China Finds It Can Live Without the U.S.

Hawks in Washington speak of ‘decoupling.’ Xi Jinping is already busy doing that—his way.

A China hand and former Treasury Department colleague told me before the 2016 election that officials in Beijing preferred Donald Trump to Hillary Clinton because they thought Mr. Trump would be an easier negotiator.

Yet Mr. Trump has proved to be anything but—and in ways that ill serve U.S. interests. Through a series of vacillating threats and entreaties that often seem to be decided on a whim, he has shown President Xi Jinping that he is an unreliable negotiator. Mr. Trump’s public bullying makes it hard for Mr. Xi to accept any deal while saving face, which is very important to the Chinese. Thus Mr. Xi is no longer earnestly negotiating, merely going through the motions.

The Costs of China’s Crackdown on Hong Kong

The new buzzword in Washington discussions of Sino-U.S. negotiations is “decoupling.” From the Trump administration’s perspective, they are threatening Beijing with the prospect of disentangling the U.S. and China entirely and creating two distinct economic systems, similar to the bipolar world of the Cold War. Many in Mr. Trump’s orbit believe that blocking China’s access to U.S. technology would thwart China’s attempts to surpass the U.S. on the world stage.

This approach is naive and probably counterproductive. It is accelerating rather than slowing the Made in 2025 program. Mr. Xi has jettisoned Deng Xiaoping ’s established strategy: “Hide your strength, bide your time, never take the lead.” From his perspective, decoupling is not only an American threat—it’s the new Chinese strategy.

Nowhere is this more evident than Huawei’s case. The Trump administration has temporarily cut off most transactions between U.S. companies and Huawei, and China hawks are pushing the president to make this decoupling permanent. Meanwhile, Mr. Trump dangles access to American-made components as leverage to get Mr. Xi to buy American soybeans. But Mr. Xi does not appear interested in tactical détente as he was last year, when he asked Mr. Trump to save ZTE, the other prominent Chinese telecommunications firm. Instead of giving in to Mr. Trump’s demands, Huawei recently introduced its own operating system, Harmony, an alternative to Android that will reduce Huawei’s reliance on U.S. technology.

I do not contend that China is benign or even that Mr. Trump has misdiagnosed the problem. Rather, my concern is that the president’s erratic approach has aggravated the situation by encouraging Mr. Xi to embrace decoupling on his own terms. After more than two decades of globalization, severing the integrated supply lines of the world’s two largest economies will necessarily be messy. For the U.S., Mr. Trump’s approach makes it even messier.

Making Sense of the New American Right

Keeping track of the Jacksonians, Reformicons, Paleos, and Post-liberals.

I like to start my classes on conservative intellectual history by distinguishing between three groups. There is the Republican party, with its millions of adherents and spectrum of opinion from very conservative, somewhat conservative, moderate, and yes, liberal. There is the conservative movement, the constellation of single-issue nonprofits that sprung up in the 1970s

  • gun rights,
  • pro-life,
  • taxpayer,
  • right to work

— and continue to influence elected officials. Finally, there is the conservative intellectual movement: writers, scholars, and wonks whose journalistic and political work deals mainly with ideas and, if we’re lucky, their translation into public policy.

China is Losing the New Cold War

In contrast to the Soviet Union, China’s leaders recognize that strong economic performance is essential to political legitimacy. Like the Soviet Union, however, they are paying through the nose for a few friends, gaining only limited benefits while becoming increasingly entrenched in an unsustainable arms race with the US.

When the Soviet Union imploded in 1991, the Communist Party of China (CPC) became obsessed with understanding why. The government think tanks entrusted with this task heaped plenty of blame on Mikhail Gorbachev, the reformist leader who was simply not ruthless enough to hold the Soviet Union together. But Chinese leaders also highlighted other important factors, not all of which China’s leaders seem to be heeding today.
.. But overseeing a faltering economy was hardly the only mistake Soviet leaders made. They were also drawn into a costly and unwinnable arms race with the United States, and fell victim to imperial overreach, throwing money and resources at regimes with little strategic value and long track records of chronic economic mismanagement. As China enters a new “cold war” with the US, the CPC seems to be at risk of repeating the same catastrophic blunders.
.. China spent some $228 billion on its military last year, roughly 150% of the official figure of $151 billion.
.. the issue is not the amount of money China spends on guns per se, but rather the consistent rise in military expenditure, which implies that the country is prepared to engage in a long-term war of attrition with the US. Yet China’s economy is not equipped to generate sufficient resources to support the level of spending that victory on this front would require.
If China had a sustainable growth model underpinning a highly efficient economy, it might be able to afford a moderate arms race with the US. But it has neither.
.. China’s growth is likely to continue to decelerate, owing to rapid population aging, high debt levels, maturity mismatches, and the escalating trade war that the US has initiated. All of this will drain the CPC’s limited resources. For example, as the old-age dependency ratio rises, so will health-care and pension costs.
.. while the Chinese economy may be far more efficient than the Soviet economy was, it is nowhere near as efficient as that of the US. The main reason for this is the enduring clout of China’s state-owned enterprises (SOEs), which consume half of the country’s total bank credit, but contribute only 20% of value-added and employment.
.. the CPC is that SOEs play a vital role in sustaining one-party rule, as they are used both to reward loyalists and to facilitate government intervention on behalf of official macroeconomic targets.
.. Dismantling these bloated and inefficient firms would thus amount to political suicide. Yet protecting them may merely delay the inevitable, because the longer they are allowed to suck scarce resources out of the economy, the more unaffordable an arms race with the US will become – and the greater the challenge to the CPC’s authority will become.
.. The second lesson that China’s leaders have failed to appreciate adequately is the need to avoid imperial overreach. About a decade ago, with massive trade surpluses bringing in a surfeit of hard currency, the Chinese government began to take on costly overseas commitments and subsidize deadbeat “allies.”
.. Exhibit A is the much-touted Belt and Road Initiative (BRI), a $1 trillion program focused on the debt-financed construction of infrastructure in developing countries.
.. An even more egregious example of imperial overreach is China’s generous aid to countries – from Cambodia to Venezuela to Russia – that offer little in return.
.. from 2000 to 2014, Cambodia, Cameroon, Côte d’Ivoire, Cuba, Ethiopia, and Zimbabwe together received $24.4 billion in Chinese grants or heavily subsidized loans. Over the same period, Angola, Laos, Pakistan, Russia, Turkmenistan, and Venezuela received $98.2 billion.
.. Like the Soviet Union, China is paying through the nose for a few friends, gaining only limited benefits while becoming increasingly entrenched in an unsustainable arms race. The Sino-American Cold War has barely started, yet China is already on track to lose.

Tune Into The Real Ronald Reagan

There is nothing clandestine about Dugger’s quarry of new material, though Reagan’s staff has done its best to play it down. The material consists of transcripts of several hundred five-minute radio spots that Reagan broadcast after he left Sacramento in 1975; a series that ended the day he announced for president in 1979.

There can be no doubt whatever that these broadcasts express Reagan’s own personal, instinctive attitudes to the important foreign and domestic issues of the day, as opposed to cooler or more cautious or veiled attitudes he may have been advised to express then or later.

Reagan himself, in the last of the broadcasts, states that he wrote them all with his own hand. “I’ve scratched them out on a yellow tablet in airplanes, riding in cars, and at the ranch when the sun went down.”

They reveal him as perhaps a cleverer man than most reporters think he is. You may accept neither his premises nor his conclusions, but you will conclude, I submit, on reading these scripts, that Reagan writes better than you would expect. He has a sure sense of how an issue can be turned, sometimes twisted, to his advantage. And he has a real flair for one-liners.

The transcripts also reveal–and this is the heart of Dugger’s contention–a harder, nastier political style than that of the relaxed, tolerant personality Reagan has so carefully cultivated in the White House.

.. “He was presenting himself to the country as a moderate,” this is Dugger’s key charge, “but these transcripts show that deep down he was a hardline right-wing ideologue with fully formed and recently expressed prejudices on all of the outstanding issues of the day.”

.. The transcripts contain too much that supports this harsh judgment. All the clich,es of the Californian radical right are trotted out without inhibition.

Eighty per cent of air pollution,” the president believes, “comes not from chimneys and auto exhaust pipes but from plants and trees.” Banning pesticides like DDT leads to “political pollution.” Smoking pot leads to sterility.

.. The social attitudes revealed are uniformly indifferent to the old, the poor, the weak, and always coincide with the interests of the rich, corporations, and the financial Haves. The president is more moved by “the injustice done to Allan Bakke” than by the plight of those on welfare, and it is “demagoguery” to believe that income taxes should be progressive, that is, should increase with the size of incomes.

.. More surprising, and more unpleasant, is the president’s habit of using the sly, indirect way of the propagandist, using code language to suggest more than he quite says right out.

.. He does not explicitly advocate the death penalty, for example. That would sound too bloodthirsty. Instead he quotes with approval the father of a murdered man who says, “after two years the murderer of my son goes free, but my son is dead.” Because the late senator Joe McCarthy did not start to make his unsupported allegations about communists in government until after Alger Hiss had been charged with perjury, it does not follow, as Reagan implies, that those who oppose McCarthyism believe that the Cold War existed only in the minds of reactionaries.

.. There is a good deal of old-fashioned chauvinism to be found in the broadcasts. The Caribbean, Reagan concluded because Michael Manley was prime minister of Jamaica, “is rapidly becoming a communist lake in what should be an American pond.” What should be? The Caribbean basin? The Atlantic? The whole great gulf of ocean itself?

..”Maybe there is an answer–we simply do what’s morally right. Stop doing business with them. Let their system collapse.”

What if it doesn’t collapse?

.. Ronald Reagan is the leader of elements in the government who want the United States to obtain a first- strike capability

.. not all Reagan’s ideas are mistaken. His reaction against the New Deal, as Dugger says, would not have taken him to the White House unless it expressed authentic grievances, genuine second-thoughts about what had been accepted wisdom, real pain experienced by those who had not been preferred targets for the benevolence of the liberal system.

It is true. but that does not make the real Ronald Reagan, revealed behind the mask of amiability in his radio scripts, any less profoundly disturbing.