Joe Biden is a nice guy, they say, but his statement on China should alarm not just his campaign staff but the rest of us as well. After all, he might (if the gods are snoozing) become president.
Last week, the former vice president said this: “China is going to eat our lunch? Come on, man. They can’t even figure out how to deal with the fact that they have this great division between the China Sea and the mountains in the east, I mean in the west. [Those pesky directions.] They can’t figure out how they are going to deal with the corruption that exists within the system. I mean, you know, they’re not bad folks, folks. But guess what, they’re not competition for us.”
That’s dumb, man.
Or maybe devious. Readers of Peter Schweizer’s book, Secret Empires: How the American Political Class Hides Corruption and Enriches Family and Friends, may remember the account of Joe Biden’s son, Hunter, flying to China with his then-vice president father and 10 days later signing an exclusive mega-deal with the Bank of China, the most powerful financial institution in the country. No wonder Joe Biden doesn’t want folks focusing on China.
It is true that Biden’s comments may reflect the received wisdom on China of 20 years ago (when he was 56), but not now. Which raises the question: Is Biden simply out to lunch, covering for his son, or is he perhaps . . . a Chinese agent?!
Bob Mueller: Call your office.
While Biden has been snoozing, China has been developing cutting-edge military technology. As a U.S. defense intelligence analysis makes clear, although China’s double-digit economic growth may have slowed recently, it has served to fund several successive defense modernization five-year plans. In addition, China has sought to acquire technology by any means available.
As has been reported repeatedly in the U.S. press, China has required foreign partners of Chinese-based joint ventures to “share” their technology in exchange for the right to do business in China’s lucrative market. China has also used other means (e.g., theft) to secure technology and expertise useful to its military buildup.
The result: China is on the verge of fielding some of the most modern weapon systems in the world. In some areas, it already leads the world.
China also has a fast-growing economy (which has supported its military efforts), aided often by theft of intellectual property. The Chinese are investing heavily in tech talent. China has eight times as many STEM graduates as the United States has. Three of the top eight internet companies are Chinese, including Tencent, Ali Baba, and Baidu (which most Americans have never even heard of). The four largest banks in the world are Chinese. Last year the Chinese bought twice as many German luxury automobiles as we did.
During the Cold War there was a saying: if command economies worked, we’d all be speaking Russian. We’re not speaking Chinese, yet, partially because we still have freedom and the rule of law. And we live in a system that makes decisions democratically. But democracy has its own built-in challenges.
Ivory tower economists are always telling us that trading with China isn’t dangerous because trade deficits don’t matter. Trade deficits, they say, are an accounting concept. In markets with transparency and without tariffs or tariff-like requirements, a deficit doesn’t matter. Most discussions of “trade deficits” focus on the deficit in goods, where economists point out that there may be a surplus in payments for services (the “other ledger”). The usual “offset” is that when the U.S. purchases more from one country than that country purchases from the United States, the mirror image of that deficit in goods is a surplus of payments to foreigners.
Question: What are the foreigners going to do with the money (i.e., the claim on U.S. resources)? Often, but not always, they invest it in the United States, and often in real estate.
No problem, here, folks. Keep moving.
The real takeaway, however, is this: trade is making the Chinese rich. It’s rather odd to hear economists tell us that trading with China isn’t dangerous, when the economists have told us for years, and are still telling us, that trade makes nations rich.
Exactly! Trading with China has made them rich and will make them richer in the future, raising the question: Why do we want to make China rich?
Trade may not be the only way the Chinese are becoming rich: abandoning collectivism and the Communist economic system has assisted them dramatically, of course.
But the central question remains: Why should the U.S. trade with China if China is our enemy? Would the United States be poorer if it stopped trading with China? Of course. But we are so much richer than the Chinese that we could take that hit to our economy far more easily than the Chinese could. They may start discovering that this week.
The lesson here is at least that President Trump should drive a hard bargain in our trade negotiations with the Chinese.
Our democratic system may be far superior to theirs, both for encouraging production and for living free. But our system makes it vastly more difficult to have (i.e., to get Congress to pass) a defense budget that is adequate to meet the threat from our enemies; a governance problem China doesn’t have.
And still won’t have even if Joe Biden gets elected president. Everyone says Biden is a nice fellow. That may be, but that’s not enough.
Asked about a potential Biden-Trump match-up in 2020, Rudy Giuliani said, “Joe Biden is a moron. I’m calling Joe Biden a mentally deficient idiot.”
Asked by CNN’s Chris Cuomo why he had said that, Giuliani asked, “You mean that he’s dumb?”
“No,” said Cuomo, “that would have been a compliment.”
Giuliani explained: “I didn’t mean [that he was mentally deficient]. I meant he’s dumb. . . . Joe was last in his law school class.”
Cuomo attempted to rehabilitate: “He wasn’t last in his class. He was low.”
Giuliani: “Actually, he was second to last, and then the other guy died.”
Guess Biden’s not a Chinese agent after all, just a guy (and a devoted father) who finished last, or second to last, in his law school class.
Whatever. Biden, and our economist friends who are still promoting “free” trade with China, need to wake up and smell the rice paddies—before we have to fight in them.
Photo Credit: Drew Angerer/Getty Images