Trump’s next bank­ruptcy may be US-China re­la­tion­ship

China Daily (USA) - - COMMENT -

The fi­nal pres­i­den­tial debate went vi­ral as Repub­li­can Don­ald Trump wouldn’t com­mit to ac­cept the elec­tion re­sults, to which his op­po­nent, Demo­crat Hil­lary Clin­ton, re­sponded that such a state­ment was “hor­ri­fy­ing” and that he was “tak­ing down our democ­racy.”

This does not bring out the best in Amer­ica’s highly val­ued democ­racy.

Can­di­dates are often care­less with facts at cam­paign ral­lies and de­bates, but Trump has set a record of mak­ing false state­ments, de­cep­tions and even out­right lies never seen be­fore in a pres­i­den­tial elec­tion, es­pe­cially his blis­ter­ing at­tacks on trade agree­ments and China. Here is a real­ity check:

Trump has stated re­peat­edly that he would slap a 45 per­cent tar­iff on all Chi­nese prod­ucts en­ter­ing the US.

Real­ity: What he does not know is that there are thou­sands of US trade ac­tions that al­ready limit Chi­nese ex­ports to the US. Th­ese pun­ish­ing im­port tar­iffs are often ap­plied un­fairly be­cause China is still con­sid­ered a non-mar­ket econ­omy, but ul­ti­mately they do un­in­tended harm to US im­porters (who pay the tar­iffs), end-users, re­tail­ers and Amer­i­can con­sumers.

The De­part­ment of Com­merce re­cently levied a 500 per­cent duty on Chi­nese cold rolled steel (me­tal to make ap­pli­ances, cars and elec­tronic mo­tors), sig­nif­i­cantly higher than what Trump is ad­vo­cat­ing.

Trump also be­lieves he could get away with such ac­tion, but he should know China will not hes­i­tate to re­tal­i­ate when­ever they believe US trade laws are be­ing ap­plied un­fairly.

This was cer­tainly the case in­volv­ing the so­lar panel sec­tor. When the US ap­plied anti-dump­ing du­ties of up to 78 per­cent on Chi­nese so­lar pan­els (prompted by lob­by­ing on be­half of a Ger­manowned so­lar panel fa­cil­ity based in Port­land, Ore­gon), China quickly re­sponded with its own 57 per­cent against US pro­duces of poly­crys­talline sil­i­con, the raw ma­te­rial for pho­to­voltaic cells essen­tial to mak­ing so­lar pan­els. If this con­tin­ues, we most cer­tainly will be on the path to a trade war.

Fi­nally, if Trump took time to read the Con­sti­tu­tion, he would see that it clearly states it is the Congress (not the pres­i­dent) that has the au­thor­ity to reg­u­late in­ter­state and for­eign com­merce.

Trump finds it con­ve­nient to blame China and trade agree­ments for the huge job losses across Amer­ica’s heart­land.

Real­ity: While he finds it con­ve­nient to por­tray China as the chief ben­e­fi­ciary of the Trans-Pa­cific Part­ner­ship (TPP) and the North Amer­i­can Free Trade Agree­ment (NAFTA) trade pacts, the truth is China is not in­volved in any of the US trade agree­ments.

Many fac­tors contributed to the job losses, but it was mostly US cor­po­ra­tions re­lo­cat­ing their op­er­a­tions abroad ad­just­ing to a more global econ­omy. Trump lives in fan­ta­sy­land when he boast­fully claims he will bring back all those man­u­fac­tur­ing jobs if he be­comes pres­i­dent.

The cam­paign rhetoric sur­round­ing TPP has all but guar­an­teed it will not be ap­proved. While China was ex­cluded for ob­vi­ous geopo­lit­i­cal and eco­nomic rea­sons, it has much more to gain if TPP fails to be rat­i­fied, which is the op­po­site of what Trump claims.

More alarm­ingly is Trump’s pre-cam­paign state­ment that “I’d love to have a trade war with China … if we did no busi­ness with China, frankly we will save a lot of money.”

Real­ity: This is typ­i­cal Trump saber-rat­tling, threat­en­ing a trade war that would force China to make ma­jor con­ces­sions, or he gen­uinely be­lieves as com­man­der-inchief, that Amer­ica would emerge vic­to­ri­ous.

Trade is a two-way street, so a trade war would have huge con­se­quences on both sides.

Ac­cord­ing to the Rhodium Group, China is a top in­vestor in Amer­ica with $18 bil­lion in the first half of 2016 and an­other $30 bil­lion in the pipe­line. There would be even greater in­vest­ments if the US-China Bi­lat­eral In­vest­ment Treaty (BIT) were to be ap­proved but that is un­likely given the anti-trade rhetoric this elec­tion year.

Also some of China’s top cor­po­ra­tions are lo­cat­ing their man­u­fac­tur­ing op­er­a­tions all across Amer­ica. Ac­cord­ing to a re­port is­sued by the Na­tional Com­mit­tee on US-China Re­la­tions and Rhodium Group ear­lier last year, more than 1,900 Chi­nese com­pa­nies have op­er­a­tions in the US and em­ploy over 90,000 Amer­i­cans.

Most of the na­tion’s state gov­er­nors are anx­ious to lead trade del­e­ga­tions to China to urge more in­vest­ments in their states.

The real­ity is that China is in­vest­ing heav­ily world­wide and if, as pres­i­dent, Trump were to shut the door or erect bar­ri­ers, then the needed in­vest­ment cap­i­tal will flow to other coun­tries. De­spite his busi­ness savvy, this would be a bad deal for the United States.

There is im­bal­ance in the trade re­la­tion­ship, to be sure, but China is now im­port­ing $130 bil­lion in mer­chan­dise from the US, an amount that’s in­creas­ing with China’s ris­ing mid­dle class and the surge of on­line pur­chas­ing.

This elec­tion year, Trump has been ever boast­ful of his busi­ness achieve­ments de­spite the mul­ti­ple bank­rupt­cies, as ev­i­denced by the enor­mous $900 mil­lion debt he ac­quired build­ing casi­nos in At­lantic City, New Jer­sey.

If Trump wins the elec­tion in Novem­ber and moves from the Trump Tower to the White House, we can ex­pect an­other bank­ruptcy, this time pos­si­bly of the US–China re­la­tion­ship. The au­thor is ex­ec­u­tive di­rec­tor of APCO World­wide, a for­mer Demo­cratic US con­gress­man and chair­man of the House For­eign Af­fairs Sub­com­mit­tee on Trade.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.