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DAVID KRUSE

Challenging China in trade

May 11, 2018
Farm News

It has been a long time since any foreign power has challenged China to the degree that the U.S. trade delegation will do this week as they debate trade. I get the impression that many Americans do not have great respect for China. That would be a shallow observation of history. My Congressman, Steve King, has touted Anglo-Saxon superiority given credit for the advancement of western civilization and the human race. That is a short observation of history.

The USA, in terms of the test of time, is still a brief episode experiment in democracy, that will have to prove that it is not just a brief interlude in the general disorder of human civilization. So far, the human race has been one conflict, war or battle for human rights after the other. We have just barely moved beyond slavery and the US participated in that in its history. In the course of time for human civilization, 1776 was not that long ago. We are the young pups, brazen and full of hubris. China however, was an advanced civilization long before ours existed. There is strong evidence that the Chinese discovered the Americas many decades before Columbus arrived. "Their science and technology and their knowledge of the world around them were so far in advance of our own in that era that it was to be three, four, and in some cases five centuries before European know-how matched that of the Chinese (1421)."

Homo Sapiens are believed to have reached China 65000 years ago. Rice-paddy agriculture is carbon-dated back 6000 years. City-state civilization goes back 5000 years. Chinese written records go back 3500 years. The Chinese have a different perspective of time than we do. The Chinese have never been what you would describe as expansionist or colonial. They do not have a deep-water navy. They have been often invaded by others. . .either by Mongols, Russians or Japanese. They built the most extensive defensive structure on earth in the Great Wall, visible from space. They are nationalistic, defending territory they consider traditional. Their modern actions today reflect this sense of security, securing the South China Sea as their lake to defend their sea access to global trade while rebuilding their land route to Europe with a new silk road.

The U.S. historical relationship with China is, in many ways, disappointing. We were staunch allies during WWII. After leaving the WWII Museum Pacific Theater exhibition in New Orleans, one is in puzzlement that after the relationship that we had during the war how in the world did it go south as badly as it did since, to where Dwight Eisenhower was advised by his Pentagon to nuke China? Mao killed more people (Chinese) than did Hitler or Stalin as a modern version of the internal strife that has always writhed inside China. The current system has been the most stable and prosperous there in centuries. China is seen as on the rise and destined to challenge the US for global respect. . .dominance. . . leadership? What exactly is being challenged? The Bannon/Bolton mindset is that China and the US will inevitably clash as titans as it is somehow pre-destined. I have no idea why. The standard of living in China has improved turning hundreds of millions of peasants into consumers. We have gotten to feed them or should I say they let us feed them soy.

For being communists, the Chinese have historically been about as capitalistic as they come. If there is an enclave of Chinese living outside China anywhere in the world they always tend to be influential and wealthy. If you would compare them to Russians or Japanese or Islamic ethnic characteristics, the Chinese are nicer guys, less criminal and more respective of life. It must be a result of the Buddhism, Taoism and Confucianism that emphasizes living in harmony. Mao must have missed the lessons.

The point being that the U.S. trade delegation going to Beijing this week are the cultural upstarts trying to make their mark on the world. Our righteous indignation over what the Chinese see as good business practices on their part will not impress them. They will however, make an attempt to seek harmony by appeasing our delegation and president if they can. I think that the odds do not favor a quick success or resolution. They will give as good as they get, aggressively defending their honor, bristling at being called evil as Commerce Secretary Wilbur Ross did.

Peter Navarro, who has written books critical of China, was not invited but was going anyway as one of the bad cops. China is willing to absorb pain in order to defend themselves. They have always been self-sufficient or they have gone without. Depending on others for their soybean supply was actually quite inconsistent with their history, something they are reconsidering and are likely modifying. Many Americans do not think that China can get along without our soy. Such an assumption is dangerous. I think they can modify their internal demand to make themselves less dependent on imports overall and specifically from the U.S. For Trump to think that we will be successful in bending China to his will with tariffs makes him. . . what was attributed to his being called by his Chief of Staff, John Kelly this week.

China has diversified its economy away from exports in general and away from trade with the US more than most realize. Also, the way that president Trump is executing a trade war with all of our major trading partners at once is creating allies for China, driving them away from us to them. This will be a test of whether the U.S. is the center of the global trading universe as much as Trump thinks. I think that he is putting the country in great risk of being isolated and diminished instead of made great with his - "us against almost everybody else" -trade war strategy.

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.

 
 

 

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