TWN Info Service
on WTO and Trade Issues (Sept20/09)
Geneva, 8 Sep (D. Ravi Kanth) – The United States President Donald Trump appears to have ratcheted up pressure on China by threatening to intensify the ongoing “decoupling” of the US economy from China, as it would help the US to become the “manufacturing superpower of the world” and “end our reliance on China once and for all.”
At a press conference held in front of the White House on Labor Day holiday on 7 September, President Trump said that “we wouldn’t lose billions of dollars, if we didn’t do business with them (China).”
It’s called “decoupling,” he said, informing reporters that it is a term used by economists for a decade.
It is an “interesting word, so you will start thinking about it,” he argued.
With less than sixty days left before the crucial US Presidential elections, President Trump appears to be repeating his old strategy of “China-bashing” as he had done in 2016.
In his message to workers on Labor Day, President Trump has chosen to raise the spectre of China all over again in trying to permanently cut off all trading relations with Chinese firms and the Chinese economy.
Although he mentioned the “phase-one” trade agreement with China that was signed early this year under which US farm producers are able to sell billions of dollars of soybeans, beef and pork to Chinese consumers, President Trump said that “there’s been no country anywhere, at any time, that’s ripped us off like China.”
“We lose billions and billions of dollars for years and years, decades. We’ve lost billions and billions and billions of dollars by dealing with China. We get nothing from China,” President Trump claimed, suggesting that they take away “our money to build up its military, aeroplanes, and building ships, and building rockets and missiles.”
As he is trailing in the polls against his Democratic rival former Vice President Joe Biden according to various surveys, President Trump also intensified his tirades against China by saying that “Biden has been just a pawn for them (China).”
“He’s (Biden) been so easy. They dream about Biden. There was a report today that they hope that Joe Biden becomes President. If Joe Biden becomes President, China will own the United States, and every other country will be smiling also. They’ll be smiling.”
He claimed that China is making record purchases of US agricultural products, suggesting that Beijing is committed to increase its purchases of US agricultural and industrial goods as part of the phase-one deal.
Currently, its purchases are far behind the goals set in the trade agreement, he said, suggesting that he is not bothered with the Chinese overtures to please him.
The US President threatened to block American companies that out-source jobs to China from receiving federal contracts, and repeatedly vowed to bring manufacturing jobs and crucial supply chains back to the US.
“We will make America into the manufacturing superpower of the world and will end our reliance on China once and for all.”
Meanwhile, the Trump administration is expected to further escalate its tech war against China by reportedly considering adding China’s leading chip-maker to a trade blacklist.
The $300 billion chip trade between the US and China, which has already been subjected to several restrictions on Chinese telecom giant Huawei, could now include China’s largest chip company SMIC (Semiconductor Manufacturing International Corporation), according to American media reports.
Despite Trump’s threats of eliminating trade with China, data released by the US Commerce Department on 3 September has showed that the US trade deficit with the Asian country increased by $1.6 billion to $28.3 billion in July.
GROWING SUPERPOWER ENGAGEMENT IN HIGH FINANCE
Nevertheless, notwithstanding President Trump’s dire threats against China, there is a growing engagement by the leading Wall Street financial firms in the Chinese economy, according to a report in The Economist on 5 September.
It says that several American asset companies and financial firms such as BlackRock, a giant asset manager, and JP Morgan Chase are setting up shop in China.
“Far from short-term greed, Wall Street’s taste for China reflects a long-term bet that finance’s centre of gravity will shift east,” the magazine has suggested.
“And unlike in tech, both sides think they can capture the benefits of interaction without taking too much risk,” it has argued.
Despite the continued dominance of American capital markets, it says that “the trade war has shown the growing muscle of China in finance.”
“A big wave of IPOs (initial public offerings) is taking place in Hong Kong, often done by firms keen for an alternative to New York,” it has argued.
The American financial firms, which have tried hard for the past 30 years to enter the Chinese market, are now “betting that China is serious about welcoming foreign finance.”
The Wall Street firms are anticipating that China’s current account surplus would shrink soon, which may force China to attract more foreign capital.
“China’s ability to attract Wall Street firms during a bitter trade war shows the clout its capital markets have,” The Economist has pointed out.