Re­set for US-China re­la­tions

The Pak Banker - - OPINION -

Two re­cent de­vel­op­ments presage a forth­com­ing regime change in Wash­ing­ton - a change that needs no help from the Na­tional En­dow­ment of Democ­racy, whose man­date to in­cite change of gov­ern­ments does not in­clude the US, in any event.

The sur­prise ar­rest of Steve Ban­non last week could sig­nify the loos­en­ing of an­other cot­ter pin in the Don­ald Trump ma­chine. Ban­non, for­mer cam­paign strate­gist and in­ti­mate ad­viser for Trump, has been charged with em­bez­zle­ment and money-laun­der­ing. If con­victed, he will be­come the lat­est to join Pres­i­dent Trump's in­ner cir­cle of crooks.

Will Ban­non squeal?

US fed­eral pros­e­cu­tors charged Ban­non and three oth­ers with skim­ming mil­lions from a fund raised to build a pri­vate ver­sion of the bor­der wall fac­ing Mex­ico. If con­victed, Ban­non could be in for 10 to 20 years in the slam­mer. Ac­cord­ing to one ver­sion of their re­la­tion­ship, Trump is es­tranged from Ban­non for not shar­ing a "li­cense fee" for steal­ing his idea of the wall and for tak­ing the lime­light away from The Don­ald. Trump called the pri­vate wall project "show­boat­ing." Thus Ban­non may not be able to count on a pres­i­den­tial par­don to get out of jail.

His other op­tion is to sing vig­or­ously to the fed­eral pros­e­cu­tors in ex­change for a lighter prison sen­tence. By telling them all he knows about the ne­far­i­ous shenani­gans of Trump and his in­ner cir­cle of crooks, the wheels of the Trump cam­paign could be com­ing off even be­fore the Novem­ber elec­tion.

The other ma­jor de­vel­op­ment is the for­mal nom­i­na­tion of Joe Bi­den as the pres­i­den­tial can­di­date for the op­po­si­tion Demo­cratic Party. His ac­cep­tance speech was force­ful, for­ward-think­ing and hard-hit­ting. He showed none of the signs of a dod­der­ing old man that Trump likes to at­tribute to him.

In­stead, Bi­den spoke about what he would do as pres­i­dent to bring the Covid-19 pan­demic un­der con­trol, put the econ­omy on sound foot­ing, face cli­mate change as op­por­tu­ni­ties for new high-pay­ing jobs, and con­tinue to fight for racial jus­tice. Not once in his 25minute ad­dress did he brag about him­self. The dif­fer­ence be­tween him and Trump, to use Bi­den's words, is the dif­fer­ence be­tween light and dark.

As the in­com­ing pres­i­dent, Bi­den will face the daunt­ing task of un­do­ing the dam­age wreaked by four years of cor­rupt and in­com­pe­tent mis­rule.

De­spite the stock mar­ket hit­ting new highs, the US econ­omy is in ter­ri­ble shape. Un­em­ploy­ment is at a record high and small busi­nesses are be­ing forced to close at un­prece­dented rates.

Bi­den will need China To re­store the econ­omy, the Bi­den ad­min­is­tra­tion will need to work with ev­ery part of the global econ­omy, es­pe­cially with China. China is the sec­ond-largest econ­omy and the first to re­cover from Covid-19. The Chi­nese and US economies are closely in­ter­twined. China's re­cov­ery will have a pullthroug­h ef­fect for the re­cov­ery of the Amer­i­can econ­omy.

Pro­vided, of course, that Bi­den can undo Trump's zero-sum con­fronta­tion with China, a con­fronta­tion that never made sense from its in­cep­tion. Im­pos­ing im­port du­ties on Chi­nese goods was sup­posed to pe­nal­ize Chi­nese man­u­fac­tur­ers. In­stead, it's the Amer­i­can con­sumer who is pe­nal­ized by hav­ing to pay more for prod­ucts im­ported from China.

The net im­pact is to raise the cost of liv­ing for all Amer­i­cans.

In­creas­ing the cost of pro­duc­tion for China was sup­posed to en­cour­age the re­lo­ca­tion of man­u­fac­tur­ing back to the US. Since la­bor-in­ten­sive, low-value man­u­fac­tur­ing shifted to Asia decades ear­lier, the Trump tar­iffs sim­ply forced the off­shoring man­u­fac­turer to look for other low-cost coun­tries, such as Viet­nam and Bangladesh.

Amer­i­can work­ers con­tinue to be among the world's high­est paid, and those ex­pect­ing off­shore pro­duc­tion to move back are naive or suf­fer­ing from se­ri­ous delu­sion.

The Trump ad­min­is­tra­tion waged the trade war as if China was not sup­posed to re­tal­i­ate, but China most cer­tainly did. Con­se­quently, Amer­i­can farm­ers are pay­ing the price for los­ing ac­cess to their largest mar­ket. Af­ter two years of re­duced sales and in­come, some have gone bank­rupt and oth­ers are won­der­ing how to sur­vive an­other plant­ing sea­son.

US Sec­re­tary of State Mike Pom­peo has pushed China to the brink of war based on three doubt­ful if not wildly off-base premises.

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