Greatness Agenda

Con: ‘Phase One’ Is a Cave to China

The administration’s deal with China, is a poison chalice and indicates blinkered thinking.

Boris Johnson, the purported populist-right champion and celebrated British partner of the Trump Administration, made a decision Wednesday that got little press this side of the Atlantic: his government will defy Washington and allow technology produced by Huawei, an agent of the Chinese state, to be used in the production of his nation’s new 5G network.

The announcement likely to come from Johnson, an opportunist par excellence, will encapsulate the limitations of Washington’s present overcautious course toward China, America’s only real rival. As we enter the third decade of the century—in spite of valiant efforts by some in the administration—the writing on the wall is clear: more countries, even our most vaunted allies, are choosing China over the United States. International relations is defined by little else than power, and America is seen, rightly, as playing a weak hand, one mostly of our own making.

As the administration counterproductively escalates with respect to Iran—a waste of time—it’s poised to take their eye off the ball in China. The “Phase One” trade deal with Beijing, which can be viewed charitably as a truce, and cynically as a capitulation to calm markets ahead of the election, should be treated with suspicion.

[Another view: President Trump Poised to Make History with ‘Phase One’ Trade Deal]

The economies of the world’s Goliaths will decouple, this decade, if not next. History will look poorly upon those who forestalled the inevitable and put profit over national interest.

A soft line toward Beijing—and continued, ruinous integration with an ethnonationalist power—puts America on its back foot when the Chinese, possibly teamed with the Russians, are ready to dump us. As a politically cowed administration enacts the most ruthless sanctions on Russia since Reagan, we push Moscow ever closer into the grasp of Beijing.

Think of Nixonian statecraft, the opening to China, only the opposite.

Rather than dividing Eurasia’s great powers, American elites have functionally united them: against us. If the duo, Vladimir Putin and Xi Jinping, ever join forces the result will be to savage America’s reserve currency status—the supremacy of the dollar that undergirds our massive deficits. Doing that they could plunge the United States into an instant depression. The historian Alfred McCoy predicts the maneuver will come before the end of the decade.

Donald Trump promised a paradigm shift on China, and he has delivered. Win or lose in November, any Trump successor, even the out of touch Joe Biden, will be loath to reverse the reality: the America-China conflict is the challenge of the century. Related profiteering by American firms, off Chinese slave labor, can and should be put to an end.

But for all the administration’s efforts, directed primarily by the talented trade envoy Robert Lighthizer, “Phase One” falls well short. That the Chinese sent Liu He, Lighthizer’s trade envoy opposite, and not Xi, to seal the deal with Trump, says all you need to know. For all the talk, Beijing views Washington as too short-term and blinkered in its thinking; the Chinese predict we fall well short of the challenge. Unfortunately, there’s no evidence to suggest they’re wrong.

The historian Stephen Kotkin asks: Why does the United States bomb the Middle East? Because we can. Why does the United States sanction Russia? Because we can’t bomb them. What does the United States do to China, our primary competitor? Absolutely nothing.

The president’s more business-minded advisors, namely his ambitious treasury secretary, Steven T. Mnuchin, allied with Iran-obsessives including Secretary of State Mike Pompeo and Vice President Mike Pence, are perfectly sanguine about the deal. The troika console China hawks that Trump will put the screws to Xi after the election.

There are two problems with this view.

First, it arrogantly presumes Trump’s victory, an unclear prospect, especially if the president cedes the mantle of the enemy of neoliberalism to Bernie Sanders, who is looking more and more like the Democratic frontrunner for the nomination. The warm words for the president out of Davos this week should be viewed by his team as a distressing, negative indicator.

Second, and finally, he’s the president now. Trump’s place in history is assured, but unlike his predecessor, Barack Obama, who saw his domestic and foreign policy legacies demolished, Trump can ensure it’s truly meaningful, by cementing a true shift on China.

“Phase One” isn’t doing him any favors.