President Trump wanted a sweeping deal with the Chinese government that would attack the heart of its state-led technology-based bid to assert global supremacy. He said publicly that he wanted President Xi Jinping to come to a flashy summit where the two men would sign a deal that gave the Americans what they wanted. Trade wars were easy to win.
Instead, the Chinese dragged out the talks for more than a year until political and economic pressures started to mount on the American president as he entered an election year. Now lower-level Chinese negotiators are coming to Washington to sign a so-called Phase One deal, denying Trump the photo opp and the symbolismm he so clearly wanted.
And the deal itself is thin. From what we can tell, the Chinese will resume large-scale agricultural purchases and will make some sort of promise about ending forced technology transfers. This later provision is clearly unenforceable because there are so many informal ways the Chinese drain technology out of joint ventures that American companies enter inside China.
The Chinese also prevailed upon the Trump Administration to declare that China is no longer a currency manipulator. We can debate the real significance of having such a list, but the Chinese clearly seek to manage the value of their currency within certain ranges. Why did the Trump administration back down on that? That was a clear concession.
The real heart of the problem America faces with China is untouched by this agreement and there is zero chance that a subsequent administration will persuade the Chinese to back away from what they regard as a winning strategy–using their huge wealth to seize dominant positions in critical technologies. And because President Xi Jiping has declared a “civil-military fusion,” these technologies will find their way into the People’s Liberation Army. Chinese hacking of America’s Information Technology infrastructure will continue as will efforts to plant and recruit agents in American companies and governmental institutions, as I describe in my book The New Art of War: China’s Deep Strategy Inside the United States, seen here. I hear almost zero debate about how we must harden our IT targets and move more quickly to develop key technologies while remaining true to our core values as a society. We are deluding ourselves as a nation if we portray the Phase One trade deal as anything more than a political token.
