“Soft despotism is a term coined by Alexis de Tocqueville describing the state into which a country overrun by "a network of small complicated rules" might degrade. Soft despotism is different from despotism (also called 'hard despotism') in the sense that it is not obvious to the people."

Friday, May 04, 2018

Trade war looms as US and China take hardline stance


A couple of things. First, this "trade war" has been going on at least since Normalization in 1979 but really since around the time Nixon went to Peking, when the US lifted the ban on selling China dual-use and other dual-use "advanced technologies." The US was too powerful, too large, and too arrogant, and US business leaders too greedy to care at the time. The odds of converting China's government to a west-friendly government weren't zero, but they were very low. China, especially under the CCP, would never be content being dominated by a western worldview. The west decided to go for the money to be made trading without worrying about what is was helping Beijing build. Second, "negotiations" is a silly word. This isn't about fixing a trade imbalance. It's about whether Beijing, now with their western-educated smiling faces in suits and Hermes ties, saying all the right things as they wave their Mont Blancs around, can put the West back to sleep and let them continue on their trajectory. They built half the world's steel capacity while the West slept and are building a large conventional military with that. 

The democracies must have that and other industries to fight conventional wars. Trump putting tariffs on steel and aluminum to protect those US industries might upset EU and Japan, et al, but they'll make sure theirs survive too. No free country is going to let itself be in the position of having to buy its materials for national defense from China. Today's focus though isn't on flows, it's on "Made in China 2025".

 Xi wants to do with advanced tech what China has done with iron, steel, aluminum, solar panels, wind turbines, etc, ie, dominate those sectors. If they kill their western counterparts all the better. Market funded businesses can not compete with businesses with unlimited funding coming from the government of China. Advanced semiconductors, AI, electric vehicles, robotics, aerospace, etc, are all the foundation of today's economy and military. So "negotiating" an end to the "trade war" means stopping Beijing from weakening or killing off those sectors in the west like it tried/is trying to do in steel etc. So, it's not about trade balance. It's about whether you want the Chinese Communist Party's system to dominate all walks of life in an increasingly growing sphere of the globe or whether you want market-based democracies to survive to lead another century.  

We've got our problems, but anything that continues to allow China to grow on her current trajectory makes our problems worse and maybe insoluble and/or fatal as time passes. That probably means a whole lot less trade with China and, especially, keeping the Chinese government from acquiring our advanced tech and using virtually unlimited state money to kill off our businesses in those sectors in the West. Not too much to "negotiate" there. China under the communist party doesn't fit well in the western trading system, but she'll stay and continue to do what she's been doing to the West so long as western leaders don't do something about it.

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