U.S. President Donald Trump and Chinese leader Xi Jinping attend a welcome ceremony at the Great Hall of the People in Beijing on Nov. 9, 2017. (Nicolas Asfouri/AFP/Getty Images)

Expert Says Trump Dealing with Remaining Communist States in Effective Ways

US tariffs could cripple Chinese communist regime

With communism abandoned in Europe and most parts of the world, only a handful of communist regimes are left.

Just like how former U.S. president Ronald Reagan was instrumental in bringing about the demise of communism in the Eastern Bloc and the collapse of the Soviet Union, President Donald Trump is also helping end communism in the world, dealing with each communist state in a different way, says Frank Xie, an associate professor in the School of Business Administration at the University of South Carolina.

Trump has spoken out against communism on a number of occasions.

“Wherever true socialism, or communism, has been adopted, it has delivered anguish and devastation and failure,” he said in a speech to the United Nations General Assembly in September 2017.

“Those who preach the tenets of these discredited ideologies, only contribute to the continued suffering of the people who live under these cruel systems. America stands with every person living under a brutal regime.”

He made similar comments in a statement in June 2017 when announcing his administration’s policy toward communist Cuba, saying “communism has destroyed every single nation where it has ever been tried.”

Trump reversed former president Barack Obama’s initiative of opening trade and tourism ties with Cuba, restoring the embargo of the Central American communist state and adding to the pressure on the ruling regime.

For Vietnam, Trump is using economic ties to bring the Asian state into the world’s economic system. “They’re actually giving up their communism very soon, I believe,” Xie said.

When it comes to North Korea, Trump has been using military threats and economic sanctions to have the communist country abandon nuclear weapons.

And on China, according to Xie, who wrote the 2013 book “The Dragon’s Vault,” imposing tariffs to balance trade is a “very effective weapon” that Trump has employed.

“The U.S. is hitting the red dragon’s vault in its soft spot,” he said, referring to the Chinese communist regime’s foreign currency reserves, which have ballooned thanks in major part to years of trade surpluses.

Xie said without these huge reserves, the Chinese Communist Party (CCP) could be crippled.

Tariffs

With only a portion of the tariffs the United States has planned for Chinese imports in effect, China is already feeling the impact on its economy given that access to its largest overseas consumer base has been impeded.

Chinese stocks have started to plummet, and the ongoing trade war is causing negative sentiment among investors. Although Beijing has imposed reciprocal tariffs, markets in the United States have remained stable, and even experienced growth.

The Trump administration has imposed a 25 percent tariff on $34 billion worth of Chinese goods, which will be extended to $50 billion in the coming days. China has responded with equal tariffs of its own on American exports.

The United States has announced a further 10 percent tariff on $200 billion worth of Chinese imports that will come into effect in a couple of months.

Last week, Trump said he is ready to extend the tariffs to $500 billion, or effectively the entire volume of Chinese exports to the United States.

The Impact

The yearly trade deficit of the United States with China in recent years has soared to over $350 billion, with the figure at $375 billion last year.

China’s total exports in 2017 was about $2 trillion, with one-fifth of that destined for the United States. With China’s 2017 GDP at $12 trillion, the total exports to the United States accounted for 3.5 percent of China’s GDP.

On the U.S. side, with 2017 exports to China at only $130 billion and with a GDP of close to $20 trillion, exports to China only accounted for around 0.7 percent of the U.S. GDP.

“The reliance on exports is not that great for the U.S., but it is huge for China,” said Xie.

“If China loses its trade with the United States, its economy is not going to survive.”

The Trump administration has imposed the tariffs along with investment restrictions on China in response to what Washington claims are China’s unfair trade practices that contribute to the huge trade deficit, as well as its theft of intellectual property.

‘The Dragon’s Vault’

China’s foreign currency reserves this year are over $3 trillion. The reserves have been steadily increasing ever since the country joined the World Trade Organization, thanks to the huge trade surpluses China maintains with its trading partners despite their complaints that Beijing is not playing by the rules.

However, the reserves aren’t used to improve Chinese people’s lives or help lift the people of the developing country out of poverty, Xie said. Rather, the money goes into the regime’s “vault” for the benefit of the CCP elites.

“In 1989, after the Tiananmen Square Massacre, the communist regime almost fell. They thought they were going to lose control of China … they were ready to go. That’s when they transferred $60 billion to Swiss bank accounts,” he said.

“That’s how much they had at that time. Of course, they have much more now. They use that as nest eggs for the elites.”

The money is used not only to fund the luxurious lifestyle of the CCP elites, but also to suppress dissidents and groups that the Party targets internally as well as to exert control overseas, Xie said.

Examples include buying support from small African countries in the U.N. Human Rights Council; supporting states that act against the United States; and funding Confucius Institutes on university campuses around the world, which have been cited as political arms of the regime in order to extend its soft power or even for espionage.

“Basically [the money is] for the survival of the communist regime,” Xie said.

That is why the U.S. tariffs are detrimental to the CCP, he explained.

“They cannot sustain their power without money support. They cannot continue the suppression, persecution, and their hold on power.”

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.