Memo: China v America

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MEDIA TENDENCIES + TRENDS: US-CHINA COMMERCIAL RELATIONS

Date: October 19, 2018

China v America

"How the world’s two superpowers have become rivals"

"China, United States discussing arrangements for meeting on November 29 in Buenos Aires, insiders say"

The Economist cover story this week looks at the growing rivalry between China and the United States.

For the past 25 years, America's senior government and corporate leaders have believed that economic integration would make China not just more prosperous, but also more liberal, pluralistic, and democratic.

Now conventional wisdom at the highest levels of American academia, think tanks, boardrooms, and elected offices belief this is not the case.

Today, many in hallways of American power, have come to see China as a strategic rival who breaks the rules, advances militarily, steals intellectual property, and dumps cheap commodity products into more advanced Western markets.

The Economist reports: "Today convergence is dead. The Trump administration accuses it (China) of interfering in America’s culture and politics, of stealing intellectual property and trading unfairly, and of seeking not just leadership in Asia, but also global dominance. It condemns China’s record on human rights at home and an aggressive expansion abroad. This month Mike Pence, the vice-president, warned that China was engaged in a “whole-of-government” offensive. His speech sounded ominously like an early bugle-call in a new cold war.

"America fears that time is on China’s side. The Chinese economy is growing more than twice as fast as America’s and the state is pouring money into advanced technology, such as artificial intelligence, quantum computing, and biotech. Action that is merely daunting today—to stem the illegal acquisition of intellectual property, say, or to challenge China in the South China Sea—may be impossible tomorrow.”

President Donald Trump since the earliest days of campaigning for the Oval Office has cited China as America's most severe and determined competition one who will manage the world for the next 20-30 years.

Many of his voters and even commonsense busniesspeople believe Trump and his administration is right to think that a strong America needs to challenge China’s behavior.

Challenging such behavior, while at the same time engaged in tit-for-tat trade frictions, coupled with hotter rhetoric somehow needs to exist in a way that supports American free market values as well as work with its commercial and military allies.

With both sides waiting to see how the US midterm elections play out, news reports today suggest Chinese President Xi Jinping and President Trump have tentatively agreed to meet on the sidelines of the G20 leaders’ summit in Buenos Aires next month.

An initial date of November 29 has been discussed - the day before the summit formally gets underway.

If confirmed, it would be the first face-to-face meeting between the two leaders in nearly a year and may suggest both Washington and Beijing are ready to de-escalate the trade tensions.

Articles to read:

The Economist: China v America: The end of engagement: How the world’s two superpowers have become rivals. https://econ.st/2OxWPBX

The Economist - Chaguan (David Rennie): China is misreading Western populism: The leaders of the People’s Republic sometimes lose sight of people. https://econ.st/2J9wLHq

Will tariffs and trade policy make a difference this election?

News reports and current polling suggest a mixed message.

Sure, there have been plenty of headlines on the subject, but there is currently no clear example that trade and tariffs are the top issues on voters' minds as they head to the ballot box.

From the nation’s farm belt to America's manufacturing hubs, especially communities where Americans are personally feeling the fallout from the Trump administration's duties on imported aluminum, steel, and other goods, tariffs and trade have emerged as a pivotal issue, just not the most pivotal issue in the midterm elections.

Eighteen percent of voters listed trade wars and 17 percent cited tariffs among the issues that concern them the most in a national survey conducted in late August and early September.

Health care, education, and infrastructure were the top issues on the minds of voters surveyed by the Alliance for American Manufacturing, a non-profit, non-partisan partnership formed by some American manufacturers and the United Steelworkers.

Even in places such as Iowa, the center of the farm belt, tariffs and trade are not the dominant issues on voters’ minds.

Iowans listed health care and education as the most critical issues for the next governor to address in a Des Moines Register/Mediacom Iowa Poll released last month.

In Wisconsin, which has a sizable agriculture and manufacturing base, 31 percent of voters say increased tariffs on steel and aluminum imports will improve the economy, and 52 percent say they will hurt, according to a Marquette Law School poll in September.

Tariffs may not be the most pressing concern for most voters, but they are an issue.

Republicans who supported Trump’s trade policies are taking political heat from their political opponents and voters worried about the tariffs’ impact on their livelihoods - especially long term.

Could tariffs and trade be the factors that tip the election in a close contest?

In tight races, everything matters.

So, yes and no - trade and tariffs matter.

Look for the post-election analysis to be colored by those who see tariffs as evil and those who see tariffs as good when reading their election analysis.

With the prospect of the Democrats taking the House and the Republicans keeping the Senate - even possibly expanding seats - the American voter will send mix messages.

What won't be mixed is that more and more American voters will continue to believe - and receive continued political support from elected officials - that China is a strategic competitor - it is just the tactics to challenge China that will be debated.

-Marc A. Ross

Marc A. Ross specializes in thought leader communications and events for senior business executives working at the intersection of globalization, disruption, and politics.