The current state of the trade talks is at the level of talking about soy beans, Chinese tariffs on American cars and similar issues. The problem is that this dialogue is no longer solely about trade. It’s about who’s credible, and who isn’t. The United States is walking a very fine line, annoying allies and trading partners, while picking a fight with a very hard-nosed modern China.
The U.S./China trade war, so far, has achieved precisely nothing for either side. It’s a nitpicking, irritating experience which has been worrying financial markets, and hardly helping global trade. The United States started this war, and apparently has no idea what to do with it now that the war is in progress.
A history of bad calls by the U.S. regarding China
Since the 1930s, America has an almost spotless record of making incredible blunders in relation to China. Backing Chiang Kai-shek with billions of dollars which went straight into various pockets, for example, was not a great idea. Chiang Kai-shek received his backing despite endless information received from U.S. operatives like Jack Service, General Stillwell, and many other Americans on the ground.
By the time Harry Truman came into office, the war was lost, the American money was gone, Chiang Kai-shek was in Taiwan, and a large amount of human misery had been funded by America in the process. Truman couldn’t stand Chiang Kai-shek, and pulled the plug on unrestricted aid in future, except for defence. American governments have been saddled with this nuisance ever since.
(This may seem like old news to Americans, but the Chinese see it differently. Backing Chiang Kai-shek was roughly the equivalent of backing Hitler, to them, and the insult has never quite faded. It was a national disaster for China, worse than the Russian Great Patriotic War, and twice as long. Millions of Chinese suffered and died in the process, in the course of fighting two wars, one against the Chinese nationalists, and the other against the Japanese.)
When the big boom in Chinese industry started to happen in the early 90s, corporate America decided that China was the place to make all their products. It was a sort of even cheaper Mexico, replacing maquiladoras with Chinese factories. The problem was that the Chinese, knowing their margins, were much tougher to deal with, despite their obvious competence with modern manufacturing.
The South China Sea islands debacle is another case in point. America and other nations protested vehemently against the development of Chinese island bases in the South China Sea. The net result of all these protests so far has also been precisely nothing. America has been made to look baffled, and worse, inept, right on Taiwan’s doorstep.
This is about much more than tariffs
So the clumsy, misguided use of tariffs as a way of reasserting American global authority has failed, and failed dismally. The world is hardly going to stop doing business with China simply because America has a problem with its self-image. These trade talks need to do more than simply make a deal with China; they need to prove that America knows what it’s doing again.
One of the unavoidable, (and may I say unwelcome), images which springs to mind is that of the UK after World Wars 1 and 2. It’s the image of a tired, confused, former superpower trying to stand on its dignity and nothing else.
That’s not quite the case — at least not yet. America is still a superpower, but it is increasingly a superpower being marginalized by itself, bad policies, horrendous diplomacy and increasing obsolescence in a worldview which barely relates to reality.
America needs to get back on track with the world, reassure China that it hasn’t gone absolutely senile, and deliver meaningful trade terms. The Chinese will not be swayed by threats, bluster, tantrums, tedious rhetoric, and dismal logic. Quite the opposite; the more ineffectual America looks in these talks, the more likely China is to take the initiative. That should not need explaining to anybody.
If the Americans want these trade talks to work, they need to come up with deals that makes sense, reduce stress on global trade, and deliver meaningful, practical terms of trade. Nothing else can make a real difference. America has made the very bad mistake of being on the back foot, and the future will depend on much better footwork than so far displayed.
