During the 2016 US election period, Russia was accorded intense attention. Hillary Clinton took a belligerent stance vis-à-vis Russia, while Donald Trump took a more diplomatic stance.

Trump emerged victorious. Following his inauguration speech a choice became apparent for international relations and the direction a nation may pursue.

Trump has been a mixed bag from a Chinese viewpoint. He has nixed the Trans Pacific Partnership from which Obama sought to exclude China. And Trump has come out as skeptical to American bases, such as in Japan and Korea, which are on China’s doorstep.

On the other hand, Trump came across as belligerent in criticizing allegedly unfair Chinese trade practices: China state subsidies for exports, low labor costs, intellectual property theft, and substandard worker safety and environmental regulations, and an undervalued currency. The LA Times complained that “blatant currency manipulation contributes significantly to a $365-billion trade deficit last year with China that would not exist in a freely floating exchange rate world.”

Upon what authority does the US, or its media organs, pontificate the monetary policy of China? China remembers well, and has learned lessons from, how a freely floating exchange rate negatively affected East Asia in 1997.

In a free-floating currency world, does not the setting of the central bank rate affect the value of the currency? Does not the accumulation of debt affect the valuation of the currency? Does not currency speculation affect valuation? Does not the printing of money and expansion of the money supply affect the valuation of the currency? When one is in hock to another country (as of October 2016, China holds about 1.115 trillion dollars in US debt) and the debtor country floods the market with its currency (aka quantitative easing), what does this indicate? One wonders upon what economic or ethical basis does the US criticize China.

Nonetheless, the verisimilitude of Trump’s complaints are questionnable. China is seeking to control outflows of capital; thus seeking to preserve the value of the RMB.

And how does Trump propose the US debtor respond to its banker? Trump threatened a 45 percent tariff on Chinese exports. China pointed out that there are rules in place through the WTO that members are obligated to honor. Tariff measures usually result in a tit-for-tat response.

Many of the big US ticket items such as Apple and Boeing airplanes would be targeted. Iphone sales are already slipping as Chinese smartphone brands are highly competitive. China is making major inroads in developing commercial aircraft, collaborating with other makers, in particular, with its ally Russia.

Recent times have witnessed China reeling off a series of impressive technological breakthroughs and successes in myriad fields: aerospace, space, satellites, rockets, space station, quantum communications, advanced physics, military, transportation, supercomputers, AI, robotics, agriculture, medicine, etc.

US politicians shut China out of participation in the International Space Station. China instead started work it on its own large-modular space station with modules to be launched this year and in 2018. Others are more willing to collaborate with China such as Russia and the European Space Agency.

China is a rising power on many fronts. (See Part 1, 2, and 3.) Yet Trump derides the nation seemingly on a trajectory to supplant the US as the preeminent world power.

A headline in Hong Kong’s South China Morning Post conveyed this disrespect: “‘I would get him a McDonald’s hamburger’: Trump says Xi Jinping shouldn’t be given a state dinner when he visits Washington.”

Quipped Trump sarcastically, “We’ll give him [chairman Xi] a state dinner and what he has done is suck all the jobs, suck all the money right out of our country.”

Trump followed this up when after becoming president-elect he upset China by speaking by phone with Taiwan’s president Tsai Ing-wen.

The Atlantic sought to apprise its readership of why this diplomatic situation exists:

The roots … date to 1949, when Chiang Kai-shek’s Republic of China was routed by Mao Zedong and the Communists, and Chiang fled to Taiwan. [what the article does not mention is that the US 7th fleet intervened to help the Kuomintang elude Communist pursuit thus helping to prevent unification with the mainland] The U.S., in Cold War mode, continued to recognize the ROC in Taiwan as China’s rightful government, and so did the United Nations. But in 1971, the UN changed course, recognizing the People’s Republic of China—or as it was often called then, Red China—as the legitimate government. In 1979, the United States followed suit. Crucially, the communiqué proclaiming that recognition noted, “The Government of the United States of America acknowledges the Chinese position that there is but one China and Taiwan is part of China.”

China responded. The People’s Daily ran a headline: “Trump’s irrational China bashing shows his ignorance of China.”

In tweets Trump stated: “You know I don’t need China’s permission to talk to the government of Taiwan … and they don’t need our permission to do some the things that they do…”

Who Wins in a Confrontation?

In a recent article, a People’s Daily headline boasted: “Trump should take note that when it comes to infrastructure, China wins hands down.” American capitalism is losing ground to the Chinese state-managed economy:

China’s economic success is testament to the advantages of its system and to Chinese ingenuity, and infrastructure is one of the nation’s strengths. Because the Chinese government is more involved in the nation’s development, leaders can plan, finance, and carry out very ambitious projects in a relatively short period of time.

It would seem prudent to learn from China’s economic success and seek cooperation over confrontation, a win-win for both sides.

China has something that America badly needs: infrastructure. However, protectionist trade policies toward China would do little to achieve the goal of reviving America… The two largest economies in the world will need to find a sweet spot in this highly interdependent relationship, and infrastructure could be a golden opportunity for both sides to leverage each other’s strengths for the benefit of both sides.

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The puzzling aspect of Trump’s petulance toward China is that while he has softened the US posture toward the nuclear-armed Russia, he has amped up the temperature with nuclear-armed China.

In the next part what a military stand off with China looks like.

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First published at American Herald Tribune.