The View from Right Field

Will Trump Reach a Real Agreement With China? More Importantly, Can Pandas Fly?

Donald Trump has delayed the March 1 deadline for increasing tariffs on Chinese imports, saying that he expects the details of a final deal between the U.S. and China will be worked out at a summit meeting with Chinese President Xi Jinping, to be held at President Trump’s Mar-a-Lago estate in Florida.  One question, of course, is what any such agreement would provide.  Would it just cover China agreeing to buy more stuff from the United States or would it really change the way the Chinese economy works?

The Economist, in a leader in its current issue (“Can pandas fly?”¹), encourages President Xi to, inter alia, limit the state’s role in allocating capital and temper China’s industrial policy.  The Economist says that “[a] more economically liberal China would end up richer and make fewer enemies.” 

But this misunderstands President Xi’s priorities – and the priorities of his predecessors.  Thirty years ago, Deng Xiaoping crushed the protesters in Tiananmen Square because maintaining control was worth putting his economic reforms on hold for a time.  It is the same with President Xi.  Growth is nice, but political control is more important.
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¹ “Can pandas fly?” was the title of the leader in the print edition of The Economist.

What’s Going to Happen In Venezuela?

Venezuela is starving.  Literally.  Aid is on its borders, but President Nicholas Maduro is refusing to let it in because the aid has been organized by opposition leader Juan Guaido (and countries supporting him).  Already, at least four people have been killed and hundreds injured, reportedly by Venezuelan security forces, including militia. 

What happens next?  Obviously, nobody knows, but 2019 is the 30th anniversary of two possible outcomes.  The first is Tiananmen Square.  In 1989, people in China were starting to demonstrate for more rights and liberties.  The protests reached a peak in Tiananmen Square in Beijing in early June.  The Army faced off with the protesters.  The Army won because it was willing to shoot the protesters until they disbanded and left.  Deng Xiaoping was willing to put his economic reforms on hold to maintain political power.

Jamal Khashoggi: What’s Worse? Foreign Policy Edition.

What’s worse (it’s easy until you think about it):

(i)  Jamal Khashoggi, a Saudi journalist, has been living in self-imposed exile for the last year, while writing articles critical of the Saudi government for, among others, The Washington Post.   On October 2, he enters the Saudi consulate in Istanbul and is killed at some point thereafter, while in the embassy, by people connected with the Saudi government.

(ii)  Between October 2015 and December 2015, five employees of Causeway Bay Books, a bookseller in Hong Kong, disappear.  At least two of them disappear while in the People’s Republic of China, one while he is in Thailand, and another in Hong Kong itself.  All five are later confirmed to be in the PRC in connection with an alleged investigation of an old traffic incident involving one of them.  Causeway Bay Books sold political books, banned in China, that were critical of the Chinese government.

A Cashless Society Plus China’s Social Credit System Equals …

­In May, FT Weekend had a long article on the increase in the number of payments being made electronically and asked, “Does cash have a future?” The subheadline read: “Electronic payment is quick, convenient, germ-free and can deter crime, from tax evasion to terrorism.  So why are we so reluctant to give up on coins and notes.”¹

The pluses of cash-free transactions are many.  For businesses, more cash-free transactions mean lower costs.  There are fewer break-ins by people looking for money.  Not having to handle cash is cheaper: you don’t have to count it; and you don’t have to physically take it to the bank.

“Trade wars are good, and easy to win”

At least, that is what Donald Trump tweeted back on March 2.  I don’t think it true, but as the U.S. and the Chinese counter to each other’s latest tariff increases, I hope President Trump keeps a couple of things in mind.

First, though, several initial comments.  One, China has been playing unfair.  Among other things, many U.S. companies, especially those in industries with proprietary technology, are only allowed to do business in China if they (i) sign a joint venture agreement with a Chinese company and (ii) license their intellectual property to the Chinese joint venture.  That needs to be changed.

Also, none of the tariffs that have been announced has taken effect yet, and they won’t for several months.  In effect, at this point, they are just threats.  Plus, apparently there are negotiations going on behind the scenes, so they may never come into effect (other than the effect they have on U.S. stock prices).

The Return of One-Man Rule: Increasing Risk in China

In my prior post, I talked about the tendency in foreign affairs to assume that things will continue as they have been.  I looked at Russia and the risks that may come from Russia as it declines.

The country, however, that could be an even greater risk is one that seems the very opposite of instability right now: China.  While The Economist saw Russia as a declining power, it said “China is clearly a rising one that has time on its side”.  Such a view fits with President Xi’s reelection last year and his changes to both the Chinese constitution and the party/governmental structure this year.  It certainly seems that President Xi is in control and that China has the time – and stability – to play the long game.  Once again, I wonder,

When Stability Is Most Expected, Change Often Intrudes: Russia

There is a tendency in foreign affairs, as in life generally,¹ to assume that things will continue as they are.  Of course, this is not true, but people still get surprised when things change.  Examples of this are too numerous to mention, though I feel obligated to list a couple.  In December 1944, nobody expected a German offensive on the Western front.  Voila, the Battle of the Bulge.  The same could be said for the Tet Offensive in Vietnam in 1968, except for the fact that, when the Battle of the Bulge was over, we understood it was a German defeat.

A more recent example is the January 1989 statement by Erich Honecker, leader of East Germany, that the Berlin Wall would be around for another 50, or even 100, years.  Oops.

“The Post,” Richard Nixon, and an Historical “What If”

As a movie, The Post is going to be a blockbuster.  But you expect that with any movie starring both Tom Hanks and Meryl Streep (in alphabetical order).  As history, however, it leaves a little to be desired.  First, it was The New York Times, not The Washington Post, that had the scoop on the Pentagon Papers, and it was the Times, not the Post, that was sued by the Nixon administration.  The Supreme Court case is, after all, New York Times Co. v. United States.  However, it could be that the Times’s newsroom did not have a role for Ms. Streep, while the Post did.

Second, I have yet to see the movie, but I hope it makes it clear that the Pentagon Papers were about how the Kennedy and Johnson administrations misled the public about the Vietnam War.  The Pentagon Papers were not about Richard Nixon.  In fact, according to Henry Kissinger,¹ there was sentiment among some political types in the Nixon White House to let the Pentagon Papers be published to show how Kennedy and Johnson had messed up Vietnam.  Obviously, President Nixon did not take that approach.

China’s Unbelievable Economic Numbers. Are They Believable?

The Wall Street Journal reported last week on China’s GDP growth rate for the first quarter of 2017.  It seemed to be big news that quarterly growth rate (i.e., the change from the quarter a year earlier) was 6.9%, an increase from 6.8% the previous quarter.  It would seem to me that 0.1% is almost a rounding error, but the article thought it was important.

Perhaps more interesting, though, was the chart of China’s reported quarterly growth rates, on a year-over-year basis, for the last several years:

China’s Main Concern is Keeping North Korea Around

In a post last week, I talked about what I understand to be North Korea’s main goal in its foreign and domestic policy: maintaining Kim Jong Un in power, and how that goal is driving North Korea’s nuclear weapons and missile programs.

But what about the People’s Republic of China?  China is viewed by many as the key to controlling North Korea’s nuclear ambitions.  What are China’s concerns?  According to most commentators, they have several.  First, if North Korea collapses, there could be a flood of refugees into China.