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Weekend Roundup: For China And The U.S., The Solution Is In The Problem

Prosperity built upon the U.S.-led open trading order now enables China to consume more American imports and export less.
One summit does not make a relationship. But it does set a tone.
One summit does not make a relationship. But it does set a tone.

Harvard’s Graham Allison worries that China and the U.S. risk falling into the “Thucydides Trap” ― named after the historian who chronicled the conflict between ancient Athens and Sparta ― in which rivalry between rising and established powers inevitably leads to war. More often than not, Allison’s research shows, similar rivalries throughout history have held to that pattern. The great question in this era is whether the world’s two largest economies can embark on a new departure, or if they are fated to replay an all too familiar past. 

The first face-to-face meeting this week of Chinese President Xi Jinping and U.S. President Donald Trump is an opening indicator of which path will be taken. One summit does not make a relationship. But it does set a tone. That Donald Trump has changed his tune from charging “rape” by China on the campaign trail to inviting President Xi for a lavish repast at Mar-a-Lago is a sign that convergent interests may out of necessity forge a different future than history would suggest. 

The interwoven relationship that has tightly tethered the U.S. and Chinese economies over the past three decades is the basis both of the present conflict and for resolving it. Hundreds of millions of Chinese have escaped poverty and climbed the income ladder by supplying cheap goods and produce to the likes of Walmart, Costco and Home Depot or assembling Apple iPhones and other electronics that are ubiquitous in the daily lives of Americans. This accounts for the huge trade deficit with China ― though the main reason for U.S. trade imbalances globally is simply that, since the 1970s, Americans consume more as a nation than they save and invest.

As the made-for-export low-wage factory of the world, China has surely taken up jobs that might have been created in the U.S. Yet China, too, is a major importer of components for what it produces, reportedly spending more on importing microchips than oil, to take but one example. Increasingly, the fortunes of leading U.S. industries like Hollywood and Boeing depend on Chinese markets.

If “the globalists gutted the American working class and created a middle class in Asia,” as White House adviser Steve Bannon has declared, then therein lies the solution. Having achieved relative prosperity built upon the American-led open trading order that President Trump says he is seeking to dismantle, China now has the income and the intent to shift to a domestic consumption-driven economy less reliant on exports to the U.S. As Shen Dingli writes from Shanghai, that means the present trade imbalance can best be addressed by China through increasing imports from the U.S. rather than cutting exports. The enormous financial resources China has accumulated from its trade surplus with the U.S., David Shambaugh suggests from Singapore, could be plowed back into the U.S. to finance the very kind of infrastructure projects Trump has promoted. If Trump can manage to restore a manufacturing base in the U.S. that is not mostly automated, it will reinforce the trajectory toward a more stable balance between the American and Chinese economies.

Further, China is plotting an economic future that largely looks away from the U.S. ― through regional free trade agreements in East Asia, building out a revived Silk Road trading route that stretches across Eurasia from Beijing to Istanbul and deepening commercial ties with Africa. In short, if the U.S. and China can manage the bumps over the next few years, the root of economic conflict will resolve itself over time.

But there’s a big hurdle they’ll have to get over first. For the two leaders, dealing with North Korea’s nuclear and missile program is a continuing conundrum. The likely course ahead appears to be a hybrid of harsher sanctions ― which the U.S is pushing ― followed in time by direct talks with North Korean leader Kim Jong Un, which China is pressing for, according to top Chinese diplomat Fu Ying

As Xi sat down with Trump in Florida, the American president launched his first direct military strike against Syrian President Bashar Assad’s airfield, where the planes which allegedly delivered this week’s deadly Syrian gas attack were based. Former NATO commander James Stavridis calls the move “proportional, tactically sound [and] professionally executed” and says it “sends a reasonable coherent strategic signal.” That signal, he suggests, was not only to Russia and Syria, but also to China and North Korea. The follow-up message Secretary of State Rex Tillerson should carry on his visit to Moscow next week, the former admiral adds, is that it must “restrain” its Syrian ally.

China’s intertwined relationship with the U.S. is also getting entangled in the immigration debate. While most of that debate has focused on Mexicans and Muslims, a new schism has broken out between second and third generation Asian Americans and immigrants who have arrived in recent years from a bolder and more prosperous Middle Kingdom. Frank Wu, who chairs the prestigious Committee of 100 top Chinese-American entrepreneurs, scorns the new immigrants “from an ascendant Asia.”: “Some of our cousins, distant kin who have shown up here, are alarming. They are bigots who do not care about democracy. They believe themselves to be better than other people of color ― it hardly is worth pointing out since it is so obvious. They even suppose, not all that secretly, that they will surpass whites.” Responding furiously to this characterization from Shanghai, Rupert Li fires back that, “The Chinese-American elite were appalled by the watershed of support for Donald Trump among new Chinese arrivals.” If “they do not feel solidarity with disadvantaged groups,” he goes on to say, it is “not because they are bigoted, but because they do not consider themselves disadvantaged.” 

Reflecting on events elsewhere in the world, Scott Malcomson reports on the latest turmoil in Hungary around the government’s effort to impose crippling restrictions on the Central European University, founded with the help of the Hungarian-born billionaire George Soros, and other institutions that receive foreign funding. As Malcomson sees it, the anti-foreigner animus of Hungarian Prime Minister Viktor Orban is “self-destructive” because it isolates the country and will undermine what it needs to progress. Muhammad Sahimi worries that the tough stance of the Trump administration on Iran only boosts the chances of the hard-liners ousting reformist President Hassan Rouhani from power in upcoming elections and putting a conservative, Assad-supporting cleric in his place. Erin Fracolli and Elisa Epstein contend that what they call Trump’s “Muslim ban” harms women by identifying “honor killings” as an Islam problem in the same way he conflates the Muslim religion with terrorism in his rhetoric about “radical Islamic terrorism.” 

Pax Technica author Phil Howard reports on his new research that shows “more than half the political news and information being shared by social media users in Michigan [a pivotal state that helped Trump triumph in the recent U.S. president election] was not from trusted sources.” He contrasts that experience with an election in Germany where, “for every four stories sourced to a professional news organization, there was one piece of junk.” He concludes: “Social media platforms like Facebook and Twitter don’t generate junk news, but they do serve it up to us. They are the mandatory point of passage for this junk, which means they could also be the choke point for it.”

Finally, our Singularity series this week looks at how CRISPR gene editing for crops can feed the 9.7 billion people our planet is expecting to host by 2050.

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