst all this that it is China who is scaring away investors? Sure, as this global environment has deteriorated, Beijing has tightened its control, and the ruling party engages in harsh regulatory crackdowns against a number of companies, which hardly creates an investment-friendly environment, but that’s a product of the insecurity being driven by tensions.

So when officials like Raimondo visit China and complain the conditions are unfavorable for US businesses, the level of hypocrisy borders on extreme, when Washington itself has done more than anyone else to undermine trust in Beijing. But if that is so, why should she even complain about it? The answer is because the US does not want to have an equal economic relationship with China. Washington’s ideal relationship with Beijing is one in which it gets full access to the Chinese market and gets to sell it anything it wants, not where Chinese companies are able to compete fair and square on a global scale. 

This is the same level of subordination it has long sought to impose on Europe, where, for example, it is casually destroying German industry by forcing its decoupling from Russian resources, selling overpriced gas and then using protectionism through the “inflation reduction act” to disincentivise production. The US wants to economically dominate China; that’s the only “investment” it has in mind and is primarily why visits like Raimondo’s never truly make any headway and are a waste of time.

 

https://www.rt.com/news/582117-china-investors-scare-us/

 

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friendship....

An affectionate sense of reunion and a warm group photo session were among highlights on Thursday in Beijing of the seventh Meeting of the China-Australia High-level Dialogue, the first such gathering of the two delegations since a meeting in 2020 in Sydney.

It was also the first meeting in the post-COVID 19 era, gathering incumbent and retired senior officials, business leaders, scholars and media workers from both nations.

The spirit of having no time to lose in repairing bilateral ties and accelerating the resumption of collaboration dominated the semiofficial dialogue.

"There are a lot of old friends as well as a lot of new ones here today," Li Zhaoxing, head of the Chinese delegation, said at the meeting. Li, a former Chinese foreign minister, is also honorary president of the Chinese People's Institute of Foreign Affairs.

Observers noted that the event was held as China-Australia relations have shown consistent improvement since last year, with diplomatic, defense and people-to-people exchanges between the two sides gradually resuming.

After its election victory last year, the Australian Labor Party expressed a willingness to improve ties with China, to which Beijing responded positively.

In November, President Xi Jinping met with Australian Prime Minister Anthony Albanese in Bali, Indonesia, "charting the strategic direction" for a turnaround in relations, Li said.

"The influence of both sides is expanding in the Asia-Pacific region, and the regional and global impact of China-Australia relations is also on the rise," he said, adding that the ties' future improvement relies on "whether the two sides have a proper perception of each other".

Li said Australia is one of the countries that enjoyed the most dividends from China's development over the past few decades.

"China has not posed any threat to Australia in the past or at present, and will not in the future," he said, adding that Australia's bonds with its allies should not be in conflict with its ties with its partners.

The two sides should "reject the ideology-based Cold War mentality", promote exchanges and dialogue at all levels and in various fields, and "properly handle differences in a constructive way", he said.

Craig Emerson, head of the Australian delegation and former Australian minister for trade, said, "I welcome the recent positive developments in the bilateral relationship, but we know that there is more work to do."

He hailed the meeting of Premier Li Qiang with Albanese on the sidelines of the East Asia Summit in Indonesia on Thursday.

"The timely and full resumption of normal trade is in the interests of both our countries," Emerson said. "Finding a way to address these issues will help us to take the relationship forward and to a new level."

He said there are many areas of shared interest in which both countries can collaborate, including climate change, people-to-people connections, health and science.

Foreign Minister Wang Yi met with the Australian delegation on Thursday in Beijing. He said the two countries have no unsettled disputes, Beijing upholds consistency in its Australian policy, and the two sides are expected to further boost bilateral friendship through using the high-level dialogue.

According to the Ministry of Commerce, bilateral trade volume reached $58.8 billion in the first quarter of this year, a year-on-year increase of 10.9 percent.

Chen Hong, professor and director of the Australian Studies Centre of East China Normal University in Shanghai, said, "The relations' repair and growth not only serve the fundamental interests of the two peoples, but are also conducive to advancing peace and development in the Asia-Pacific region and the world.

"China is not opposed to Australia's efforts to play an important and positive role in the Asia-Pacific region," he said. "Canberra needs to act with adequate political wisdom, determination and foresight, properly perceive China and its development, and see China as a partner rather than a rival."

According to Ruan Zongze, Chinese consul general in Brisbane, "Three years after the outbreak of the COVID-19 pandemic, Chinese students have finally ceased online learning and returned to Australia, as have Australian friends who came to China for work, travel and cultural exchange.

"Amity between the people holds the key to sound state-to-state relations." Ruan said in a recent video speech.

 

https://www.chinadaily.com.cn/a/202309/08/WS64fa5d49a310d2dce4bb4939.html

 

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