Saturday, April 1, 2017

The Dragon Cometh

By now you are probably looking forward to next week’s showdown at the OK Corral. That is, in the United States Senate where Democrats, emboldened by President Trump’s falling approval ratings, are going to filibuster the Supreme Court nomination of Judge Neil Gorsuch. It will surely produce enough drama to distract the nation for days on end.

As T. S. Eliot said, we are: “distracted from distraction by distraction.”

Perhaps more importantly, next week the President of China Xi Jinping arrives in the United States for his first meeting with President Trump. Wouldn’t you like to be a fly on the wall for that meeting? All things considered, you probably will be.

The meeting is significant, Gideon Rachman of the Financial Times tells us, because China is fast overtaking the United States as the world’s leading economic power. It might—and probably will-- take decades for this to become fully actualized, but we are well on the way.

Rachman points out:

[The trend] I’m most confident of is [the] growing economic power of Asia. More of the world’s production will come there. More of the world’s trade will come there. China will, for at least 30 years, be easily the most important economic power in Asia.

Many of the countries that looked instinctively to America, both for their markets and for their political leadership, will begin to tilt more toward Beijing.

The question that hangs over us is this? Was this inevitable once China discovered free enterprise? Was this the result of bad trade deals? Did it happen because an increasingly decadent West lost its will to work? Did it happen because the West decided that it was better to feel good than to work hard?

One should not underestimate the shift. Rachman explains:

In the aftermath of Trump’s election, there was this famous moment where Xi Jinping comes and gives a speech at Davos. I was in the audience. The conventional thing to say afterwards was, “Isn’t it amazing: China’s now the defender of the globalized order that America has turned against.” But it’s not that surprising because China is the world’s biggest manufacturer. It’s the world’s biggest exporter. Of course it would defend the current system. I remember talking to an EU official afterward and he said, “When Britain was the dominant economy it was the promoter of free trade. When America was the dominant economy it was the promoter of free trade. Now China’s the promoter of free trade, and you can feel the wheels of history turning.”

Still, we do not know why it happened and we do not know whether the tide can be reversed. Clearly, the Trump administration believes that it can be reversed, that America can regain its position as the world’s leading manufacturer. It’s good to be optimistic, though it does not feel especially realistic. When you power up expectations, you will need to meet them:

What I mean by Easternization is the shift of economic power to Asia and, with that, the shift of political power to the East. And I think that Trump and the many Americans who voted for him, and maybe even some who didn’t, are unsettled by that process. Certainly Trump doesn’t accept it in any way as natural or inevitable that America’s position as the dominant economic and political power would erode. There was definitely a backward-looking nostalgic element to the “Make America Great Again” slogan—[back to] the period when America was the dominant power, the dominant economy, when the world respected American power. Probably the peak of that was the 1950s.

Trump believes that American presidents gave it all away, by promoting trade with China:

He’s a reversal of the [Bill] Clinton and the [George W.] Bush views of the rise of China—that, although it presented challenges, basically it was a good thing, it would create economic opportunities for America, and it would bind the world together, reduce conflict. Trumpism, insofar as it’s a coherent ideology, is very much based on the premise that Americans made a big mistake encouraging the rise of Asia economically.

One might, if one were to be fair minded, suggest that President Barack Obama retreated from world leadership and left the field open to Russia and China. Obama projected weakness on the world stage and discouraged hard work and industry on the home front. One might even suggest that the Obama presidency, with its concern for identity politics, social justice and the culture wars made America even more weak and decadent, thus diminishing China’s primary competitor.

Naturally, Rachman, who must be a good liberal and a Remain supporter, excuses the Obama administration. Another reason why the West is declining is that liberal intellectuals feel a preternatural compulsion to defend everything that their Messiah did. It’s embarrassing.

In Rachman’s words:

But I think it’s particularly difficult for America because it’s pretty obvious to most people in Britain and France, however much they may dislike what’s happened, that we’re not going back ever to the period where they were the dominant global power. I think a lot of Obama’s policies can be read as trying to adjust America as gently as possible to this new reality in ways that are as least damaging as possible for the United States and for the rest of the world. But even within his own mind, there’s a struggle going on; in Asia-Pacific, [the Obama administration] doesn’t say we’re going to accept that China is going to be the dominant power.

The Obama administration did not have to say anything. Its actions spoke louder than any words. Rachman conveniently fails to mention that Obama sat by while the Chinese established military bases on the trading routes in the South China Sea. In America no one noticed and no one cared. Still it was a horrendous failure, a perfect sign of who was in charge.

Again, Rachman rationalizes Obama’s dereliction by presenting it as the result of events beyond his control. And he does not mention the horrors in Syria, which horrors are primarily the responsibility of a feckless and pusillanimous Obama:

Because of what’s happened in recent years [with the Arab Spring and the Iraq War], you suddenly have a sense that America no longer is in control of events in the Middle East. The Europeans, although they make a feeble effort to intervene in Libya, then walk away and leave a vacuum. And then the Russians move [into Syria]. More generally you just have an anarchic situation, with Chinese economic interests very much [at] the fore but the Chinese having no interest in playing a political role.

And Rachman, in the interview, has nothing to say about the Obama administration’s sell out to Iran, the deal that put Iran on the road to nuclear weapons, its betrayal of Israel at the United Nations and its giving Egypt to the Muslim Brotherhood.

Israel understood that it could not count on America because it could not count on the Obama administration. After all, the West believes that it must fight the good fight against Islamophobia. It has failed to counter the threat of Islamist terrorism and the threat of Muslim refugee infiltration. And it continues to feel drawn to the Palestinian cause, not understanding that the Palestinian territories are laboratories for terrorism. One understands that the Chinese, witnessing this cultural collapse, would be preparing to take over the world.

Rachman observes that Israel has known enough to reach out to Asian nations:

Even in Israel, [political leaders are] looking very much to economic opportunities in India and China, partly because they [feel] that the Indians and the Chinese [are] pragmatists who [won’t] put them under pressure on human rights or the West Bank. An aide to [Israeli Prime Minister Benjamin] Netanyahu said to me, “We had a great meeting with the Chinese. Twelve hours and you know how long they spent on the Palestinians?” I said “no.” He said, “Twenty seconds. They’re not interested. What they’re interested in is business deals with us and that suits us.”

Is it too far gone to be reversed? Can the situation be turned around?

Stay Tuned.


Sam L. said...

All the Palis will buy are arms and ammunition. They have nothing to sell.

Ares Olympus said...

Stuart: Was this inevitable once China discovered free enterprise?

Did China discover free enterprise? If so, it looks like a terrible system given the breadth of their ghost city constructions, owned by a temporary middle class looking for a place to stash their surplus money, while too expensive for the vast majority of ordinary Chinese to live in.

Another blog I follow, Of two Minds, by Charles Hugh Smith looks at the rise of inequality and see it going back to the 1980s when the financialization of the economy really got going, and we learned that the faster we got into debt, the richer we got.

And you have to imagine China's rise in the last 20-30 years has been the same trick, but times 100, and when we doubled-down in debt creation in 2009, China double-double-doubled down.

I'm not sure what to make of Americas rejection of "Free trade" like the TPP, although it is made more complicated by the fact that 90% of Americans don't even know that China was excluded from that agreement, and on purpose, so it easy to believe Trump is not only an agent for Russia, but an Agent for China as well. Now they can make their own deals to reduce tarrifs for their vast exports.

If we really wanted to be patriotic, we might ban foreigners from buying property in the U.S, and causing property value bubbles on our coastal cities. Of course we love bubbles, so we'll see if Trump ever takes on this issues of sovereignty.

And when China's ultimate bubble pops, and it seems impossible to believe it won't pop first, there's going to be even more foreign money flooding into our assets, and maybe those Chinese billionaires who successfully escape the money "firewalls" of China, maybe they'll be happy to apply for American citizenship, and maybe we'll let them come.

Perhaps there are some American billionaires looking to settle in China's soot-cities for their best "quality of life", but I'm betting not many.

I admit I'm clueless how all this ends. Partisan food fights do look pretty meaningless in comparison. I'd feel better if we were working towards reducing our dependence upon one-time use fossil fuels, whether or not future Climate change is catastrophic or not. Maybe Climate change really is a Chinese Conspiracy, but they seem to believe it more than we do.

China's Three Gorges Dam is pretty amazing, and so maybe they really will figure things out with their "authoritarian free enterprise" and they'll still have energy to run their civilization even after they stop burning coal.