Christopher Balding on the new China trade deal

Here is the final paragraph, there is much more detail throughout, recommended:

If we take what is known about the deal, its role as a Phase I deal leading to later deals, and assume it gets executed as described, with each side living up to their commitments, I think it is fair to describe this deal as a solid step forward.  Realistically however, each side seems to be positioning themselves for the expected failure of the agreement and little reason to believe the deal will be executed as described. The Trump administration has maintained significant leverage if China does not follow through on its commitments and I have little realistic reason to believe China will meet its commitments. At the end of the day in any contentious negotiation, it comes down to placing risk adjust trust in your counterpart to execute their side of the agreement. Each side is signaling they have little faith in their counterpart.  If we start from that premise, the Trump administration seems to have positioned themselves well expecting this deal to eventually collapse but also lower tariffs if by chance China does abide by it commitments.

And:

…I would have to put the risk that this deal doesn’t see 2021 as close to 50%.

Here is the full post.

Comments

If China influences the election for say Mike "Xi is not a dictator" Bloomberg, then we move closer to 100% deal don't we? Last presidential election was full of out of touch New Yorkers, I won't be looking forward to the next contest of elite New York billionaires running for higher office

You can clearly see from the recent past and present, the Chinese government has no honour and can't be trusted. The Trump administration is making the right assumptions.

China is an autocracy with a mercantilist economic model and foreign policy guided by sun tzu's dictum that the "acme of skill is to subdue the enemy without fighting"

There is little to no chance they will honour any deal that hinders either.

If America wants to maintain it's position it must challenge this economic model and foreign policy strategy. That means pressing them at every turn. China's military strength is overstated. Trump has the right instincts.

Sounds like a good time for a large-scale Pacific trade deal with a bunch of ally countries that aren't China.

Well, the media has made quite a fuss about this deal, but it does not look all that different from what Trump told us back in May, April, and December of last year. The main point of it is that he will not impose the increased tariffs that were supposed to come in tomorrow. Well, thank heavens for that. But otherwise what we have is a lot of vague promises about future action, with many of these having been made before with little result.

What I noticed from this episode is that finally the stock market has figured out that this is just a lot of noise and barely moved yesterday on this.

Oh, and now we also have the absurdity of Pelosi making some minor changes to the USMCA and putting it through the Hous with the support of the AFL-CIO, but now McConnell does not want to take it up in the Senate. WTF?

Not entirely sure where you are getting your info.

McConnell said it would be brought to the floor after the impeachment trial is over. Which will only be 10-12 days long.

This is the latest word from Moscow Mitch, but you seem to be a bit foolish in your predictions on how long this will take, and it is now not just anti-union GOPs whining about the deal, but the Mexican govt that thinks US has been allowed too much authority over labor-management relations in Mexico.

"Moscow Mitch,"

Is he related to that socialist, Obama?

I am pleased that the deal contains nothing, except perhaps the promise of not stealing IP and the promise to buy more stuff.

The promise not to steal is hardly binding, because the sellers of IP have already optimized. Buy more stuff? Sure, and get the extra hard currency to pay from increased US imports from China. :-)

What Trump has wanted to do is reverse freer trade to ensure that the losers lose less, a bad policy. There are efficient ways of compensating the losers. What is extant is that it looks nicer, but has no substance.

Both of these provisions are vague at this point. I don't think China is on record even acknowledging the IP stuff.

I have always been amazed at the unwillingness of the powers that be to tax China for its numerous bad behaviors.

They are, by all indications, murdering prisoners to steal their organs.

They are, by all indications, running the largest concentration camps since the Holocaust.

They are, by all indications, dumping more pollution and carbon dioxide into the atmosphere than anyone else on the planet.

They are, by all indications, providing liquidity and expertise to all manner of thuggish states in the world.

They are, by all indications, attempting to export their censorship by pitting the powers of the Chinese state against foreign corporations.

At exactly what point do we think it would be a good idea to pay some price now to stop rewarding bad behavior? At exactly what scale do gross human rights, environmental, and diplomatic abuses warrant any punitive response?

I get, a bunch of wealthy people get phenomenally richer because they skim off much (most?) of the surplus had from Chinese trade. And I get there is collective action problem.

But at some point there needs to be consequences for China's behavior. We have tried cooperative engagement for 40 years. During that time, when has China shown forward progress on becoming any sort of decent state?

I wish Mr. Trump the best of luck, but I suspect, strongly, that the only way to get China to choose honest cooperation is opt to play a few painful rounds of defection.

Absurd. China is a normal country that acts about as well as you’d expect given its history and level of development.

Watch the BBC video where they went to one of the Xinjiang camps: https://m.youtube.com/watch?v=WmId2ZP3h0c. Even with them trying to make it look as dystopian as possible, the conditions there look better than the two US prisons I have toured, much less a Nazi concentration camp.

China is the largest CO2 emitter only because of its large population. Per capita, it polluted on par with Europe and far less than the US.

It’s good that China is willing to trade with people we sanction. The US government is not democratically elected by foreigners and thus has no right to determine who foreigners get to trade with.

And many companies change their content to avoid offending people in other countries, for example Netflix recently amended a film after complaints from the Polish government: https://www.bloomberg.com/news/articles/2019-11-14/netflix-agrees-to-amend-devil-next-door-after-poland-complains. If you’re concerned about foreign censorship of Americans, you should focus on Israel, which is actually getting anti-BDS laws passed in the US. All Americans are on the other hand totally free to boycott China and advocate doing so.

So China's concentration camps are just like the Theresienstadt Ghetto (https://en.wikipedia.org/wiki/Theresienstadt_Ghetto), temporarily rehabilitated in 1944 in preparation for a visit by the Red Cross. Somehow China is normal, but the U.S. and Israel are not. How are you not a quisling?

Need a tissue, hon?

"the conditions [at the Uighur concentration camps] look better than the two US prisons I have toured"

Uighurs aren't criminals. It says a lot that you think that the right standard with which to evaluate their treatment is that of convicted criminals. That's not evaluating China compared to a "normal country".

On a purely tactical level of argumentation on here, silence on the topic is perhaps a better move than "Oh, the camps aren't that bad"...

I wonder if the inmates are subjected from micro aggressions, misgendering, and non-preferred pronouns as well? That would really get the Chinese in trouble.

Right, Chinese concentration camps, with children, are to be compared to the places where the US locks up convicted murderers and rapists. Thanks for conceding that China is uniquely condemning millions of people on the basis of ethnicity to illegitimate incarceration.

As far as emissions, please. China emits 600 grams of carbon dioxide per dollar of GDP (PPP). This is double that of India and thrice that of Indonesia. The only states, in the world, who use more CO2 intensively are a handful of states whose economies are majority fossil fuels (Curacao, Trinidad and Tobago, Turkmenistan) and a remote Pacific Island where the tourists fly in weekly (Palau). And that is just carbon dioxide. Chinese pollution, of the traditional kills kids directly sort, is horrific. And lest we forget, by PPP, China is per capita somewhere around US levels of income from 1985; yet their levels of pollution and all other manner of bad economic behavior are much closer to Victorian times.

Right, we need states to do things like sell arms to the Rwandan Genocidaires during the the mass killing of innocent civilians. It is also good for the world for China to supply arms to Sudan, that way they could more easily kill civilians in Darfur. And lest we forget the systematic mass rape and killing in Guinea was underwritten by China.

China is a welcome trade partner to those killing the innocent and it does so not in the belief that it prevents worse atrocities, but merely to build power and influence. China lacks even a fig leaf that it is seeking to stave off greater evil.

Just because other countries behave badly does not excuse China. I am fully aware that Greece has hangups that gave us FYROM before they settled on North Macedonia and that many countries use the powers of state ... it is just that China does so more than everyone else combined.

At the end of the day, you can keep pleading that somehow China is perfectly normal, but this is idiotic.

I don't know enough about the topic to comment, but wonder how much of their emissions (high or low, per capita) is from crazed, madcap concrete pouring state directed "infrastructure investment" of questionable purpose. Seems like something Western Green parties will remain silent on...

North Korea has done exceedingly little against outside individuals. China feels free to dictate terms to international corporations and actively seeks to censor much of the world today.

North Korea may be a worse state than China, but the again trade with North Korea is also much less prioritized than with China.

Ok, that's a fair point. China isn't as bad as North Korea. Granted, it's a ridiculously low bar and doesn't exempt them from condemnation, but it's true.

There's no doubt that China has some troubling aspects but Trump couldn't give a monkey's arse about human rights, the environment, democracy, or what have you. It is strictly trade for him.

So?

Doing the right thing for the wrong reason is better than the alternatives. If we are ever going to induce meaningful change out of China they need to fear at least potential pain for noncompliance. If the most risk tolerant President in decades is unwilling to to try tariffs (which he also believes are less punishing than the rest of the government), who will?

Establishing a credible "defect" threat requires a belief that we are willing to endure the pain. Why we are willing to endure it is immaterial.

So you are still going to have Muslims in camps, organ stealing, pollution, all the things you whined about in your rant but under a different trade deal. How exactly is that better?

1. Any future threats become more credible.
2. The sky-is-falling prognostications will be less salient.

The two are related, but in the main the first looks mainly from the Chinese view. A world where the US has used tariffs as a heavy threat is one where they might do so again. It also is one where China has felt the pain such tariffs can cause.

The second is from the American point of view. Tariffs on China will have a cost paid by American consumers and firms. Yet for all the drama, our economic output and employment remain quite strong in spite of multiple rounds of tariffs and tariff threats. If American policy makers have undertaken tariffs in the past without the economic world imploding, it makes it more plausible that they will carry out threats.

Successful coercion requires the ability to do harm and a belief that harm will be done absent compliance. Trump may well demonstrate the first and increase belief in the latter.

There is a slight chance that China will improve on some of these issues just for the optics of it if they start believing that they face a real threat. I am doubtful, but states have responded to similar implied threats in the past.

+1, good points

You have to be patient with change and with China. 40 years seems like a long time to you but this is a place and people that go back at least to the beginning of recorded history with all the legacy and well baggage that entails.

If you think there was been no progress for this generation consider the one before that. It is the difference between night and day. There is also a growing awareness of the benefits of democracy as one province exercises their freedom of speech and assembly to push for more while another quasi-province is a fully fledged liberal democracy. The whole of Asia has never been more democratic and prosperous. The idea that a prosperous country will advocate for more democracy was true in South Korea, Taiwan, Japan, and is currently proven true again in Hong Kong. Patience.

All those countries transitioned to democracy at much lower levels of income than China today. Perhaps the West should have *patience* with China but perhaps China should have *patience* with how much it expects to export West until it embraces liberal democracy.

Let's wait it out, let them get old, while staying male biased in population proportions, focus trade relations on India and Southeast Asia instead. People who want to see a closer relationship with China should be patient.

We already tried trading more with the rest of Asia, that was the TPP deal. But your side spiked it.

https://edition.cnn.com/2015/10/07/politics/hillary-clinton-opposes-tpp/index.html - "Hillary Clinton comes out against TPP trade deal" - October 7, 2015 -

"Clinton specifically cited currency manipulation enforcement, benefits for pharmaceutical companies and impacts on American workers as the reasons she was disapproving the deal."

(T)he deal is strongly opposed by liberals -- particularly labor unions that fear it would cause the United States to bleed more jobs and wages to countries that pay workers less.

The measures in the TPP are not necessarily the only route to prioritizing trade with Asia, and it was rejected on a fairly bipartisan basis.

TPP was unfortunately a crony capitalist giveaway that would only enrich the swamp. That doesn't mean that a real Trans-Pacific deal ex China that actually benefits its citizens cannot be had and will be yet another mark on the Trump presidency.

"40 years seems like a long time"

The Cold War was won in about 40 years, measured from the end of WW2 to the fall of the Berlin Wall. So, yes, by any reasonable standard the strategy of look-the-other-way-on-China's-abuses has failed relative to the containment strategy that won the Cold War.

"look-the-other-way-on-China's-abuses"
We spent three decades pretending Formosa was the whole China. Have we won yet? And exactly which kinds of "abuses" China is commiting which are comparable to occupying half Europe? Exactly what the China are doing which is so worse than what our Mujahideen friends, our Saudi friends and the South American death squads have done or are still doing? Maybe we should just work harder instead of bkaming the Chinese for all our problems. Maybe our oeaders should stop to pander to yokels and thugs and start thinking about how to make our country more productive.

Well there was that whole episode where they shipped in the weapons used for the Rwandan Genocide. The death toll enabled by that Chinese decision would be more dead than all the Mujahideen, Saudi, and South American deaths combined. But for good measure, the Chinese also supplied the arms to for the Sudanese dictatorship to purge civilians in both South Sudan and Darfur. Not to mention their roles in Guinea, Zimbabwe, and Zaire.

Maybe we should just tax products made in manners that do not comply with out civil rights, environmental, or labor laws. Seems simple enough. You want to move production to China so you can pollute, kill a few workers, and enable mass oppression ... great we can levy a tax on the all the externalities that you are creating which will haunt us for decades to come.

And it is not like we lack options for diminishing China role in manufacturing. Vietnam, Cambodia, South Africa, Indonesia, India ... there are plenty of slightly less evil nations to pick up the slack. Why we might even encourage a "race to the bottom" where dictatorships and emerging democracies improve living standards to win unfettered access to US markets.

The measure for China is not are they quite as bad as the USSR or Nazi Germany, but simply are they bad. If so how bad do they have to get before we tax their bad behavior?

I mean is it okay to look the other way for profit if they only kill a few hundred thousand?

I see. We are justified in supporting Muslim terrorists and South American death squads because, let us be honest here, the Chinese are biting our markets and Trump wants to pander to yokels. Don't you have no shame?

The Cold War was nonetheless a war. Like all wars, it had some explicit sacrifices, some mistakes, and some unwarranted evil that came from trying to prevent things like all the mass blood letting in Asia that came from China and every Chinese proxy of that era.

Wars are evil, but sometimes less evil than letting horrific regimes, like the Fascist and Communistic blocs, run roughshod over the world. If China is at war (cold or otherwise), who do they think is on the other side? If it is us, then we should honor it and treat hostilities as a conflict. If it is not us, who are they forestalling?

Ultimately I could not give rat's ass as to why Trump is doing something or why a percentage of the population backs it. I can about what the effects will be and having of the most evil enabling regimes in the world being a bit more circumscribed is good.

But I'm weird. I also would like the Saudis, Maduro, and Sudan to face more consequences for their choices.

I see. We had to "sacrifice" other people's lives and freedoms. How nobe we were! We made the sacrifice of helping Muslim terrorists taking over in Afghanistan. You know, for freedom! Let us be blunt, we don't care about any of the supposed misdeeds China is said to have commited. It is money our leaders are fighting for. That is why our leaders support the Saudi totalitarian regime and now are pretending to be shocked by the Chinese refime, which at least is helping China to prosper. Why are we nor pressuring our clients in Afruca and Latin America and Middle East to do as much for rheir peoples as the Chinese government is doing for its people? Why are we sooooo interested in democracy for Iran and Cuba but never for Saudi Arabia? I think the answer is obvious. The mask of our government's supposed benevolent intentions have slipped.

Oh not this stupidity again. The US spent 2.4 trillion in Afghanistan. The GDP of the whole country is 21 Billion. Even if we looted every dollar of economic output for a century, we would still be eating a net loss.

And so it goes with South America. Our net exports to South and Central America last year were only $42 billion. We have provided $181 billion in direct aid over the decades. Even if all our meddling produced an additional 8% profit over whatever we might have achieved absent interference, we are still looking at looking at a net loss over the last 50 years.

The argument that the US makes these interventions out of some silly mustache twirling capitalism scheme would require that these capitalists be utterly incompetent at basic things like looting the public purse.

Like any other power, money making is rarely the goal. Instead we prize stability and typically off countries one of two options: be on our side and you may be oppressive or be non-oppressive and you may oppose us. When we tolerate bad actors, it is virtually always because we are making trade offs opposing a greater perceived evil.

Maybe we are wrong about the magnitude of evils; it has happened in the past. But if you think China is seriously worried about some evil, what is it? What exactly did China see as the evil to be avoided in Darfur or Rwanda?

You are missing the point. The public pays the trillion dollar tab with negative returns, yes. But there's a few billion here and there that go into the pockets of certain connected groups of who preferred it not be known like Halliburton (Cheney), Blackwater (Prince/Devos), Carlyle Group (Rubinstein). Using a public resource for private gain has been in play since the founding of the republic. War in Middle East in this regard is similar to a Wall Street bailout. It is not wise to pretend otherwise.

The graft potential is massively low though.

Halliburton, for instance, has a total net profit of $1.6 billion. The total value of the company is only $8.3 billion. Even if Cheney owned the whole company, he is still skimming less than 0.1% of the funds for his own nefarious purposes. And lest we forget, the sum total Iraq and Afghanistan work never amounted to more than something like 10% of Halliburton's revenue.

Blackwater topped out a $1 billion in annual contracts. Again, this is less than 1% of outlays for the wars and represents revenue rather than income.

The Carlyle Group has $13 billion in total assets with net income of $118 million.

Despite your alleged decades of graft, this is all we have to show for it?

I am sorry but as corruption goes, these are pathetically low percentages. You could generate far more profit with a basic tax cut. Heck you could generate more profit by changing the depreciation allowances or even the compliance requirements.

Wall Street, sure the numbers there might actually add up. But that is my point. Going to war requires physical goods be consumed. It requires that people actually do things. These are inherently far less profitable than murky movements within the financial sector.

And frankly, I just have a hard time believing that any of these groups need a war to sponge money out. Clinton was making $200,000 per speech. The Obamas were getting high 8 figure book advances (which appeared reasonably justified). High political office can very easily make you rich, but most of the time people get rich then go for high political office.

War is just not a terribly good way to bring home the bacon. You have to be utterly incompetent at graft to use trillions in spending to generate millions in income.

We have buried not one, but two generations of leaders since "normalizing" trade relations. South Korea, Japan, and Taiwan all transitioned to successful democracies within a 40 year timeline of their first dictators seizing power. Long before they fully transitioned we saw lots of back and forth towards representative government and maintenance of civil society. They all did so when they had less than half the per capita economy of China.

As far as all that history, oh please. Somehow I am supposed to believe that this matters more than that of Italy because China's has an extra 300 (out of a 3000) years of history? Or that somehow India, with earlier extant recorded history, is somehow less wedded to her history?

We have had 40 years to show forward progress. And the best you can offer me is that people in one city in China are only being killed sporadically for trying to restore their civil liberties to something a little less than those city dwellers had in 1997?

The truth is China is more brutal than Korea under Syngman Rhee. Their atrocities are worse than anything seen in the post WWII era. And they show no signs of increasing Democratic accountability or tempering of bad behavior. China, today, is worse on basically every measure than any of the East Asian states you have named.

Hi Thiago.

Go away.

Alright, Thiago.

Settle down.

Aren't you Dr. Wilson?

Oh Thiago, will you ever win?

Sometimes the reference to human rights serves as a basis to interfere into domestic issues of other countries on an ideological basis, on a political basis, without any good reason. Hungarian Foreign Minister Peter Szijjarto

Okay so are any of these good reasons:
1. The harvesting of prisoner organs for cash?
2. Throwing millions into prison camps for their ethnicity?
3. Polluting our airspace so badly that after the cloud of noxious chemicals crosses the Pacific it can still harm Americans' health?

I don't claim that we are perfect, but at some point some line is crossed and we should at least consider taxing the people and corporations who prop up a regime that has a horrific record on basic human flourishing.

" Or that somehow India, with earlier extant recorded history, is somehow less wedded to her history?"

India's history didn't have a brutal revolution that brought the whole of the country under the grip of a dictatorship that survived to the present day. History aka path dependency does matter.

Granted.

Why on earth would we then expect China to take decades longer than Russia which also had over a thousand years of history and a had a brutal revolution that brought the whole country under the grip of a dictatorship that survived to the present day?

China is not unique, but it is uniquely being given longer treatment with kid gloves to no apparent effect.

It has long disgusted me how economic relations with China a re handled in the media. Like those with Japan in the 1980's. Talk about racism!

Much of the idiocy seems to me to stem with a conflation of trade and security issues. If you want to nail the Chinese on security, use the least cost solution: Using trade hurts you, a lot! Using other means, like sabotaging these fake islands looks real cheap.

Trade with China yields the US nothing; it's pure harm. USA's biggest imports from PRC are consumer electronics (a vector for digital soma that rots your brain). In contrast they import from Americans actually useful things: natural resources, jet aeroplanes, and high-tech production tools to help China replace what remains of US manufacturing.

USA elite class made this decision. It's like the bible story of the man who sold his birthright for a "mess of pottage. "

Why don't you make your own shirts? :-)

Actually, in the real world, the USA imports 8 rimes more machimery from China than sells it to China. Also, America spends three times more money on Chinese plastics and furniture than China spends in American machinery.

Eh, with this topic as raised by Famulus, you would have to look at the actual individual sectors in detail and not the sheer bulk of machinery (by value or volume).

Do imports of machines from China -> US help the US to stimulate industries and advance them to the world production frontier? Do imports of machines from US -> China do the same for them? They could do both, but more so for one nation than the other.

It's a complex topic then but generally more agreed on than not that the stimulatory effects on growth from of US/Western trade with China (from imports and exports) are significant for China and much less significant for US/the West.

"It's a complex topic then but generally more agreed on than not that the stimulatory effects on growth from of US/Western trade with China (from imports and exports) are significant for China and much less significant for US/the West."

Which is different from stating, "trade with China yields the US nothing; it's pure harm." Anyway, if we do not want to trade with China, we don't have to.

Of course "we" don't, but at what level of "we" should this decision be made? A political one where this aligns to the strategic goals of the country - risks politics mucking up economic win-win - or at the level of individual investors, businesses, private actors - who aren't aligned to strategic international relations goals and risk messing that up with big consequences?

That is the point. But, if the president really believes Chinese trade is an existencial threat for America, as Mr. FAMULUS believe, he has to take the measures he sees fit to curb it.

Part of being "free" is being able to transact business with whomever you wish. Let's not forget that the leading "liberal democracy" in the world was formed without any vote of the populace, a creation of a group of radical traitors.

Ah, those would be those guys who immediately started signing protectionist tariffs and embargo acts towards the parent country, right?

Parts of this seem bad for both sides. Requiring the Chinese government to massively increase its imports will inevitably give the Chinese government more control over trade. The currency the government needs to pay for its imports will also have to come from somewhere, and a big chunk of that somewhere is likely to be private Chinese people’s imports—most notably tourism, an area where China has a $300 billion trade deficit because of how much its upper-middle-class people like to see foreign countries. Reducing outbound tourism from China only strengthens the Chinese government’s control over its people and reduces the chance for liberal and cosmopolitan influences on China’s growing upper-middle-class.

Requiring the Chinese government not to support buying foreign companies also seems bad for innovation. Chinese venture capital, even if state-backed, increases the total pool of venture capital that is available to innovators, increases the potential payouts to innovators, and thus increases the incentive to innovate and global rate of innovation. Chinese investment funds have played a noticeable role in my Rust Belt city’s nascent tech sector. While elements of China’s industrial policy such as industrial espionage arguably harm innovation, merely buying technologies seems to be a clear benefit to innovation. The main risk, that of overpaying, is borne by the Chinese themselves.

"The currency the government needs to pay for its imports will also have to come from somewhere ... " Yeah, Chinese imports up implies Chinese exports up!

You can't rapidly create a Silicon Valley tech sector out of thin air, because there is a whole ecosystem of smaller tech firms, universities, smart immigrants in addition to locals, venture capitalists and angel investors, and other tangibles and intangibles. Everybody knows that.

And you can't rapidly create a manufacturing sector out of thin air either, because that needs an ecosystem too. It might take a generation to build one. But everyone seems to be in denial about that, and sees nothing but straightforward job-creation opportunities.

It seems increasingly clear that China is willing to pull the trigger on a trade war. All wars are lose-lose propositions, but may become almost inevitable when both sides are convinced that disproportionate losses will happen to the other side.

At some point, the trade war may actually morph into an embargo, where China withholds and restricts exports of key items. If push comes to shove they could probably end the existence of Apple, a trillion-dollar corporation.

Too much hyperbole. China can't end Apple the same way the US can't end Huawei. It is also much easier to start up a manufacturing industry than to create another Silicon Valley. Vietnam's rise since the trade war shows how much can be done in just one year. Nobody wants to admit the obvious but local manufacturing is easy to do but requires *ahem* government assistance to be competitive against places with laxer labor and environmental standards.

What the Trump administration wants, more than anything else, is control over China's industrial policy. Trump's trade negotiators have made that clear from the outset. And China has made clear from the outset that China is a sovereign country and will not let another country dictate its domestic economic policies. One could make an argument that the Trump administration is projecting, that what Trump wants is an industrial policy of his own, one similar to China's. Trump being Trump, he doesn't want others to have what he doesn't have. Nothing would make Trump happier than for him to have the power to pick and choose his favored industries and firms. As a substitute for a veto power over China's industrial policy, Trump has instead picked and chosen American industries and firms to punish or reward, with tariffs and exclusions from tariffs on imported goods, a heavy handed approach to an industrial policy that hasn't made Trump very popular, even with the industries and firms that Trump has graced with exclusions because those industries and firms are aware that Trump is more fickle than a teenager in love. I suppose our host would oppose an industrial policy for America (it ain't exactly markets), but what is our host's view about having a veto power over China's industrial policy?

No.

It’s about using the Chinese equivalent of the NSA to hack American companies and steal IP.

That’s not industrial policy Boomer.

It's understandable to assume that America has the advantage (in this case in IP), but the reality is something different. It's hard, really hard, to see America's role in the world from anything other than the American perspective. Having said that, was what happened last night in Australia not the greatest.

Okay you seem to misunderstand. When I say NSA I mean the National Security Agency. It’s the largest employer of mathematicians. You’ve probably heard of it?

China’s version of the NSA spends its resources hacking American companies to steal trade secrets.

China's approach seems to be wait out Trump and he will begin negotiate against himself, which has happened a few times already.

I also have not seen any specifics on the IP stuff that is also supposed to be part of this deal. I don't believe China has even acknowledged those provisions, which is concerning.

There are only so many times you can dress up the pig before it stops being "novel."

We have all read about how Trump needs to put some policy wins on the score board for the elections, and there may be truth there. But we don't hear that about Xi and I do wonder if given all the chaos occurring in multiple placing within China he doesn't have the same incentives even if election timing is not an issue.

I would characterize such an outcome as kicking the can down the road though. China and the west have major differences in their conceptions of the public-private divide, basic understandings of property rights, social relationships and, perhaps under weighted, status and proper behavior in the context of that status that I suspect any close ties, political or economic are doom to increasing levels of disputes and tensions.

So is that worth it for either side, much less the world, in the long run?

Perhaps a bit more distancing than increased integration (or the return to that attempt) could produce a superior equilibrium.

What I think is funny is how we shoot ourselves in the foot,

While trying to win a race.

This week, while my wife was visiting a library, I visited a nearby tea retailer/wholesaler, to ask the owner how tariffs were affecting him. He said that their first shipment of Chinese tea with tariffs had just arrived.

I wondered how many US tea producers were protected by these tariffs on Chinese tea? He said there are some in South Carolina and Hawaii.

Protect the tea workers of America!

How many products subject to tariff have low US employment, and are we simply enabling non-Chinese foreign producers to raise their price?

There are alternative sources besides communists you know. And you probably want to help the people in Hong Kong too.

You could just read the history of the 20th century . Or read about Jimmy Carter and the Soviet Union on trade....

There isn't a deal - https://www.washingtonpost.com/world/the_americas/new-north-america-trade-deal-hits-glitch-as-mexico-objects-to-us-labor-inspectors/2019/12/15/969703cc-1f51-11ea-b034-de7dc2b5199b_story.html

What Mexico signed isn't what's being presented to the US Congress for a vote.

"Seade said Mexico would never accept foreign labor inspectors “for a simple reason: Mexican law doesn’t allow them.” The Foreign Ministry noted in a communique that Mexico could reject any such diplomats the United States sought to post in the country."

Comments for this post are closed