Sunday, October 14, 2018


DONALD TRUMP IS DRIVING A 21ST CENTURY ECONOMIC COLD WAR THAT WILL ACCELERATE AMERICAN WORLD ISOLATION (By Francis C W Fung, Ph.D.) (I) SHOULD U.S. AND CHINA BE FRIENDS OR ENEMIES The whole idea of Hilary Clinton's pivot to Asia was to reclaim Asia and stop China's influence by diplomatic and military efforts. As a business man and under his economic adviser Peter Navaro's (author of Death by China) urge Trump decided to launch a trade war to add to the containment of China. On the surface the trade war is to re- balance American trade deficit and bring American jobs back. In reality trade war will not bring American jobs back due to many advantages China has in manufacturing other than low labor cost as detailed by CEO Cook of Apple Computer. The deeper reason is that Trump and his advisers see China as long term threat more than Russia. Together they see China as a economic and technology competitor that will one day overtake the U.S. They are scared of Build in China 2025 to upgrade 10 critical technologies to world leader position by 2025. These include robotics, AI, space exploration and biotech etc. This made in China 2025 project is so threatening to American technology leadership, the Trump inner circle leadership announced on Oct 1st China's national day that the U.S. China relation should be competition and not cooperation. The U.S. speaker of the occasion even quoted Confucian saying to validate his position by saying that the strategy of the time is to call a spade as a spade. So his conclusion of the time is that U.S. and China must be enemies. (2) TRUMP'S GRAND ECONOMIC STRATEGY TO CONTAIN CHINA BY TRADE WAR China under Deng Xiaoping and Xi Jingping's reform and open up policy became successful in catching up with the West in industrial revolution through willingness to learn and hard work. In fact in some areas such as high speed train and ecomerce China is actually ahead of the West. In ecomerce China has 700 million net citizens and twice the ecomerce volume of the U.S. China's high speed rail network is longer than the the whole world combined. Instead of recognizing China's true reasons of technological advance, Trump and his inner circle adviser, Navaro and Steve Bannon blame it on globalization and the alleged China cheating trade practice. These self appointed China experts think trade war can stop China's technology advance. But the reality is that it is too late to slow China. China has already reached the critical momentum that its research dollar is matching the U.S. and its patent applications has exceeded America. China's innovation has surpassed Silicon valley to the point that of the 10 highest unicorn start ups in the world more than half are in China. (III) TRUMP'S NATIONALISTIC TRADE WAR AGAINST THE WORLD Trump in his 2018 UNGA keynote speech advanced the concept that nation state is the central concept today. Nationalism requires the U.S. to make America great again. He believes that globalization puts America at a disadvantage and allows China to take advantage of the U.S. So he is promoting nationalism VS globalization. As he believes that nationalism is the growing tide, hoping to appeal to the world's fear of China's growth through globalization. On the other hand China is not a nation state as expounded by Zhang Wei Wei and Martin Jacques (author of When China Rules the World). As a civilization State China treasures its Confucian philosophy of community of common destiny (Tien Hsia Wei Kung). Under Xi Jingping's new era leadership of community of common destiny, China will promote his concept of shared future through the Belt and Road initiative to achieve win win development. Simply put Xi's unselfish diplomacy is to welcome all nations to ride China's train of development( See Xi's speeches at the 2017 Davos meeting, G20 and UNGA speeches.) Xi"s willingness to share China's dream with the whole world is in direct contrast to Trump's nation state selfish goal of make America great again. Trump's selfish goal will surely lead the U.S. to global isolation. (IV) TRUMP'S DRIVE FOR 21ST CENTURY ECONOMIC COLD WAR WILL LEAD TO TWO CONTENDING SYSTEMS AGAINST CHINA AND THE U.S. WILL NOT WIN. Contrary to trump's belief that by exploiting the current Western return to nation state selfishness will enable him to lead the world. First any fear of China's rise by globalization is only temporary. Ultimately globalization expands world trade and enables the whole world to grow. Under China's ancient wisdom of community of common destiny the whole world can truly reach win win harmony. The developing world needs help to achieve industrialization. To do that the developing world needs China's Belt and Road initiative to build various essential infrastructures,power generation and industrial centers to develop. Trump's idea of returning to nation state selfishness only benefits developed countries at the expense of developing countries. Not only Trump cannot slow China's continuing rise, it will drive more developing countries towards the B and R initiatives. In the short term Trump may drive the world into two systems but the U.S. will not win. China's growth momentum is strong enough to with stand Trump's aggressive push. As indicated before Make in China 2025 will succeed on target and B and R Initiative will gather more and more nations to join China's continuing globalization along the new silk road. This connectivity will include all Central Asia, Europe, South and East Asia, Africa and Latin America countries. U.S. won the 20th century ideology cold war against Russia because the Russian economic system is not competitive and collapsed under U.S. pressure. This time China's socialism with Chinese characteristics has proven competitive by its phenomenon growth and catching up through the last 40 years performance. China is already the largest world economy by purchasing power. By 2025 China will definitely surpass the U.S. technology wise and economy wise. During the 20th century cold war China joined the U.S. to team up against Russia. This time despite Trump's open wooing of Russia it has too much to loose to join the U.S. Russia needs most is to develop its economy. There is little America can help Russia on the economic front whereas Russia has a lot to gain by opening up its East and working with China on the B and R Initiative, Eastern Economic development and Arctic Silk Road initiatives. (V) CONTINUING HIS TRADE WAR AGAINST CHINA TRUMP WILL LOSE AND LOSE BIG In a deal with Trump, Jack Ma of Alibaba pledged to create one million job for the U.S. Because of the trade war Jack Ma redirected his energy towards Russia instead. AS pointed out earlier China's internet is gaining momentum faster than America. The two system internet world is already a reality. If Russia folds completely into the Chinese internet system so will Central Asia and Eastern Europe. With China's investment and infrastructure help to modernizing. Africa is growing with break neck speed there is no doubt China will lead and operate the African internet world. Economic wise if Xi Jingping's diplomacy of Band R Initiative and community of common destiny continue its current growth momentum the Chinese system of globalization will be so convincing EU will have a change of heart instead of tag along after Trump. Currently EU and Japan already indicated that they will cooperate with China on the B and R infrastructure projects (see the China Radio article" So Long as It Connects"). With North Korea situation stabilizing the new silk road is likely to extend from Japan, through Korea peninsular and all the way to China and Russia. Greater vision will always win over selfish smaller vision, especially the former will bring economic benefits. Thus Trump's selfish nation state diplomacy will not last long. Unlike the 20th century ideology cold war, this time because of Trump's shorter vision, the U.S. will lose the 21st century economic trade war and lose big, All the cards are stacked against Trump's shortsightedness. His art of the deal will collapse and be relegated to the dust bin of history!!! Francis C W Fung, Ph.D. Director General World Harmony Organization