August 6, 2019
It is past time we stop talking about a possible war with China and realize we
have been there for some time. Their worldview and their resources have
been concentrated on disrupting ours for at least two decades. China locks
its people in and works them to the bone for one sixth of U.S. GDP per capita
(unadjusted) while we debate about free health care, free college and open
borders. Xi is more polished than Mao, no less of a totalitarian and a far more
ambitious colonialist. Trump was scoffed at three years ago when he warned
that China was a currency manipulator, stealing our technology, and building
military bases in the South China Sea in violation of international law. These
are only a few of the fronts in this war. The belt and road initiative is thinly
veiled new age colonialism. Build “free” assets in foreign lands and use them
to control the economies and politics of your host. So it is with port facilities in
Cambodia, energy from Venezuela, the largest foreign investor in Brazil, and
$60 billion invested for natural resources from Africa.
Who is propping up North Korea and doing nothing to curb its nuclear
ambitions? Should we imagine for a moment that North Korea is less a
dependent and puppet of Xi than they were of Mao? What was the route
through which Iran’s centrifuges arrived? When we speak to China of world
co-operation on climate change, they speak of all their high-speed electric
trains and Tesla’s but do they mention their new coal fired power plants built
to generate the electricity? And what is going on in Hong Kong if not a
preliminary to the subversion of Taiwan?
We might also ask why is China building a nuclear navy; already 27 nuclear
submarines and now Aircraft Carriers, one commissioned in 2012, one now
in sea trials and a third planned for 2022. Clearly these are not competitive
with the 430 ship U.S. Navy but enough to dominate the neighborhood and
hopefully keep a risk averse U.S. from interfering.
Obama and his immediate predecessors were all Chamberlain. “If we work
with China they will become more like us!” How did that work with the last
seekers of world hegemony? Xi is more sophisticated and deliberate than
Hitler, and his ambitions are no less dangerous.
In our corner we have Donald Trump. He understands the threat that all
others in the world were ignoring. He saw the hollowing out of our technology
leadership. He sees the dependence of unbalanced commerce enabling China
to compete unfairly and to own too much of our debt. If there is any doubt
the competition is unfair, remember China is not free. The Government and thParty own and control and finance everything. They print money at will and repress their people to control prices. Western corporations are putty in their hands when they do business in China or try to compete elsewhere. Trump sees that we must use our power to defeat evil empires, not just call them names. “Xi is my friend.” “I love Kim.” “I believe Putin.” He will talk nice as long as there is progress. But he simultaneously makes sanctions work with all three plus the Iranian mullahs and Venezuela with little help from our still sleeping allies. Nobody predicted we could accomplish what he has. Too few understand it.
The talking heads strut and fret upon the stage. “What will who do next?”
“We need international cooperation.” “How much will tariffs cost us?” When
China devalues, in China an American product that used to cost ¥6 will now cost ¥7.
In America, a Chinese product that used to cost $1 will now cost 86 cents plus the tariff.
The devaluation helps China to keep selling us stuff by subsidizing the tariff.
Trump contradicted the talking heads and told us that China would pay the bill. The devaluation hurts Americans selling to China as it doubles down on the cost of the tariff to Chinese consumers. Some Americans will have to find other markets. In the short term China seems to win, but devaluation’s flip side is loss of assets and weakness in the long term. Meanwhile it is fair that we soften the disproportionate cost to soybean farmers.
The players at the table, Xi and Trump, are both several moves ahead of the
talking heads and the press. We have the advantage of human resources
that know and use freedom. We still have technology leadership, wealth, and
systemic financial power. On every front, China has been frustrated, but they
have a strong will and centralized power. They will not yield easily. The game
continues but it is not a game, it is war. It hopefully will not be much of a
shooting war but it will be long and hard and have many dimensions.
This war need not end in defeat for China. Winning for us means teaching
China that if they choose to trade as gentlemen in a community of lawful and
honest nations, they will be welcome. If they choose to live in a ruthless and
dishonest world, they will always find a stronger adversary who will make that
an unwise choice. The stakes are no less than Western Civilization itself and
we are its only hope. All of us are soldiers. Fortunately we have a leader at
the helm who will no longer give an adversary permission to take advantage
and who has the will to win. Lets hope we the people do as well.
Michael Moffitt
August 6, 2019