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Trade Wars and False Assumptions

Trump and Xi will probably strike a deal not because they like each other, but because it is mutually beneficial for both men to do so. Only a small number of sabre-rattling D.C. nutjobs want an all-out war with China, but it’s a loud minority. They get a lot of airtime and they get to spook the markets because it makes for good television. But all that talk about economic decoupling, protectionism and military confrontation seriously undermines the cooperation that still exists between American and Chinese companies. It also highlights our insecurities as a nation.

The Chinese are in no position to challenge U.S. supremacy, but that’s probably not their objective anyway. At least not yet. And while we continue to fight never-ending wars in the Middle East, the Chinese are expanding their commercial influence, taking over vast markets in Europe, Latin America, and Africa (Read THIS and THIS and THIS). They have also resisted the urge of military expansionism, something the U.S. can’t seem to avoid. This irks conservatives because it contradicts their narrative of a warmongering China.

The ire is rooted in old assumptions, particularly the widespread belief that you can only get rich by embracing neoliberalism and American-style democracy. Equally moronic was the idea that China would become more democratic and pro Western as its economy grew because the Chinese people would fall in love with junk food and Hollywood blockbusters. It was a preposterous fantasy based on arrogance and self-congratulatory pomp. But you know what did happen? They became entrepreneurs. They also didn’t want their country to be a permanent source of cheap labor, so they moved up in the value chain, making the leap from manufacturing to high tech. Now the Chinese are tinkering with robotics, artificial intelligence, and computer chips.

China is not like the West and it will never be like the West. China is an old civilization, with rich traditions (e.g. Confucianism) and a wide array of historical references to draw from. Their extensive past has shaped their national identity in ways that our parochial Western eyes will never understand. The Chinese are very proud of what they have achieved in the last forty years and they are not done. Hundreds of start-ups are springing up allover China and they can now claim the world’s most valuable startup, which is why venture capital firms like Sequoia Capital and SoftBank are pouring money into the Chinese tech sector.

When Trump says China is “raping” America, the accusation is not only a provocation but a farcical play with history since it was the Chinese who suffered great indignities at the hands of Western powers (Read about the Opium Wars). But playing the victim could backfire on Trump if tariffs don’t have the desire outcome. It could also send the message that America is losing its competitive edge.

Disclosure: Long Tencent

 

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