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ABullNamedTrumpinaShopCalledChinabyYashengHuangProjectSyndicate

WORLDAFFAIRS
YASHENGHUANG
YashengHuangisProfessorofGlobalEconomicsandManagementattheMITSloan
SchoolofManagement.

JAN3,2017

ABullNamedTrumpinaShop
CalledChina
CAMBRIDGESomeofUSPresidentelectDonaldTrumpsnastiestattackshavebeen
directedatChina.HehasaccuseditofrapingtheUnitedStateswithitstradepolicies,
andofcreatingglobalwarmingasahoaxtoundermineUScompetitiveness.Why,then,
aremanyChinesepolicyadvisersandcommentatorssanguineaboutfutureUSChina
relations?
ThereasoningseemstobethatTrumpisabusinessman,and,toparaphraseUSPresident
CalvinCoolidge,thebusinessofChinaisbusiness.China,thethinkinggoes,canworkwith
aswashbucklingdealmakerlikeTrumpbetterthanwithasupposedlyideological
HillaryClinton.
ManypeoplewouldbesurprisedtoseeClintoncategorizedasanideologue.Andthereis
scantevidencetosupporttheclaimthatbusinesspeoplesomehowembodypragmatism,
giventhatsomanypowerfulUSbusinessleadersarecommittedideologues.TheKoch
brothers,forexample,stubbornlyclingtoimpracticalandthoroughlydebunked
libertarianideas,andnumerousFortune500CEOsinstinctivelysidewithRepublicans,
eventhoughtheUSeconomyconsistentlyperformsbetterunderDemocratic
administrations.AndoneshouldnotforgetAndrewWilliamMellonsinfamousand
recklessadvicetoformerUSPresidentHerbertHooverontheeveoftheGreatDepression:
liquidatelabor,liquidatestocks,liquidatefarmers,liquidaterealestate.

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ABullNamedTrumpinaShopCalledChinabyYashengHuangProjectSyndicate

TherevelationthatTrumpandPresidentTsaiIngwenofTaiwanspokebytelephonehas
probablynowshatteredanyresidualhopethattheincomingUSadministrationwillbe
anythingbutabullinaChinashop.Thatphonecallviolatedaprotocolavoidanceof
directcontactbetweentheUSandTaiwanatthepresidentiallevelthatAmerican
presidentsfrombothpartieshavecarefullyobservedforfourdecades.
TrumpsdiplomaticbreachsentshockwavesacrossAsia,whichhethenaggravatedby
asking,inaseriesoftweets,ifChinaconsultedwiththeUSbeforedevaluingitscurrency
orbuildingamassivemilitarybaseintheSouthChinaSea.
ButbycallingintoquestiontheOneChinapolicy,Trumpisplayingwithire.Carefuland
deftmanagementbybothRepublicanandDemocraticadministrationshashelped
maintainthefragilepeacebetweenChinaandTaiwan.FortheUS,theprimaryobjectiveis
tomaintainthestatusquo,bydissuadingTaiwanfromactivelyseekingindependenceand
discouragingChinafromforcingTaiwanintoaspeedyreuniication.
Inanothertweet,TrumpaskedwhyheshouldntengagewithTaiwanatthepresidential
levelwhentheUSissellingTaiwanbillionsofdollarsworthofweapons.Feignedornot,
suchbaflementfromtheAmericanpresidentelectistrulyworrying.TheUSsellsTaiwan
militaryequipmentmostlyforselfdefense,andasasignaltoChinathattheUSwillnot
standidlybyintheeventofChinesemilitaryactionagainsttheisland.ButtheUS
deliberatelyattenuatesthismessagebyrefusingtoengagewithTaiwanatthehighest
levels,whichismeanttodisabuseTaiwanofthenotionthatitcancountonAmerican
supportiftheislandeveractuallydeclaresindependence.
Formorethan40years,thisdoctrineofstrategicambiguityhasworkedbrilliantly.Peace
hassurvivedmultipleleadershipchangesonbothsidesoftheTaiwanStrait.Andtrade
andinvestmentbetweenTaiwanandmainlandChinahavelourished.
AbreakwithlongestablishedpolicybyTrumpwouldbedamaginginmanyways.For
starters,hecouldemboldenTaiwantobemoreaggressiveintryingtoupendthestatus
quo.Indeed,TsaisownDemocraticProgressivePartyisoficiallycommittedtoTaiwans
independence,andwhileTsaiherselfhasnotyetsoughttorealizerevisionistgoals,that
couldchangeifshefeelsthatTrumpissympathetictohercause.
TrumpcouldalsododamagebyinlamingChinesegovernmentandmilitaryhardliners,if
heconirmstheirbeliefthattheUSwantstounderminetheircountryscoreinterests
namely,sustainingtheappearance,ifnotthereality,thatthereisonlyoneChina.The
ChineseforeignministryinitiallyvoicedmildcriticismofTrumpscallwithTsai,but
PeoplesDaily,theChineseCommunistPartyshouseorgan,hassinceissuedafarstronger
rebuke,warningthatcreatingtroublesfortheChinaUSrelationshipiscreatingtroubles
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ABullNamedTrumpinaShopCalledChinabyYashengHuangProjectSyndicate

fortheUSitself.Soonafter,theChineseNavytemporarilyseizedanAmerican
submersibledroneininternationalwaters.Chinaisclearlysignalingitsagitation.
ThereisnomethodtoTrumpsmadness.Inthesametweetjustifyinghisphonecallwith
Tsai,herepeatedafalsechargethatChinaisdevaluingitscurrencytogainexport
advantagesvisa vistheUS.Hisknowledgeofinternationaleconomicsiseithernon
existentortenyearsoutofdate.Inreality,Chinaisnowhemorrhagingforeignexchange
reservesanddesperatelytryingtopropuptherenminbisvalueinthefaceofcapitallight.
TrumpisapparentlyantagonizingChinafornogoodreason.Worse,byannouncingthat
theUSwillwithdrawfromtheTransPaciicPartnershipdesigned,atleastinpart,to
shapeglobaltradeandinvestmentlowsaccordingtoWesternrules,ratherthanChinas
mercantilistvisionTrumpisalsoabandoningaUSpolicythatcouldhavechecked
ChinassurginginluenceinAsia.SinceTrumpsTPPannouncement,manyAsiancountries
havenowpledgedtojoinaregionaltradeblocspearheadedbyChina.WithTrumpshelp,
theChineseCenturymayarrivesoonerthananyoneexpected.
BymovingclosertoTaiwan,attackingChinaonphantomgrounds,anddismantlingthe
TPP,TrumpisprovokingChinawhilesimultaneouslyempoweringandenablingit.Thisis
nottheartofthedeal.Itstheroadtodisaster.
http://prosyn.org/qs4cmyI
19952017ProjectSyndicate

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