The US-China Relation is a complex one. The recently hyped trade war is by no means the single issue nor the most important issue. The complexity of the two-nation relationship is not because of their size but because of their biased views towards each other, causing serious misunderstandings and ill-considered actions and policies in handling competition. China is very different from Russia. China’s threat is from competition, a fair competition under nationalism and global regulations. China does not really pose military threat since her military capability is more defense oriented comparing to Russian military. The fact that the U.S. will send a trade negotiation team consisting of Peter Navarro, author of “The Coming China War” (2006) and “The Death by China” (2012 book and documentary), and the wildest anti-China economist with no other American economist agreeing with him, is a bizarre diplomatic event. No wonder the negotiation team rushed back in two days. Now that Trump has made an about-face statement regarding cutting off supply to ZTE and expecting President Xi’s special envoy, Vice Premier Liu He to visit Washington to continue the trade talks is intriguing to say the least.
While the media had no clue what the negotiation will turn out, we may do a fair analysis of the US-China relations in terms of common perceptions as depicted by mainstream media. In this analysis, we may add a brief comment to question the validity of these common perceptions. Perhaps, as citizens, we may discover and alert any misunderstanding and faulty policy between the U.S. and China, particularly hurting the US-China trade relation. We shall focus on six common perceptions and number them for easy tracking with a notation A, American common perception on China, B, Chinese common perception on the U.S. and C, a comment on them:
1. (A) China’s economy is the world’s second largest. China’s ambition is to dominate the world. China is gaming the system to grow her economy at the expense of the U.S. (B) The U.S. is the no. 1 economy of the world. She is already dominating the world. She sets the rules for her self-interest. She sanctions and controls what she wants to export and imports goods at low costs taking advantage of the hardworking developing countries. (C) COMMENT: the above statements seem to be fair and harmless assessments so long free competition and free trade is honored.
2. (A) China desires to become a leader in hi-tech industries. China trades her market for technology, letting foreign companies to do business and make profits in China for introducing technologies into China. (B) The U.S. is the most advanced leader of hi-tech industries. The U.S. leverages her market for capital, absorbing foreign capitals to invest in the U.S. funding her hi-tech developments and industries, financial products and imports of cheap goods and services. (C) COMMENT: Each country is planning for one’s self-interest and objective. The growing size and changing nature of Chinese market seems to support China’s desire and goal. The stagnant and saturating US market seems to lose its leveraging power to attract capitals to the U.S. a US concern.
3. (A) China’s military strength is ramping up with a budget increasing over 10% per year, focusing on naval force and modernizing all her combat capabilities. China is able to sell some of her weapons at competitive price to regional small countries. (B) The U.S. maintains her superiority in military strength in all areas with both offensive and defensive nature. The U.S. maintains a large number of military bases all over the world explicitly targeting Russia and China. She fosters alliances with many countries, recently cultivating an additional tie with Japan, Australia and India targeting China. (C) COMMENT: China’s defense budget is set about 2% of her GDP ($175B 2018) a reasonable figure for her geographic size, fourteen neighbors and over 8530 miles of coastlines. Her military development is apparently more defense in nature. Whereas the U.S. maintains a defense budget at 3.3% of her GDP with an absolute figure about $650B. (2018) The U.S. is the no. 1 arms seller. Russia is no. 2 and China is a distant third.?
4. (A) China has a mounting debt mainly produced by her provincial and lower governments, a potential financial problem, but China holds over one trillion dollars of US debt, pressuring the U.S. (B) The U.S. has persistently maintained a deficit budget mounting a huge national debt. The interest and principal payment of the debt is maintained by selling treasury bills. The U.S. has the largest pool of liquid assets relying on printing money and bills to finance her deficit spending at the expense of other countries’ hard earned dollars. (C) COMMENT: Both the U.S. and China are vulnerable under a debt financing scheme to run their governments, but the U.S. is in worse shape far more depending on a controllable dollar. China’s large holding of the US treasury bill becomes vulnerable with dollar currency fluctuation uncontrollable. China would like her RMB to become an international trading currency so that she will have control on her trading balance sheet. This is understandable except the U.S. sees RMB as an international trading currency posting a threat to the US dollar and her ability to manage her debt financing.
5. (A) China’s Belt and Road Initiative (BRI) is seen by the U.S. as China’s means to bind other countries with China through trade. Other countries are happy to accept Chinese funds to finance economy-boosting projects. (B) The U.S. is seen to bind other countries through military alliances. Other countries under security threat accept the military protection from the U.S. The U.S. is accused to be stirring up more security issues in the world. (C) COMMENT: China has made tremendous investment in her basic infrastructure development, not only lifting her country’s transportation, communication and commerce (economy) as well as her capability of exporting infrastructure development technology to other nations. China seems to be more willing to engage in solving international conflicts through the U.N. Actions.
6. (A) China’s leader Xi Jinping is called a dictator especially after the Chinese Communist Party amended the constitution to permit Xi to assume leadership position without term limit, but Xi’s performance received wide support from the Chinese people and the respect of the international leaders. (B) The U.S. President Trump won the election as a dark horse. His style of leadership bewildered not only the American political elites but also the international political arena. (C) COMMENT: Xi came up the ranks through harsh life and career experiences seemingly understanding the poor people and the dream of being middle class. He seems to be leading with a sincere goal, call it Chinese dream. Trump was born with a silver spoon and made a fortune through wheeling and dealing in the complex US real estate business. His business skills seem to be foreign to the diplomatic world. Trump puts the world on an edge which may or may not be good for the U.S.
Trump Administration is only into its 17th month, but a turbulent change of his cabinet personnel and White House appointees has occurred. Currently, Trump seems to surround him with people more hawkish against China, some like Navarro beating the drum that China has taken the US jobs and two are destined to war and some others like ‘Pentagon generals’ believing in military power. The combination of these people driven by Trump’s “Make America Great” slogan is not a good plot for the U.S. since both ‘bias attitude’ and ‘legacy strategy’ just do not make sound policy. At this point, Trump seems still acting independently, possibly able to learn on his own and call his own shots. He claims that he has a good personal relationship with Xi; let’s hope the two leaders will guide their relationship onto a sensible mutually beneficial path rather than into a deadend alley by the ‘fake common perception’.