Rea­son for op­ti­mism in gloomy trade war

Global Times US Edition - - FORUM -

Edi­tor’s Note:

As trade ten­sions be­tween China and the US es­ca­late and an in­creas­ing num­ber of an­a­lysts tend to be­lieve that no sil­ver lin­ing can be seen in years to come, Stephen Or­lins (Or­lins), pres­i­dent of the Na­tional Com­mit­tee on Us-china Re­la­tions, noted he is still op­ti­mistic about the bi­lat­eral re­la­tion­ship in the long run. Why is he an op­ti­mist against such a gloomy back­drop? What can both sides do to ease ten­sions? Or­lins shared his views with Global Times (GT) re­porter Li Aixin on these is­sues in an ex­clu­sive in­ter­view dur­ing The Third Taihe Civ­i­liza­tions Fo­rum held in Bei­jing over the week­end. GT: China and the US have be­gun im­pos­ing ad­di­tional tar­iffs on each other’s goods since Septem­ber 1. Some say that the two coun­tries are run­ning out of tar­iff cards, do you think the tar­iff war might spill over to other fields? Or­lins: I think it’s the op­po­site. I think the other fields have af­fected the trade dis­cus­sions. I think that the de­te­ri­o­ra­tion in the na­tional se­cu­rity re­la­tion­ship, the de­ci­sion in De­cem­ber of 2017 to brand China a strate­gic com­peti­tor and China’s re­sponse to that has led to the trade war be­ing more intense.

If you look at the Huawei ban, it’s a trade is­sue, but the pres­i­dent of the US said that the sale of Huawei goods in the US was a na­tional se­cu­rity is­sue. Then it be­came a trade is­sue. I think that both the na­tional se­cu­rity is­sues, the po­lit­i­cal is­sues flow on to the trade is­sues and they flow back. It’s re­ally not one way or the other. It’s both ways. GT: What do Amer­i­cans and US com­pa­nies think of US Pres­i­dent Trump’s move to es­ca­late the trade war? Or­lins: Clearly, the com­mon per­son in the US does not ben­e­fit from the trade war. But there is, es­pe­cially among the po­lit­i­cal base of Pres­i­dent Don­ald Trump, there is a be­lief that even though they have to eat bit­ter­ness, they have to lose sales of soy­beans or corn or grain to China. They feel it’s worth it in or­der to have a level play­ing field with China. GT: Will it play a role in Trump’s next move? Or­lins: Yes, it will af­fect the de­ci­sion of Pres­i­dent Trump, whether to roll back the tar­iffs, to main­tain the tar­iffs, or to in­crease the tar­iffs. I think it’s go­ing be a com­bi­na­tion of the po­lit­i­cal pres­sure that is brought on him and the trade war’s ef­fect on the US stock mar­ket.

The pres­i­dent speaks about it very of­ten. He uses the Dow Jones In­dex and the S&P 500 In­dex as his grade for how he’s do­ing. When we break new records in the stock mar­ket, he says, “You see, I’m do­ing a great job, the stock mar­ket is reach­ing a new high.” Then when he spoke about the tar­iffs, we saw the stock mar­ket go way down. And now it’s start­ing to creep back up again, as peo­ple be­lieve we may have some progress in the talks in early Oc­to­ber. GT: The Wall Street Jour­nal re­cently pub­lished an ar­ti­cle en­ti­tled “Has Amer­ica’s China Back­lash Gone Too Far?” What is your view on this? Do you think it has gone too far? Or­lins: I think US pol­icy to­ward China dam­ages the Amer­i­can peo­ple. I think our cur­rent poli­cies to­ward China are bad for the over­whelm­ing ma­jor­ity of Amer­i­cans. They may be good for a tiny seg­ment of Amer­ica, but they’re bad for most Amer­i­cans. So I see ac­tions that are taken that I find very dif­fi­cult to un­der­stand.

It’s dif­fi­cult to un­der­stand. In part it’s driven by Chi­nese gov­ern­ment’s poli­cies that have grad­u­ally frus­trated peo­ple in the Congress, in the busi­ness com­mu­nity, in NGOS, in academia. So those poli­cies have put a foun­da­tion un­der those who want to get very tough with China.

But these tar­iffs hurt av­er­age Amer­i­cans. If they are in­creased on De­cem­ber 1, they will sig­nif­i­cantly af­fect poor Amer­i­cans.

If you think about tar­iffs on con­sumer goods, ul­ti­mately the price has to be passed on to the con­sumer, de­spite what the pres­i­dent says about China pay­ing those tar­iffs. Ul­ti­mately the Wal­mart cus­tomers, the Costco cus­tomers have to pay more. The es­ti­mates are now that they’re go­ing to have to pay about $800 to $1,000 more per fam­ily. Now if you’re rich Amer­i­cans, $800 or $1,000 doesn’t re­ally mat­ter. But if you are mak­ing $15,000 or $18,000 a year, an in­crease of $1,000 means you can­not buy all the goods. You gotta make a choice. Do I buy a new pair of pants? Or do I buy a new pair of shoes? So I think these poli­cies are ter­ri­bly un­fair to poorer Amer­i­cans.

I think the Na­tional De­fense Strat­egy, which de­fines China as a strate­gic com­peti­tor and has now led to our spend­ing $750 bil­lion on de­fense, and has led China to re­spond by in­creas­ing its ex­pen­di­tures on de­fense, hurts both so­ci­eties.

When you spend so much on de­fense, where do you get the money to re­build your in­fra­struc­ture? Where do you get the money to fund ed­u­ca­tion? Where do you get money for poverty al­le­vi­a­tion? Where do you get money for all of these things? What’s hap­pen­ing is we’re see­ing a di­ver­sion of re­sources from where the US needs it and where China needs it into our de­fense bud­gets.

I com­mute on the sub­way ev­ery day to work in the US in New York, I see the fail­ure to fund in­fra­struc­ture. Amer­ica’s in­fra­struc­ture is pa­thetic. It dates from the 1950s and 1960s and doesn’t have new tech­nol­ogy. The sig­nal­ing sys­tems in the New York sub­way sys­tem date back decades. When I take the train to Wash­ing­ton, the track is so bad that it shakes and I get dizzy by the time I ar­rive in Wash­ing­ton three hours later. If that were in China, I would ar­rive in less than 45 min­utes. Wash­ing­ton to New York takes me three hours. I would take the money that we’re spend­ing un­nec­es­sar­ily on the strate­gic com­pe­ti­tion and di­rect it into things that help the peo­ple. What’s hap­pen­ing in this pol­icy is it has lost sight of the peo­ple.

I am tough on the US gov­ern­ment be­cause I be­lieve that a con­struc­tive Us-china re­la­tion­ship helps the peo­ple of the US. It also helps the peo­ple of China. But my pri­or­ity is the peo­ple of the US. Peo­ple al­ways ask me, who do I rep­re­sent? The Amer­i­can peo­ple. Who speaks up for the Amer­i­can peo­ple to­day, as our so­cial pro­grams, our in­fra­struc­ture, our ed­u­ca­tion are all un­der­funded? GT: You said that we should be more op­ti­mistic about the China-us re­la­tion­ship even if it is go­ing through hard times now. In what ways do you think the two can start get­ting out of the cur­rent predica­ment? Or­lins: There are a lot of lit­tle things that can be done that could then be­gin to im­prove the re­la­tion­ship.

There are many prob­lems that ex­ist to­day in China, your publi­ca­tion and other pub­li­ca­tions re­fer to the US as the black hand in a lot of its prob­lems. That’s not the case, but it be­comes the nar­ra­tive. In the US, the nar­ra­tive is ev­ery­thing that China does is bad – it’s try­ing to kick the US out of East Asia; it’s hurt­ing all of these busi­nesses. The pos­i­tive sto­ries in both China and the US are never told. What the gov­ern­ments need to do, what or­ga­ni­za­tions like ours need to do is to cre­ate pos­i­tive news.

There are a lot of lit­tle things that could be done to cre­ate kind of a pos­i­tive mo­men­tum in the short term. The rea­son why I’m an op­ti­mist in the long term is be­cause of the Amer­i­can and Chi­nese [peo­ple]. The peo­ple of each coun­try still have strong bonds.

We have 360,000 Chi­nese col­lege and grad­u­ate stu­dents in the US. We have tens of thou­sands of Amer­i­cans here. We have nu­mer­ous kinds of re­la­tions be­tween the Chi­nese and Amer­i­can peo­ple. And in the end, they are go­ing to come to the con­clu­sion that a co­op­er­a­tive re­la­tion­ship is nec­es­sary to deal with the threats to their lives.

What I al­ways say is a mother in Shang­hai and a mother in New York have the same fears for their chil­dren. I was driven out of my home by a cli­mate change storm called Sandy that flooded my home and af­fected my life, the life of my chil­dren. I lived through 9/11 ter­ror­ism. The Chi­nese lived through the mas­sacre in the Kun­ming rail sta­tion. Ter­ror­ism is a com­mon fear. We all lived through Ebola. We saw how Amer­i­can and Chi­nese sci­en­tists jointly fought this pan­demic. And then the eco­nomic crisis of 2008 kind of made moth­ers fear for the eco­nomic op­por­tu­nity for their chil­dren. And those are the real threats, not the South China Sea, not Tai­wan, not a strate­gic ri­valry. Peo­ple will ul­ti­mately re­al­ize that.

I have great con­fi­dence in the peo­ple. The way it works in the US is that democracy works slowly, but it ul­ti­mately reaches the right con­clu­sion. And the right con­clu­sion is go­ing to be a co­op­er­a­tive re­la­tion­ship be­tween the US and China, not this de­cou­pling, not the cre­at­ing of two tech­no­log­i­cal ecosys­tems. Be­cause that’s go­ing to slow eco­nomic devel­op­ment in both China and the US.

Peo­ple are go­ing to rec­og­nize that and it’s go­ing to hap­pen while I am still alive.

Stephen Or­lins

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