How World Leaders Ruined the Global Economy

They took the best growth picture in a decade and put us in danger of recession.

Why are so many key global leaders pursuing so many stupid economic policies?

As recently as January 2018, the International Monetary Fund issued one of its most upbeat economic forecasts in recent years, extolling “broad based” growth, with “notable upside surprises.”

By last month, the fund had sliced its forecast for expansion this year to 3.2 percent — a significant falloff from the 3.9 percent projection reiterated just six months earlier — and had pronounced the economic picture “sluggish.” American investors are more concerned; the bond market is sounding its loudest recessionary alarm since April 2007.

The deterioration in the economic picture is not the consequence of irresponsible behavior by banks or a natural disaster or an unanticipated economic shock; it’s completely self-inflicted by major world leaders who have delivered almost universally poor economic stewardship.

The trade war initiated by President Trump sits firmly atop the list of bad policies. But Brexit has tipped Britain into economic contraction. With European governments unwilling to pursue structural reforms, the continent is barely growing. President Xi Jinping of China has focused on standing up to Mr. Trump and solidifying his own power. After a promising start reforming the economy, India’s prime minister, Narendra Modi, has turned instead to oppressing his country’s Muslim minority.

None of this was necessary. As the January 2018 I.M.F. report indicated, the world economy was firing on all cylinders — “the broadest synchronized global growth upsurge since 2010” — as jobs were being added and inflation remained subdued.

Yes, Mr. Trump’s trade war and Brexit loomed, but amid hope that the former would prove empty and the latter would be softened.

Not so today.

Often against the recommendations of his more sensible advisers, Mr. Trump has implemented the country’s most protectionist actions since the 1930s. As a result, world trade has begun to fall for the first time in a decade, with noticeable economic impact. Last week, Goldman Sachs cut its already modest projections for fourth-quarter growth to 1.8 percent from 2 percent.

That’s a far cry from the “4, 5, 6” percent that Mr. Trump talked about just before his tax cut passed.

Nor has that been Mr. Trump’s only misstep in economic policy. Instead of nurturing growth with important investments like a robust infrastructure program, Mr. Trump deployed his political capital to secure tax cuts that disproportionately favored business and the wealthy.

The “sugar high” they produced quickly wore off. And now, instead of developing better policies, the president has chosen to attack the Federal Reserve, whose independence is cherished by investors, business people and economists.

Boris Johnson, Britain’s new prime minister, abandoned his predecessor’s notion of a “soft Brexit” that would have maintained some ties with the European Union. Instead, he reaffirmed his promise that his country would leave the E.U. on Oct. 31 with or without a deal. The pound quickly fell to its lowest level against the dollar since 1985. (It has since recovered slightly.)

Then there’s China. By virtue of both its remarkably fast industrialization and its protectionist policies, the nation has long been a trade threat. But four years ago, the government issued its “Made in China 2025” economic manifesto, which put in writing China’s plans to attain a leadership position in key new sectors, including robotics, pharmaceuticals and aerospace.

The notion of China using its state power to take on important American and European industries instead of pursuing market reforms set off alarm bells across the political spectrum and provided a concrete underpinning for Mr. Trump’s trade confrontation.

Mr. Xi, rather than acknowledging China’s protectionist practices, has proved unwilling to accept a new trade agreement with effective enforcement provisions. That has raised doubts about whether China is seriously interested in reforming its unfair trade practices — keeping key markets fully or partially closed, using state subsidies to favor its companies, forcing American companies to transfer technology to China and the like.

Of course, at least in the world’s democracies, voters bear substantial responsibility for electing these inadequate leaders. The rise of populism as a reaction to disaffection about economic and social conditions has been well documented as a principal driving force.

Occasionally, good choices have been made, such as the election of President Emmanuel Macron of France. But even that has not led to progress; public support for Mr. Macron turned to opposition when he instituted the much needed policy changes that he promised.

Any chief executive officer who botched his or her job as badly as most of these leaders have would be fired. Let’s hope that voters come to that realization when given the chance.

Why Xi Jinping Is Courting Kim Jong-un

It’s not about nuclear weapons, leverage with President Trump or the trade war.

.. Such vagueness should come as no surprise since obtaining a compromise from Mr. Kim never was the purpose of Mr. Xi’s trip. China’s president did not travel to North Korea to prove to Mr. Trump that only the Chinese government can broker a deal with Mr. Kim or to gain bargaining power in the trade dispute. In keeping with the long, tangled history of Chinese-North Korean relations, Mr. Xi traveled to Pyongyang to lure back into China’s fold what he sees as a difficult and wayward subordinate.

China may be North Korea’s largest trade partner and a formal defense-treaty ally, but tension and distrust have characterized relations between the two countries for decades. Strains reappeared in recent years after Mr. Kim tested nuclear weaponsand seemed to pull back from China while repositioning North Korea closer to the United States and South Korea. China, for its part, has gone along with the latest punishing international sanctions against North Korea.

Kim Il-sung resented the asymmetry and as a hedge maintained ties to the Soviet Union after the Sino-Soviet split in the late 1950s: He needed Mao, but didn’t think Mao could be trusted. Sure enough, come 1972, China welcomed President Richard Nixon in Beijing and began rapprochement with the United States, while North Korea remained violently opposed to the presence of the several tens of thousands of American forces stationed in South Korea.

After Mao’s death in 1976, the patterns of Chinese-North Korean diplomacy, like so much to do with China, changed. Mao’s successors were more interested in developing China’s economy than in big-power politics. In 1978, the leaders Hua Guofeng and then Deng Xiaoping made North Korea their first overseas destination. But this flurry of diplomacy belied the emergence of new tensions in the alliance: The two countries’ political systems and approaches to economics and foreign affairs began to diverge.

By the mid-1980s, China was barreling down the path of “reform and opening-up,” as the official line went, and it wanted a stable international order, thinking that this would be more conducive to its own growth. But Kim Il-sung saw China’s burgeoning links to capitalist economies as a betrayal of the socialist trading bloc, and his government is suspected of having ordered assassination attempts and terrorist attacks abroad.

Then came what the North Korean government considered to be an unforgivable act of treachery: In 1992, as Communist regimes were collapsing across Eurasia, the Chinese government normalized relations with South Korea, leaving Kim Il-sung diplomatically isolated and economically in the dust.

After Kim Il-sung’s death in 1994, his son and successor Kim Jong-il asserted some measure of independence from China by not visiting for six years. He finally made a trip in 2000, soon before hosting the South Korean president for an unprecedented meeting and while preparing to bring President Bill Clinton to Pyongyang — or, only once it seemed like détente with South Korea and the United States was within grasp.

Several Chinese leaders, in turn, visited Pyongyang in the early 2000s, trying to project the image of a special relationship. Yet something was resolutely changing: The North Korean government was now doggedly pursuing a nuclear weapons capability, not only to defend itself against the threat of regime change suddenly posed by a hostile Bush administration, but also to emancipate itself from its unreliable and bossy ally.

In China, an App About Xi Is Impossible to Ignore — Even if You Try

Communist Party members using the Study the Great Nation app during a weekly meeting in Beijing in February. Tens of millions of Chinese are now using the app, often under pressure from the government.

CHANGSHA, China — Inside a fishing gear store on a busy city street, the owner sits behind a counter, furiously tapping a smartphone to improve his score on an app that has nothing to do with rods, reels and bait.

The owner, Jiang Shuiqiu, a 35-year-old army veteran, has a different obsession: earning points on Study the Great Nation, a new app devoted to promoting President Xi Jinping and the ruling Communist Party — a kind of high-tech equivalent of Mao’s Little Red Book. Mr. Jiang spends several hours daily on the app, checking news about Mr. Xi and brushing up on socialist theories.

Tens of millions of Chinese workers, students and civil servants are now using Study the Great Nation, often under pressure from the government. It is part of a sweeping effort by Mr. Xi to strengthen ideological control in the digital age and reassert the party’s primacy, as Mao once did, as the center of Chinese life.

While many people have embraced the app as a form of patriotism, others see it as a burden imposed by overzealous officials and another sign of a growing personality cult around Mr. Xi, perhaps China’s most powerful leader since Mao’s time.

“He is using new media to fortify loyalty toward him,” said Wu Qiang, a political analyst in Beijing. He likened Study the Great Nation to the little booklet of Mao quotations that was widely circulated during the chaotic and violent Cultural Revolution.

Since its debut this year, Study the Great Nation has become the most downloaded app on Apple’s digital storefront in China, with the state news media saying it has more than 100 million registered users — a reach that would be the envy of any new app’s creators.

But those numbers are driven largely by the party, which ordered thousands of officials across China to ensure that the app penetrates the daily routines of as many citizens as possible, whether they like it or not.

Schools are shaming students with low app scores. Government offices are holding study sessions and forcing workers who fall behind to write reports criticizing themselves. Private companies, hoping to curry favor with party officials, are ranking employees based on their use of the app and awarding top performers the title of “star learner.”

Many employers now require workers to submit daily screenshots documenting how many points they have earned.

Propaganda is ubiquitous in China, but experts say Study the Great Nation is different because the government is forcing people to use it and punishing those who cheat or fall behind.

The app allows users to Watching a video about his recent visit to France, for example, earns one point. Getting a perfect score on a quiz about his economic policies earns 10.

The app comes as Mr. Xi, who rose to power in 2012, is leading a broader crackdown on free speech in China, imprisoning scores of activistslawyers and intellectuals, and imposing new restrictions on the news media. Mr. Xi has spoken frequently about what he calls the need to guard against online threats. He has warned that the party could lose its grip on power if it does not master digital media.

“There is no national security without internet security,” Mr. Xi said in a speech this year. “If we cannot succeed on the internet, we will not be able to maintain power in the long run.”

David Bandurski, co-director of the China Media Project, said the app was a way for Mr. Xi to ensure that Chinese families are invested in the life of the party at a time when many dismiss propaganda as stilted and irrelevant.

“Loyalty to the party,” Mr. Bandurski said, “means loyalty to Xi Jinping.”

Study the Great Nation in some ways harkens back to the Mao era, when the chairman’s portrait hung in living rooms and families studied his words feverishly. While Mr. Xi cannot yet match Mao’s grandeur, he has borrowed from Mao’s playbook in his quest to be seen as a singular, transformative force.

The app features a television series called “Xi Time” and Mr. Xi’s quotations on topics like building a strong military and achieving a “Chinese dream” of prosperity and strength. The app recommends stories about Mr. Xi on its home screen and sends push notifications highlighting “golden sentences” from his latest speeches. Even the Chinese name for the app is a play on Mr. Xi’s name.

The app, which also offers lighter fare about traditional Chinese culture, history and geography, presents a censored version of current events. Topics such as China’s mass detention of Muslims are not included.

.. Not everyone is as enthusiastic. In interviews, students and workers complained that superiors publicly chastised them for low scores. Others said bosses threatened to deduct pay or withhold bonuses if they did not use the app more frequently. They did not want to provide their names for fear of punishment, but some have complained online.

Critics say Mr. Xi is intruding into the private lives of Chinese citizens in a way the party has typically avoided since the Mao era. The app makes the party’s messages difficult to ignore, awarding points only when an article has been read completely and a video has been watched for at least three minutes.

“You cannot divert attention away from it,” said Haiqing Yu, a professor who studies Chinese media at RMIT University in Australia. “It’s a kind of digital surveillance. It brings the digital dictatorship to a new level.”

The app, which was developed by the party’s Propaganda Department and the technology giant Alibaba, is available on the Apple app store as well as Android app stores in China. The Propaganda Department keeps user data.

It is unclear how closely the government tracks users of Study the Great Nation, but the app requires people to provide a mobile number to register and a national identification number to access videoconference and chat features.

Given the pressures to use the app, a cheating industry involving at least a dozen products has flourished. A man who listed his contact information in an online advertisement for cheating software said in an interview that many of his more than 1,000 customers saw the app as a burden imposed by bosses. He declined to provide his name for fear of retribution.

The government has moved swiftly to prosecute cheating and limit criticism of the app. The police in the southeastern province of Jiangxi last month detained a man who sold cheating software for about $13. The police said the man was running an illegal business.

The state-run news media teems with glowing reviews of the app, including stories about diligent hospital workers and kindergarten teachers who open Study the Great Nation as soon as they awaken, even before they drink water or go to the bathroom.

The app has inspired videos by prison guards, raps by children and adulatory song-and-dance routines by power plant workers. Some party members have suggested the app can be used as a dating tool to screen potential mates (“If you see a guy on the subway using the app,” says one cartoon, “you should marry him”).

In Changsha, which coincidentally is an hour’s drive from Mao’s childhood home, the local news media has lauded Mr. Jiang, the owner of the fishing gear store, for his high scores. He and his wife sometimes answer questions on the app together at dinner, alongside their 9-year-old son.

Mr. Jiang said his military training had inspired him to devote himself fully to Study the Great Nation. By using the app, he said, he has grown even more patriotic.

“President Xi has a dream of great renaissance,” he said. “When young people are strong, the nation is strong.”

As China Talks Begin, Trump’s Trade Negotiator Tries to Keep President From Wavering

WASHINGTON — In the middle of his crowded dinner in Buenos Aires with President Xi Jinping of China, President Trump leaned across the table, pointed to Robert Lighthizer, the United States trade representative whose skepticism of China runs deep, and declared, “That’s my negotiator!

He then turned to Peter Navarro, his even more hawkish trade adviser, adding, “And that’s my tough guy!” according to aides with knowledge of the exchange.

Now, with talks between China and the United States set to begin this week in Beijing, Mr. Lighthizer, aided by Mr. Navarro, faces the assignment of a lifetime: redefining the trade relationship between the world’s two largest economies by Mr. Trump’s March 2 deadline to reach an agreement.

And he must do it in a way that tilts the balance of power toward the United States. His approach will have significant ramifications for American companies, workers and consumers whose fortunes, whether Mr. Trump likes it or not, are increasingly tied to China.

First, however, Mr. Lighthizer will need to keep a mercurial president from wavering in the face of queasy financial markets, which have suffered their steepest annual decline since 2008. Despite his declaration that trade wars are “easy to win” and his recent boast that he is a “Tariff Man,” Mr. Trump is increasingly eager to reach a deal that will help calm the markets, which he views as a political electrocardiogram of his presidency.

Mr. Trump has repeatedly told his advisers that Mr. Xi is someone with whom he can cut a big deal, according to people who have spoken with the president. On Saturday, Mr. Trump called Mr. Xi to discuss the status of talks, tweeting afterward that good progress was being made. “Deal is moving along very well,” Mr. Trump said.

The administration has tried to force China to change its ways with stiff tariffs on $250 billion worth of Chinese products, restrictions on Chinese investment in the United States and threats of additional levies on another $267 billion worth of goods. China has responded with its own tit-for-tat tariffs on American goods. But over a steak dinner during the Group of 20 summit meeting in Argentina, Mr. Xi and Mr. Trump agreed to a 90-day truce and to work toward an agreement that Mr. Trump said could lead to “one of the largest deals ever made.”

Mr. Lighthizer — whose top deputy will meet with Chinese officials this week ahead of more high-level talks in February — has played down any differences with Mr. Trump and views his role as ultimately executing the directive of his boss. But the trade representative, who declined to be interviewed, has told friends and associates that he is intent on preventing the president from being talked into accepting “empty promises” like temporary increases in soybean or beef purchases.

Mr. Lighthizer, 71, is pushing for substantive changes, such as forcing China to end its practice of requiring American companies to hand over valuable technology as a condition of doing business there. But after 40 years of dealing with China and watching it dangle promises that do not materialize, Mr. Lighthizer remains deeply skeptical of Beijing and has warned Mr. Trump that the United States may need to exert more pressure through additional tariffs in order to win true concessions.

When Mr. Lighthizer senses that anyone — even Mr. Trump — might be going a little soft on China, he opens a paper-clipped manila folder he totes around and brandishes a single-page, easy-reading chart that lists decades of failed trade negotiations with Beijing, according to administration officials.

Bob’s attitude toward China is very simple. He wants them to surrender,” said William A. Reinsch, a former federal trade official who met him three decades ago when Mr. Lighthizer was a young aide for former Senator Bob Dole of Kansas. “His negotiating strategy is simple too. He basically gives them a list of things he wants them to do and says, ‘Fix it now.’

Mr. Trump’s selection of Mr. Lighthizer last month to lead the talks initially spooked markets, which viewed the China skeptic’s appointment as an ominous sign. It also annoyed Chinese officials, who had been talking with the Treasury secretary, Steven Mnuchin, a more moderate voice on trade and the primary point of contact for Liu He, China’s top trade negotiator. Mr. Mnuchin has urged the president to avoid a protracted trade war, even if that entails reaching an interim agreement that leaves some issues unresolved.

Mr. Mnuchin, who attended the G-20 dinner, helped Mr. Trump craft an upbeat assessment declaring the Buenos Aires meeting “highly successful” in the presidential limousine back to the airport, according to a senior administration official.

The disparate views among Mr. Trump’s top trade advisers have prompted sparring — both publicly and behind the scenes.

During an Oval Office meeting with the trade team the fall of 2017, Mr. Lighthizer accused Mr. Mnuchin and Gary D. Cohn, the former National Economic Council director, of bad-mouthing him to free-trade Republican senators.

The argument grew so heated that the White House chief of staff, John F. Kelly, quickly pulled the combatants into the nearby Roosevelt Room and away from the president, where the argument raged on for a few more minutes, according to two witnesses.

Emily Davis, a spokeswoman for the United States trade representative, disputed the account.

Mr. Lighthizer has since worked to increase his own face time with Mr. Trump. He has joked to colleagues that he has more influence with Mr. Trump during winter months because he is able to hitch a ride on Air Force One during the president’s flights down to Mar-a-Lago, which is several miles from Mr. Lighthizer’s own $2.3 million waterfront condo in Palm Beach, Fla.

He used that access to argue to Mr. Trump that the United States has never had more leverage to extract structural reforms on intellectual property, forced transfer of technology from American companies and cybercrime. But while Mr. Trump has jumped at the chance to claim victory in changing China’s ways, experts say that what Mr. Lighthizer is demanding would require significant shifts in how Beijing’s central government and its manufacturing sector coordinate their activities, and that might simply not be possible in the short term.

“Good luck with that,” Mr. Scissors said.

Those who know Mr. Lighthizer say he will try to force concessions through a combination of pressure tactics, like tariffs, and public condemnation. Mr. Lighthizer — who described his own negotiating style as “knowing where the leverage is” during a 1984 interview — typically presents few specific demands during initial talks while publicly bashing efforts by the other side.

He used that approach during recent talks with Canada and Mexico to revise the North American Free Trade Agreement, criticizing foreign counterparts as intransigent and characterizing complaints by American businesses as pure greed.

Mr. Lighthizer’s unsparing view of China comes, in part, from his childhood in Ashtabula, Ohio, an industrial and shipping town on the Great Lakes hit by the offshoring of steel and chemical production. For much of his career, Mr. Lighthizer was a lonely protectionist voice in a Republican Party dominated by free traders, alternating between jobs in government and a lucrative private law career representing large American corporations like United States Steel in trade cases against China.

Mr. Lighthizer found his way into Mr. Trump’s orbit through his work in the steel industry, where he gained prominence by filing lawsuits accusing Japan and China of dumping metals into the United States, in violation of trade laws. In 2011, Mr. Lighthizer caught Mr. Trump’s eye with an opinion piece in The Washington Times, in which he defended Mr. Trump’s approach to China as consistent with conservative ideology and compared the future president to Republican icons like Ronald Reagan.

Taciturn in public and self-deprecating in private, Mr. Lighthizer sees himself as a serious player on the world stage: Two recent guests to Mr. Lighthizer’s Georgetown townhouse were greeted by the stern visage of their host staring down at them from an oil portrait on the wall.

The trade adviser is guarded around Mr. Trump, often waiting until the end of meetings to make his points and quietly nudging the president away from actions he views as counterproductive, current and former officials said. That was the case in mid-2017 when he cautioned the president against withdrawing unilaterally from the World Trade Organization, adding for emphasis, “And I hate the W.T.O. as much as anybody.”

He does not always get his way. In the wake of a new trade agreement with Mexico and Canada this fall, Mr. Lighthizer urged Mr. Trump to consider easing steel and aluminum tariffs on those countries and replacing them with less burdensome quotas. Mr. Trump rejected his plan, according to negotiators from all three countries.

A poker-faced Mr. Lighthizer broke the news to his Mexican and Canadian counterparts by declaring the proposal was inoperative, one of the officials said.

The president also ignored Mr. Lighthizer’s advice in early December when he announced that he intended to begin the six-month process of withdrawing the United States from Nafta in order to pressure House Democrats into passing the new United States-Mexico-Canada Agreement.

That threat undermined months of quiet negotiations between Mr. Lighthizer, labor groups and Democrats like Senator Sherrod Brown of Ohio and Representative Nancy Pelosi of California to try to win their support for the new trade deal. Mr. Trump has yet to follow through on his threat, and Mr. Lighthizer continues trying to work with Democrats to get the new trade deal approved.

Bob is trying to provide stability and focus in a completely chaotic environment,” Mr. Brown said. “I can’t speak for Bob, but I am certain he is frustrated. How could you not be frustrated as the U.S. trade representative for a president who knows what his gut thinks but hasn’t put much of his brains into trade?