By Herman Tiu Laurel

Of China and Biden

November 11, 2020, 9:49 pm

WHAT Trump’s four years of trade and tech war with China proved and left no doubt about it that the US cannot do and will not heal without cooperative relations with China.

Trumps’ trade war that intensified in his last two years in office did not deliver a single promise made upon its launch: it has not returned US manufacturing companies and jobs to America and resulted in higher consumer prices while 3,500 American companies have sued the US government for reimbursement of tariffs on $300-billion of imports from China.

The so-called US economic growth in the Trump years came from massive tax cuts for the rich corporates and before the coronavirus, financial stimulus packages for a brief “virtual growth” created artificial upticks and fragile jobs, while it is bragging of using the Defense Production Act to ramp up US production of goods could not even make a dent on the domestic scarcity of PPEs, face masks and essential medical supplies, to which the US had to turn to China for these.

US domestic production and public infrastructure had fallen into decay for decades due to shifting from the physical economy to the virtual finance capital economy where money begets more money by itself without production (GM earned more from financial legerdemain than making cars), while science faced defunding, and communications, roads, bridges, power infrastructure were left to rot. US companies instead went to China to produce as well as to tap its huge market.

Trump has failed in his trade war with China, but his failure is not his alone. Biden was part of it having supported the major initiatives of engagement in better times with China in the past. Whether Biden can change the US that he was part of forming, if and when proclaimed as president, remains to be seen. But if he approaches the relations with China that Trump took, then Biden will also fail – and it would spell the final doom for the United States of America.

China’s system vs. US

The 1969-1972 Nixon-Kissinger engagement with China to stop the USSR began the story of China’s astonishing half-century rise to be “a moderately well-off society” by 2049. But it would be wrong to believe that China could not have achieved the fantastic growth without the US, it would just have been much slower, while the US would have lagged behind the NIC’s (Newly Industrialized Countries) earlier without China’s low-cost and high-efficiency workforce and industrial base.

Contrary to the US advocacy of “free trade,” it has shown its habit of protecting its economy through fair and often foul means. In 1972, the Nixon administration decoupled the US dollar to save the U.S. economy from its war overspending, the height of currency manipulation the US keeps accusing others of. In 1985, the US imposed the Plaza Accord on Japan to curtail its economic ascendance. The US engaged China for its market and efficiency, but China has exceeded the master.

The advantage of China today over the US is its moral principle, that of “Serve the People”. It’s a slogan that was very popular in the early years of the Communist Party of China (CPC) rebuilding of China, but still remains the foundation of its current political platform. Everything China is doing now still echoes this old call, as President Xi Jinping reiterates in the recent book “The Governance of China’... ‘We have a grand yet simple goal – a better life for all our people”.

That’s the difference between China and the US political-economic systems, the former with its focused (not authoritarian as it has its pyramidical election system with party guidance) economic-political system that delivers on its long-term promises to the people, while the US electoral college cum popular election based system (undemocratic) which is inherently divisive and short-term electoral-cycle oriented. Finally, the jury is in on both systems.

China’s ‘scientific socialism’ vindicated

Even US corporations prefer to stay in China due to its predictability, while the US steeped in its doctrinal adherence to its convoluted elections system that continues to fractionalize its society. Despite Trump’s trade war, very few US companies have left China. A Goldman Sachs report released in early September 2020 said:

“A majority of companies in semiconductor equipment and materials, as well as healthcare, are actually expanding Chinese production... In the auto and industrial machinery sectors, moving out of China and Chinese expansion are happening simultaneously...” "While tariffs did cause rerouting of commodities trade and relocating of consumer electronics products from China to ASEAN countries, we have seen limited evidence of broad-based reshoring of manufacturing activity back to the US.”

While incoming President Biden is showing signs of taking the right direction, i.e. healing the US, using science to fight COVID-19, rebuilding US public infrastructure (roads, bridges, telecoms - exactly what China continues to do), it remains to be seen if he’ll succeed. If he restarts cooperation with China instead of returning to the Trump trade and tech war, the rebuilding of the US will be easier for him to rebuild the economy and infrastructures to prosper Americans – even with China’s funding for the debt-stricken USA.

China, after just a short dip in its economic momentum in the second quarter of 2020, quickly picked up the positive growth in the 3rd quarter and is now acknowledged universally as the only economy that will achieve positive growth by end of 2020 and potentially sustain the growth rate of the 8% per annum for until 2030 according to former World Bank ex-chief economist Justin Yifu Lin, due to its “competitive edge in new technologies and huge, resilient market”. This is the success of “scientific Socialism with Chinese characteristics”.

China’s CIIE, and the way forward

The reality for the US is evident in its participation at the 2020 CIIE, the China International Import Expo that opened November 5, as the Global Times reported at the opening of the event “'US presence at exhibit biggest ever’... Contrast to some politicians’ push for decoupling... US companies have voted with their feet by sorting the largest space at the third CIIE in Shanghai, rebutting efforts and rhetoric aimed at decoupling the world’s two largest economies.”

There are five more US companies that have joined the CIIE this year than last, now at 197 despite the difficulties of the COVID-19 year. The lure of the gigantic Chinese market is simply irresistible for even American entrepreneurs and giant companies. China offers the US to avoid the Thucydides Trap by inviting the US to its market, engaging in fair trade (all US claims about intellectual property theft are mere propaganda, hence no WTO case against China WTO ever prospered), and profit from China’s prosperity.

China is applying the moral principles of Confucius and Sun Tzu in dealing with the hostile US reaction to its loss of the power of its unilateralism and its global hegemony but offering Win-Win cooperation. China is winning the war for China and for the US. This way, both will emerge winners as well as the rest of the world – especially Asia and the ASEAN which will be spared devastation with US-China cooperation. To operationalize this for the US and the world, China pledges to import $22-trillion of goods in the next 10 years.

In a recent Atlantic Council interview by David Rubenstein with Singapore Prime Minister Lee Hsien Loong on what he would advise US President-Elect Biden now, he answered, “... stabilize your relations with China because for the rest of Asia we depend on stable US-China relations in order for us to have a secure, predictable environment in which we can make a living and live our lives...” At the very least, as Time magazine featured, “The US and China need to start talking...”

The Philippines, ASEAN, and Biden

The whole of ASEAN has preferred that the US keep off the region except for promoting trade, commerce, prosperity, and peace against the Trump administration’s Pompeo-led rabble-rousing and posse-forming against China which had fallen on deaf ears. If Biden takes Trump’s tone with ASEAN, he will get a response no different from what ASEAN gave Pompeo – a silent rebuff. If asked, ASEAN would echo PM Lee Hsien Loong – work with China to improve a good Asian environment even more.

China is the top trading partner of 130 countries already, the vast majority of the world’s economies. The US can’t hope to overcome that by the basic fact that China’s vast population now constitutes the largest single, financially empowered consumer market in the world – which China offers to the US to tap into as well. China, in fact, has propped up the US economy once before, with its consumers also serving as the crutch for the US post-2008 financial crash.

The Philippines needs to set its sights on its platform to jumpstart its COVID-19 stricken economy and massive joblessness, and that is trade, commerce, industrial cooperation, and tourism with China. This is not an easy as it sounds due to the infestation of Sinophobic maniacs in the political, media, and military bureaucracy constantly running interference for the US – such as the recent ludicrous displays by Hontiveros, Gordon, Binay, Villanueva, et al over the “soft invasion” of Chinese tourists and retirees.

Fortunately, the Duterte government persists in its independent, positive, and cooperative approach to relations with China and reaps the benefits. China-funded projects are on a roll, with 12 projects completed the past four years, two donated bridges finished by the first half of 2021, and tens of billions of investments from telecoms to steel operational by 2021 onwards. In the CIIE, the Philippines closed long term deals for bananas, pineapple and avocado exports, and when China’s vaccines come, Chinese tourists will soon follow.

Serve the people, serve humanity

The Human mission always returns to this one task, and it separates Humankind from the Animal Kingdom – The Moral Principle. China’s socio-political leadership stands on the moral principle of “Serve the People”, hence it has a clear and unerring compass. As China transforms to higher levels of development, this “Serve the People” now transcends to “Serve Humanity”, hence it seeks to enjoin “enemies” into its Win-Win cooperation for the benefit of all, embodied in the slogan “Community of Shared Future for Mankind” – a goal that cannot err in righteousness.

The US as a society with 70% anti-China sentiment stoked by its ruling class is still stuck with its 20th Century notion of “American exceptionalism” and America as an “indispensable nation, but it is a hopeful sign that President-Elect Biden has not ventured to speak yet on his prospective policy on China and thus, keeps open the optimism that he will change the US policy of confrontation with China towards cooperation and collaboration. This reminds me of the prominent US and UN economist Jeffrey Sachs words at a “No Cold War” webinar.

“The idea of a new cold war that divides two blocs of nations is a kind of insanity and an invitation to mutual destruction rather than to solve the problems that we face... so what do we need to do to achieve truly a multilateral constructive approach... that I think is the most important challenge that we face in true foreign policy in the future and I would say in this regard, it is of course partly the US elite understanding that the days of the 1950s arguably are over. We need a very different kind of approach.

“We need to understand that unlike the historical episode where, with all complexity respected, the British Empire in a way was followed by the American Empire, this is not the situation where the US Empire will be followed by a China Empire or by any other hegemonic power but by a multilateral system under rules of the game that stop us from killing each other and enable us to cooperate in crucial areas such as fighting climate change, or protecting biodiversity or ending poverty or as at the present moment fighting a deadly pandemic disease... “

I really believe the US ruling class, now with a change in leadership and after the traumatic errors of Trump, can and should have learned that working with China would be the best option for the US. It’s not going to be easy to overcome the Deep State pressures, but the experience and evidence points to the imperative for Biden to succeed. (Join: “Power Thinks” with Ka Mentong Laurel and guests; Every Wednesday and Saturday 6 pm Live on Global Talk News Radio (GTNR) on Facebook and Talk News TV on YouTube).



About the Columnist

Image of Herman Tiu Laurel

Herman Tiu Laurel is a veteran journalist and founder of think tank PHILIPPINE-BRICS Strategic Studies.