As Donald Trump’s re-election bid moves to the next level, and the vote is expected to take up in just over 3 months, his crusade team is now learning of his only genuine forward-looking argument for his much-cherished ability to succeed over the country’s thorniest economic economy challenges “He came here and tamed the sneaky practices of China’s foreign industry where others before he tried and failed,” sounds hollow.
Bragging about the state of the national economy under Trump’s supervision would not. This week, Mr. Trump’s Commerce Department reported that with the loose decline in panderated COVID-19 pandemic expansion, GDP in the 2020 quarter would have fallen to an annualized rate of -32.9%, the lowest rate ever recorded for the U.S. Economy.
So what does an American president do: bet on the anathema of his Beijing supporters and his fervent adherence to his purpose of forcibly disapsing the United States of China?
Trump’s reaction is not only to seek a more complete forced decoupling, but also to enlarge it in outdoor spaces in the economic sphere. It’s like the president’s mantra is “if you can’t tame them, dissociate yourself from them.” (As stated earlier in this space, corporations enter and exit foreign markets all the time on the basis of the regime’s endogenous trade decisions; forced decoupling reaches decisions resulting from the dictates of the original corporate governments.)
This may be just as well for the President, inasmuch as the biggest economic policy card Mr. Trump has tried to play with the Chinese is anything but a decoupling strategy. And, it has not turned out well.
This is, of course, its remarkable “phase one” agreement, whose crown jewel is a series of massive interstate product transactions designed and controlled through Washington and Beijing.
Yes, under President Trump, U.S. industry policy has more resembled a “command and control” regime that looks more like Xi Jinping’s Communist Party than vice versa. This is largely due to Mr. Trump’s unique move to the functionality of U.S. foreign industry: Reducing the country’s bilateral industry deficits with our partners, as if such a move was of economic importance. That in itself is not the case.
Although this week, China, due to strong domestic demand for maize-based food for the revival of its swine industry, decimated by swine flu in 2019, made its largest daily acquisition of maize in the United States (estimated at $300 million) and previously, made other agricultural acquisitions in the United States, the Chinese will not succeed in the purpose of purchasing Trump’s 2020 phase of $36.5 billion. If for no other reason, this result stems from the fact that the objectives of the agreement were explained in dollar terms: with the fall in uncooked curtain costs generated through the drop in demand due to the COVID19 pandemic, this means that Beijing would have to buy a much larger volume than ever anticipated.
That’s how he told his Secretary of State, Mike Pompeo, our country’s foreign policy and China’s diplomatic decoupling. The first primary salvo in this regard, after a speech through Pompeo titled “Communist China and the Future of the Free World,” was the closure through Washington of the Chinese consulate in Houston. Beijing temporarily retaliated through the last U.S. consulate. In Chengdu, the capital of Sichuan, China’s fourth largest province, which is the southwestern center of the country and has a population of more than 80 million people.
At first glance, Houston provides a much greater opportunity to collect economic data for the Chinese than Chengdu for the United States. Chengdu is a listening post for China’s activities of the country’s minority teams in Xingjiang and Tibet. Houston, traditionally a U.S. primary power center, is now a larger hub for complex technology, aerospace, and medicine, and is a key U.S. port.
In this sense, Beijing’s reaction to Washington’s has been billed through the Chinese, and has been interpreted across the United States and the rest of the world, as measured. But don’t be fooled. The Chinese do not rely heavily on their official diplomatic missions to gather economic intelligence in the United States. They don’t want to do it: the U.S. public corporation offers many other opportunities for China (and other economic adversaries) to do so.
On the other hand, the United States and other countries cannot take advantage of equivalent opportunities in China, where even the national population is more than aware that the Party not only listens to the talks, follows electronic correspondence, but also observes citizens’ movements. A complicated network. remote cameras that implement facial popularity technologies.
It is this asymmetry that Washington, at least in the domain of political progression for global affairs, does not fully understand. The result? U.S. corporations operating in China have more to lose in retaliation for foreign policy and diplomatic sphere than the interests of Chinese industry in the United States.
This is another economic effect of forced decoupling between the United States and China, which, as we have noted before, would be neither simple nor quick. And it wouldn’t be free for American companies, their staff and their customers. China is called the “global factory” for a reason, and the global multi-tiered source chain network is much more complex than many, adding some C-suite executives and board managers, recently learned of coVID19’s pandemic. At the same time, the concept that global expansion would not be adversely affected if there were a bifurcation of technological criteria (as forced decoupling would entail) is debatable, even if such bifurcation were sustainable.
But even in some other way, the more expansive forced decoupling of Trump’s diplomatic and foreign policy towards China is likely to hurt U.S. and U.S. economic and industry interests more than China’s. Indeed, this would be Xi Jinping’s authoritarian regime and would provide him with ammunition to accentuate his national nationalist policies, reducing the rare chances of a democratic motion in China.
Moreover, as we see, it strengthens Xi’s ability to shape a multilateral anti-American. coalition of other nations.
In contrast, Mr. Trump’s proclivity has been to deal with China (as well as with other countries) on a bilateral basis—no doubt a product of his career structuring real estate transactions, especially in New York City. Curiously, Secretary Pompeo’s speech (and subsequent actions) seems be an incipient attempt to create a coalition of other democratic nations to take on China. The challenge there is, after almost four years of Trump’s chiding of fellow leaders of such countries, there will likely be few takers.
I testify as an expert witness and advise the executives and forums of C-suite corporation administrators and investment budget in investment and trade.
As an expert witness, I testify and advise senior executives and corporate policymakers’ forums and investment budget on foreign investment and business transactions, litigation, antitrust laws, corporate governance, economic and national security regulation, corruption compliance and GSE/CSR; Attend various Administrators Forums Be a key speaker and write on professional and popular media on topics similar to global investment and business operations, expansion strategy, and threat mitigation. For more than 3 decades and a part, my experience has focused on: (i) structuring cross-border transactions and taking a position on foreign investment and industry disputes; (ii) antitrust and economic regulation; (iii) corporate governance; (iv) enforcement and corruption investigations; (v) regulation of the national security of industry and foreign investment (e.g. CFIUS); (vi) corporate social duty and GSS issues. Comments about my writings are welcome. Personal Website: www.harrygbroadman.com Brief Biography: Currently, I am a partner and president of the emerging market practice at Berkeley Research Group LLC (BRG), a global control consulting firm and expert litigation witness with offices in 22 countries; a college member at Johns Hopkins University; A non-executive director in several admin forums; a member of the Board of Directors and a university member of the main workshop of the National Association of Corporate Directors (NACD); and a common guest speaker in the United States and in many countries in Asia, the EU, Russia and the CIS, Latin America, the Middle East, Australia, Turkey, the Balkans and Africa. Previously, I worked in foreign equity, control consulting, global bank, White House, U.S. Senate, RAND Corporation, Brookings Institution, and Harvard University Faculty. My full biography and resume of my career, videos of speeches and testimonials, work of qualified witnesses, board positions, books, columns, professional articles and press interviews can be found on my non-public website: www.harrygbroadman.com