Trump right to shake up status quo by taking call from Taiwan

Donald Trump is mostly wrong about China. But he was right to accept the congratulatory call from Taiwan President Tsai Ingwen. It was right if for no other reason than to make the point that the Chinese government doesn’t have a veto power over the schedule of the U.S. president.

Astonishingly, the Chinese government asserts such a power. It regards any official interaction with Taiwan or the Dalai Lama of Tibet as intervening in China’s internal affairs and throws a conniption. More astonishing, American presidents since Jimmy Carter have largely ceded the Chinese government that power.

If Trump was doing nothing more than announcing his emancipation from such limitations on his scope of action as the elected leader of a sovereign United States, that’s a welcome development. And better to do it as president-elect, when the stakes are lower and there is time to digest it, than to wait until he is president.

Does that risk retaliatory action by China against Taiwan? Perhaps. But that is something for the Taiwan government to weigh and consider. It is their territory and people who are at risk.

If the democratically-elected leadership of Taiwan concludes that its geostrategic position is strengthened, not weakened, by making a congratulatory call to the president-elect of the United States, the president-elect should accept it.

Taiwan is an admirable sovereign state. The United States shouldn’t pretend it doesn’t exist.

Despite being internationally isolated, Taiwan has a high-performing market economy. Since the end of the dictatorship of Chiang Kai-shek, who died in 1975, the country has developed a competitive democracy, with peaceful transfers of power between parties.

Taiwan is one of the Asian tigers, notably including Japan and South Korea, which proved that democratic capitalism can succeed even when not embedded in a Western culture.

When Carter abrogated a military treaty with Taiwan, Congress, led in significant part by Arizona Sen. Barry Goldwater, replaced it with the Taiwan Relations Act, which remains in force today.

The Act commits the United States’ government to treat Taiwan, for all legal and practical purposes, as a sovereign country. To “make available” defensive arms for Taiwan’s self-defense. And to maintain the “capacity” to come to Taiwan’s aid if attacked. All that, but no phone calls? Some fear, and others hope, that the call is just an opening shot of a gettough policy by Trump against China.

During the campaign, Trump vowed to declare China a currency manipulator, depreciating the yuan to promote exports. That’s a false charge.

A stable currency is a prerequisite for economic growth. China has followed a loose peg to the U.S. dollar. That’s a practical shortcut to a stable currency for a country in which truly independent institutions, such as a central bank, are impossible.

Right now, China is intervening in markets to prop up the value of the yuan, which has been falling alarmingly relative to the dollar and other currencies. And it has had to reinstate capital controls to staunch the flow of investment funds out of the country.

Trump is also wrong about the net economic effect of Chinese imports to the United States. They have significantly increased the purchasing power of American consumers, particularly the lower middle-class that has supposedly been left behind by globalization.

There is, however, plenty about China that’s worrisome. It does deny fair access to its markets. It engages in serial cyber and other theft of intellectual property. Its territorial ambitions threaten the peace of the region.

China’s ascent may be on the edge of stalling out. Taiwan’s GDP per capita is $46,800. China’s is just $14,100. China’s system of state capitalism won’t be able to bridge that gap. And in the other Asian tigers, the transition to a consumer-driven economy was accompanied by an opening up politically as well. There’s no reason to think China can be different.

Given the stakes and uncertainty, the U.S. approach to China should be cautious and careful. But that shouldn’t include treating Taiwan as a pariah.