As Donald Trump continues to rack up state primary and caucus victories and appears to be the presumptive Republican candidate for president, it is important to understand the implications of what a Trump presidency would mean for U.S.-Chinese relations. This is the relationship between the world’s two largest economies and one that is fraught with difficult political, military, economic, hacking and technology issues. So far, it appears that he is completely lost on these issues. Here are five facts Donald Trumps gets wrong about China:
1. China Controls North Korea
“China has total control just about [over North Korea].” – Trump, CNN
It’s true the Chinese are the dominant economic supporter of North Korea but the North Koreans take severe measures when the Chinese push their influence too far. Dictator Kim Jong-Il executed his own uncle because he was getting too close to the Chinese. If anyone in Pyongyang advocates a bigger role for the Chinese, they die.
2. The United States can force China to act.
The U.S. “has great economic power over China and we just don’t know how to use it.” – Trump, CNN
Trump says we can essentially force them to do what we want. He ignores the fact that the Chinese are currently the second largest economy in the world. China has become the largest holder of U.S. government debt. Their reserves are shrinking but still exceed $3 trillion. They also have the world’s largest population with nearly 1.4 billion people. There is no way that we have ever been able to dictate to China and certainly cannot now.
3. Taxing products coming in from China can solve problems.
“I would certainly start to put taxes on goods coming in from China.” – Trump, Fox Business News
Trump wants to impose “taxes” on Chinese goods coming into the United States, which is a euphemism for some form of tariffs. But yet he says, “I’m a free trader.” That’s a complete contradiction. Free traders don’t believe in tariffs. And our experience with Japan has taught us that tariffs are too blunt an instrument. They hurt American consumers, among other things. Wal-Mart, Home Depot and many other major retailers would have to eat the taxes or, more likely, pass them onto consumers.
4. The Chinese are devaluing their currency.
“They are ripping us on trade. They are devaluing their currency.” – Trump, Fox Business News
Actually, the Chinese government has been trying to increase the value of its currency, or at least hold it steady, so that it can become an international reserve currency like the dollar and the Swiss franc. The yuan is up 0.9 percent so far this year. The major reason the currency has been under pressure lately is the exodus of capital from China, including money held by rich Chinese families.
5. Business magnate Carl Icahn will be a tougher negotiator with China.
“We have to negotiate great trade deals. I would get the best guys. Carl Icahn is a friend of mine. I’d say, ‘Carl, congratulations, handle China.’ I’d get other guys like Carl. I’d say, ‘Good luck, here’s Japan.’ Believe me, we will do so well.” – Trump, MSNBC
Trump says that Americans such as Carl Icahn are “our best and our finest” people and “these are the kind of people we should use to negotiate” with the Chinese. Icahn is a greenmailer who takes stakes in the stock of target companies and forces them to do things that benefit short-term shareholders–like Icahn. It is a reprehensible activity.
The Chinese would look at a Carl Icahn like he is from another planet. Icahn would have no credibility at all with the Chinese, given that “China’s Carl Icahn” was recently arrested for insider trading. The kind of Americans they respect are the ones who have deep insight into the Chinese language, history and culture.
Ultimately, a President Trump might be able to surround himself with people who actually know something about China. If he is starting off with such a negative and uninformed bundle of attitudes, it might be impossible for the U.S. government to maintain any kind of stability or balance in the relationship. That’s how bad things happen in the world.
About William J. Holstein
Bill was a foreign correspondent for three years in Hong Kong and Beijing, and he has been writing about China ever since. Most recently, he published “Has The American Media Misjudged China? 35 years after China’s opening to the world, some of the key assumptions that have guided coverage are being tested by the presidency of Xi Jinping.” Learn more about Bill.