By Peter Koenig
Taiwan has become a new “eastern pivot” for Donald Trump. Against all international laws and UN charters, he is approaching Taiwan, as indicating to the world that regardless of the established world rules which make Beijing, the Peoples Republic of China (PRC), the official and legitimate Authority of China, with Taiwan being a part of China – the self-styled emperor, Mr. Trump, pretends he prefers dealing with Taiwan as an independent country. By doing so, he intends to invite others to do likewise. Trump wants to make Taiwan an ‘ally’ – dreaming of setting up a US base on the island, thus further encircling China. It is the old game, divide to reign. But he can’t be as ignorant as to believe it will actually work. It’s just one more thing to annoy PRC. Frankly – seen from a step back, it looks more like attempting to dump one of those primitive Trumpish ‘diplomatic’ bombshells on PRC’s back. – Provoking the Dragon?
Dragons can be lethal, especially if exposed to nonstop strings of insults and debasement, attacks, and threats, sanctioned with trade wars, subjecting US$ 200 billion worth of Chinese exports into the US with 25% import tax, and, mind you, Trump just issued a new threat –raising the ante to US$ 300 billion, in case China refuses to attend the G20 summit in Osaka, Japan on 28-20 June 2019. Can you imagine – the insolence, ordering President Xi to attend the G20 summit?!? The man has indeed no manners, diplomatic or otherwise.
Trump further bragged on Monday, 10 June, that China will make a deal with the United States “because they’re going to have to.” – And what would be the deal? He never explained. He added that “China has lost trillions of dollars since he, Trump, was elected president”.– Imagine this impunity in recklessness! – Well – surely, President Xi Jinping will not be duped or blackmailed by joker Trump.
On another front, Trump threatened Mexican’s new President Andrés Manuel López Obrador, AMLO for short, with a 5% tariff on Mexican agricultural exports to the United States, if illegal immigration to the US would not stop. AMLO approached President Trump with an open letter, saying that he seeks peace and not confrontation, dialogue not war, and that AMLO’s government will do whatever is in its power to stop illegal migration to the US.
He stated, correctly, that a trade war would do more harm than good to both nations. Trump then dropped the threat, with worldwide publicity, to make sure his ‘goodness’ is recognized the world over. However, just a few days ago, Trump threatened Mexico again with the 5% tax, in case AMLO’s promise doesn’t hold and poor Mexicans keep illegally crossing the border into the great Promised Land (no, not Israel, but the western extension of Israel).
Of course, this tariff has nothing to do with trade. It is punishment, a sheer demonstration of supremacy. And – never mind, Trump probably doesn’t understand that California’s agriculture thrives on the low-wage illegal Mexican and Central American immigrants.
It is nevertheless amazing that the (western) world stands by and dares say NOTHING. The threats of sanctions seem to be effective. Anybody, or any nation that refuses to go along with Washington’s thuggish criminal behavior may be subject to punishment, be it by trade and / or financial sanctions, or outright military intervention. There is no international law, no rules of the community of nations, no political common sense that is respected by Trump and his handlers, and the world is afraid. Even though so far most of the threats have amounted to nothing more than ridiculous blabber and saber rattling.
There is no international law, no rules of the community of nations, no political common sense that is respected by Trump and his handlers, and the world is afraid.
More threats were thrown at Iran, with more sanctions and economic strangulations if Iran doesn’t “behave” – actually there are hardly any explanations given what “good vs. bad behavior” would mean for the US, other than Washington’s repeated empty accusations of Iran being a nuclear threat, disregarding the Joint Comprehensive Plan of Action (JCPOA), or nuclear deal signed in 2015, freeing Iran of any further accusation of wanting to become a nuclear power (which, by the way was a farce in the first place – the subject for another essay).
This so-called nuclear deal was signed by the 5 UN Security Council members, including the US. But as we know, under pressure from Netanyahu, Trump reneged last year from the deal – and since then horrendous sanctions of economic strangulations and foreign asset confiscations – outright theft, in clear text – were imposed by the US on Iran, with ongoing pressure on the EU to do likewise. According to Trump – and his two minion mouth-pieces, Pompeo and Bolton – more are to come.
To that, Iran’s Foreign Minister, Mohammad Javad Zarif, stated that Iran will not be blackmailed and added the philosophical observation that Trumps economic wars around the globe will eventually backfire. Well, yes. Trump’s reckless playing with tariffs, sanctions and other punishments around the globe will eventually drive everybody away from dealing and trading with the US, including away from the western monetary system. It’s the silver lining of the dark-dark US cloud. Its economics 101.
Propelled by German business interests (but at the same time limited by Washington [and Brussels] on what he is allowed to say), German Foreign Minister, Heiko Maas, visited Iran a few days ago to seek a compromise for Germany and other EU members to still hold on to the Nuclear Deal, because Germany’s economy wants to deal with Iran, yet, seeking concessions from Iran that may assuage Washington. But Iran’s Foreign Minister, Zarif, didn’t fall for it. The meeting ended in nothing. Good so, because there is nothing, absolutely nothing, that any ally (except Israel) could do to change the Bully’s mind on Iran.
Frankly, does Trump seriously believe he possesses all that power over other world leaders? Or is he, Trump, just a convenient lackey of a force much stronger behind him, a force that controls both the Pentagon and, more importantly, the western financial and banking system – the Zionist designed western dollar-based monetary system. This Ponzi scheme has been able for the last 100 years or so – and as we witness, every day more – to usurp the world, holding it hostage, with artificially created economic booms and busts, with economic sanctions, strangulations, confiscation, with the theft of nations’ foreign assets and even their reserve funds, if they don’t bend to the will of the self-proclaimed super power USA.
Yes, it’s a fading super power, but it still has control over its forced allies and vassals – many of whom, by now are sick and tired of their ally-cum-vassal status, as they realize what their losses are. They believed in economic, diplomatic and military privileges, but are gradually awakening to reality. Progressively they see the empire as what it is, a shiny, blustering, preposterous house of cards that may come crashing down at any time. Their anger and courage of Washington’s vassalic allies is slowly raising, and they will eventually break out from their repressive situation. When that happens – and Trump is hastening that moment with his erratic ‘sanction-prone’ behavior around the world – a grand geopolitical shift for the better may take place.
—
They believed in economic, diplomatic and military privileges, but are gradually awakening to reality.
With all the flattering and roses the leaders of Taiwan may get from Trump, do they realize that their role will just be that of one more enabler to enhance the empire’s dominion and increase the US’s wealth by helping it steal more of the world’s resources?
In the end, Taiwan may just become a mess, a chaotic island with lots of loose ends, with people pulling in different directions, as they realize that their government has been “bought” to give away their partial sovereignty and well-being – and they will raise up.
Taiwan, just look around the world! – The latest example being Sudan. Orchestrated chaos is controlling Iraq, Afghanistan and Syria? – And look what is being planned, so far without success, in Venezuela? – Taiwan will just be another pawn on Zbigniew Brzezinski’s legendary Grand Geopolitical Chessboard.
The US has been fomenting worldwide hostility against China and Russia for the last 100 years, and especially since WWII, intensified by the fake and false Cold War, made possible thanks to an all-western-dominating AngloZionist lie-propaganda machine.
—
We know about “Russia Gate”, the never-ending bashing of President Putin and Russia. The more subtle US attempts to destabilize China have started soon after China had become fully self-sufficient and autonomous, when she gradually opened her borders to integrate into the world with exports and attracting foreign investments in the 1980’s. The so-called Nixon ‘ouverture’ to China, Nixon’s one-week trip in 1972 to Beijing, Hangzhou, and Shanghai, was perhaps the first attempt by Washington to use the huge Chinese market for US exports, and at the same time constraining China’s rapid and foreseeable economic growth. Indeed, China grew exponentially and in 1986 gained observer status at GATT (General Agreement on Tariffs and Trade), a precursor to WTO, and started negotiating membership of the World Trade Center – of which she eventually became a member in 2001.
Trade, Chinese highly competitive exports was then – and is today – a key issue for the US goal of world hegemony. In anticipation or rather to prevent China from becoming a world economic powerhouse, Tiananmen Square protests were introduced in 1989. The leadup to the so-called massacre was a huge false flag. A student protest movement, funded by the US State Department, through the infamous NED (National Endowment for Democracy – an “NGO” specialized in “regime change” operations – see also Venezuela). The 4th of June crackdown had been prepared months before, guided by the bloody hands of US Secret Services, CIA, NSA, and most probably MI6. The “students” had no common cause for the protest, just a sudden desire for more “freedom”, “reforming the communist party” without citing specifics they wanted reformed.
The 4th of June 2019 anniversary of the ‘massacre’ 30 years ago, is used by the western media to propagate against Chinese “tyranny”. The news of the massacre was repeated every hour on the hour by almost all radio and TV stations throughout Europe, lest you might forget, and the too-young-to-remember – should learn and be prepared for the coming Chinese monster. That’s the goal of the corporate presstitute. And they may succeed, as sleeping people have no clue of the truth, nor are they interested in abandoning their comfort and facing the inconvenient truth.
Let’s just juxtapose the forced memory of Tiananmen Square with real atrocities being perpetrated by the west, as these lines go to press. Take Yemen, devastated by the west and its proxies, chiefly Saudi Arabia and Qatar, with weapons and funding from the US, the UK and France. Yemen is a non-aggressive peaceful country. Tens of thousands of people have been killed in the last 4 years of this atrocious war, most of them children and women, thousands from cholera and other water and improper hygiene related diseases; two thirds of the population suffer from famine. The related death toll is in the tens of thousands. This is exacerbated by the Red Sea Port of Hudaydah, the gateway for most of Yemen’s imports, being shut by Saudi and Qatari armed forces, so that not even emergency aid enters the country. The UN calls it the largest humanitarian crisis in recent history. – You hardly hear anything in the western news about this western funded and executed atrocious mass killing.
False flags from Tiananmen Square, to 9/11, to the Ukraine Maidan, to the sporadic string of terror killings in Europe and the United States, by ISIS / IS Al-Qada and associated groups – all funded by the empire and it’s proxies and vassals – to the more recent ‘regime change’ or Color Revolution type protests in Hong Kong, the Umbrella Revolution of 2014 and street protests of the last week, with thousands of protesters in the street against a Beijing initiated extradition law to be introduced by Hong Kong’s legislation – are all US / western instigated, funded and guided so as to provoke and destabilize China. And foremost, demonize China in the eyes of the western world. Most western countries have extradition laws for criminals to be turned over to the jurisdiction of the country where they may have committed the crime. But that’s not mentioned by the corporate lie-propaganda.
These permanent aggressions against the world power China – a world power with a pacific non-expansive life philosophy, could badly backfire. Just imagine, Beijing may eventually get sick and tired of Washington and its vassal-allies meddling in PRC’s internal affairs, could easily repeal Hong Kong’s semi autonomy and incorporate the city fully into the territory of the PRC – complete with Chinese laws, obligations and benefits. As simple as that. What would Washington do? What would the west do? – Scream murder? – Well, they do that already, so it couldn’t be much worse. A military aggression on China? – Hardly. The West wouldn’t dare. Attacking China is attacking Russia. There is a strong alliance between the two countries, one that was made even stronger by several new agreements signed between Presidents Putin and Xi during the recent St. Petersburg International Economic Forum.
Most western countries have extradition laws for criminals to be turned over to the jurisdiction of the country where they may have committed the crime. But that’s not mentioned by the corporate lie-propaganda.
Similar provocations are planned and take place with Taiwan. In April 2019 the US sent two destroyers into the Taiwan Straits, claimed by mainland China as their territorial waters. Germany – which according to their armistice status’ obligation of non-confrontation and non-aggression – is considering sending a war ship to join the US and French warships in an attempt to demonstrate to the world that these are international waters.
What if such provocations, rather than gathering more world recognition of Taipei’s self-styled autonomy, they prompt President Xi Jinping to close in on Taiwan and actually absorb the island as a PRC owned territory? This would just conform to what Taiwan nominally already is since 25 October 1971, when the UN General Assembly Resolution 2758 declared The Peoples Republic of China as the sole legal China.
Switch to another corner of the world with a different but very much connected scenario. Early this morning, 13 June, in the Strait of Oman, about 25 km from the coast of Iran, a Japanese-owned and a Norwegian oil tanker (the owner of which is an old friend of Iran’s) were attacked. Explosions and fire broke out, some seamen were injured, and 44 were actually rescued in the Gulf of Oman by Iranian ships. As of now, it is not clear what happened and who the perpetrators were. Never mind, Pompeo immediately accused Iran for the attacks – and keeps doing so, stating falsely that video evidence – never offered to be seen by the public – showed it was Iran. Why would Iran attack a Japanese oil tanker, while Japanese Prime Minister, Shinzo Abe, is visiting Iran’s Supreme Leader Ayatollah Ali Khamenei in Tehran on Thursday, the very day of the attacks, for talks to maintain the treaties of the Nuclear Deal?
World! Let’s face it. Only an idiot will believe that the world is idiotic enough to believe that Iranians are so idiotic as to attack foreign vessels in the Gulf, clients and friends of Iran. If this smells like a false flag – it is a false flag. Carried out by whom? Could be the Saudis, Israel, the Emirates, Mossad, the CIA, MI6… any one of the puppet allies of the emperor.
People, where are we going? – As a result of this incident oil prices rose immediately by up to 4% for fear that worse might happen, namely that Iran might close the Strait of Hormuz through which about 25% of the world’s hydrocarbon are shipped. A closure could have oil prices jump to USD$ 200 / barrel or more – and sink the world in the worst recession of recent history. In the meantime, Wall Street bankers, notably Goldman Sachs, who have ample experience with oil price manipulation, are already playing with oil futures which under such a scenario could bring them hundreds of billions while the rest of the world goes belly up.
On another, but very much related topic: Many, especially unaligned countries, are losing trust in the US and especially in the US-dollar. They are quietly switching their reserves to Chinese yuans and / or gold. Trump’s handlers know about it. They may be contemplating as a last resort a new kind of gold standard. Losing out on dollar hegemony is one of the reasons they are pushing The Donald into a trade war with China. The (US) expectation is that a trade war with China would debase the Chinese currency, thereby discredit it and make it unattractive as a reserve money.
Creating a conflict between PRC and Taiwan, might, from a US point of view, have the same effect, degrading the yuan, in addition to bringing other Asian countries on board, those who are themselves worried about their territorial waters, i.e. the Philippines, Malaysia, Indonesia.
And yet, in an opposite corner of the world, namely in the swamp of Washington, the same Pompeo who just found another reason to increase sanctions on Iran, is utterly upset that his plans in Venezuela didn’t work out, because the stupid opposition cannot unite, cannot be trusted. That would leave only the ‘military option’ on the table – but that military option is too risky with Venezuela being supported by her strong allies, Russia and China.
Friends – what you must be aware of – all the dots of conflicts, wars, threats, harassments, false flags, sanctions and otherwise punishments, lies and lies and lies around the world, are dots that must be connected. Only then you get the Big Picture – and to understand the Big Picture is crucial. It is at once hilarious for the phantasy it portrays and catastrophic for the danger it presents. For the owners of this Big Picture, the Washington Swamp and Israel, it represents the illusion and desire to achieve the US-Pentagon-Banking plan – within the PNAC (Plan for a New American Century), a wishful thinking of Full Spectrum Dominance.
This Big Picture is best portrayed by Chris Black’s latest master piece: This Outlaw Power: America’s Intent is to Dominate China, Russia and the World
About the Author
Peter Koenig is an economist and geopolitical analyst. He is also a water resources and environmental specialist. He worked for over 30 years with the World Bank and the World Health Organization around the world in the fields of environment and water. He lectures at universities in the US, Europe and South America. He writes regularly for Global Research; ICH; RT; Sputnik; PressTV; The 21st Century; TeleSUR; The Saker Blog, the New Eastern Outlook (NEO); and other internet sites. He is the author of Implosion – An Economic Thriller about War, Environmental Destruction and Corporate Greed – fiction based on facts and on 30 years of World Bank experience around the globe. He is also a co-author of The World Order and Revolution! – Essays from the Resistance.
Peter Koenig is a Research Associate of the Centre for Research on Globalization.
First published by the New Eastern Outlook – NEO
China-US Trade War: Japan G20 Déjà vu?
By Jack Rasmus
This past June 29, 2019 Trump and China president, Xi, met again at the G20 in Japan in the midst of a potential further escalating the trade war. Has anything changed as a result of their meeting? Or is it just deja vu of their prior G20 meeting in Buenos Aires on December 2, 2018?
In the months leading up to the December Buenos Aires meeting between Trump and Xi, US neocon trade negotiators (Lighthizer, Navarro) had scuttled in May 2018 what was then a pending trade deal negotiated by US Treasury Secretary, Steve Mnuchin, and his Beijing counterparts. Thereafter, China had refused throughout the summer and fall 2018 to meet with Trump, despite Trump’s repeated attempts to lure Xi back to the bargaining table with threats and ‘happy talk’ praising Xi before the US November midterm Congressional elections. Xi did not take the bait. Trump and Xi finally met again at the G20 in Buenos Aires on December 2, 2018. The outcome was more typical Trump public ‘happy talk’ laced with platitudes about how he and Xi had such a great relationship; how the two countries trade teams would now work toward an agreement; and how Trump in the interim would not impose a further hike in existing tariffs on China $200 billion imports, scheduled for January 2019. Stock markets began to recover, after their 30% swoon of late 2018, in expectation of a trade deal—assisted at the time as well by the US central bank, the Fed, capitulating in late December 2018 to Trump demands to stop raising US interest rates.
Following the Buenos Aires G20, the two countries’ trade teams resumed negotiations in February 2019 and it seemed were about to reach an agreement once again. But, once again, as in May 2018, the negotiations broke down a second time this past May 2019—once again scuttled by the US neocons and anti-China hardliners who had retained control of the trade negotiations and access to Trump’s ear.
In the aftermath of the Japan G20 meeting of June 29, once more the same ‘spin is in’ that followed the Buenos Aires meeting: i.e. Trump declares publicly he has such a great relationship with Xi; Trump announces there’s a great deal now pending between the two countries; and the US and China trade teams will soon begin again to thrash out the details on the remaining 10% or so of US-China trade differences. In the interim, Trump announced he will withhold imposing his threatened increase in tariffs (this time on an additional $325 billion of China imports to the US).
In other words, coming out of the latest G20 it’s almost an exact déjà vu all over again on June 29, 2019, as it was at last December 2018’s G20 meeting between Trump and Xi in Buenos Aires.
The key question is—in the wake of the second collapse of a pending US-China trade deal this past May 2019—will we now also see a repeat again of the US maneuvers that occurred following the break up of the first deal of May 2018? Or has Xi and the Chinese finally ‘got Trump’s number’, as they say, and will refuse to come back to the negotiating table until after the 2020 election, unless Trump provides firm assurances of a compromise. Moreover, that compromise, should it occur, will have to include the US withdrawing its latest demands for a China capitulation on the technology issue, which has always been the crux of the US-China trade dispute.
The First Trade Deal Blow Up: May 2018
In March 2018 the US launched its first salvo against China with US trade representative, Lighthizer’s, report that China was stealing US technology and that China’s 2025 program was a plan for it to surpass the US next generation technology development (G5, AI, cybersecurity)during the next decade. Trump administration public statements, in contrast, focused on the China trade deficit and on China policies preventing US corporations’ majority ownership of its operations in China. Trump immediately imposed tariffs on an initial list of China imports to the US; China responded with a smaller list.
China quickly engaged with the US on these various issues, sending a team to finalize terms on a trade deal to the US in May. Trade negotiation teams traveled back and forth between Beijing and Washington. It looked like a deal was imminent.
As a deal got closer, in May 2018, US Treasury Secretary, Steve Mnuchin, assumed control of the negotiations with the Chinese. Neocon trade advisor, Peter Navarro, a member of the US trade team, was thrown off the US team. Mnuchin had apparently cut a deal with China: the latter would buy trillions of more US farm and manufacturing goods over the next five years, US bankers and multinational corporations would be given 51% or more access to ownership of their operations in China, and China would pass legislation placing limits on US corporate tech transfer in China.
The trade team neocons—Lighthizer, Navarro, and now Bolton in the background—had gained Trump’s ear and whoever gets to Trump last usually gets him to do what they want. Moderates, including the generals, were leaving the Trump administration like rats departing the ship at dockside. Besides, during the summer 2018 Trump had turned his attention to the NAFTA 2.0 negotiations and the upcoming November 2018 US midterm elections. Further progress on US-China trade could wait. The US had already gained concessions from China on two major themes: China purchases of US farm goods and 51% ownership. That would still be on the table when negotiations resumed. Let China think about the tech issue further in the interim, until after the November US elections. Trump tried over the summer and fall of 2018 to entice Xi to return to the table, but Xi did not take the bait. To do so would only give Trump another event to boast to his political base during the November 2018 elections. Xi would wait. And he’ll now wait again.
Delaying negotiations after the May 2018 blow up of negotiations would, of course, mean US farmers would continue to feel the pinch of China reduction of purchases of soybeans and other commodities. But Trump softened that blow with tens of billions of dollars of US subsidies to US farmers in 2018, to be followed by tens of billions more in early 2019.
G20 Buenos Aires Meeting and After
Immediately after the November 2018 elections, Trump renewed efforts to meet with Xi. They did so at the end of 2018 at the G20 in Buenos Aires. Lots of fanfare and typical Trump hyberbole followed: President Xi was such a good buddy. A great deal was in the works and would soon be announced. In the interim, Trump suspended raising tariffs to 25% on existing $200 billion of China imports as negotiations resumed February 2019. Lots of happy talk about all the progress being made at the G20, as the US stock markets recovered nicely in the first quarter of 2019.
But negotiations broke down once again, a second time, in May 2019 (as they had a year previous in May 2018). The official US line fed to the media was that the Chinese had reneged at the last minute, and added new demands and proposals—when in fact it was the US that introduced last minute demands it knew the Chinese could not accept, in the week before the China delegation was to come to Washington to finalize the deal.
This time the Lighthizer-Navarro-Bolton team not only demanded stronger limits on tech transfer from US corporations in China. Now the demand was China would have to sever all its companies’ relations with US tech companies in the US —and not just Huawei. A new US offensive was launched to intimidate US researchers doing joint tech research work with Chinese counterparts in US universities to end their joint cooperation; US tech companies in China were quietly told to start planning to move their supply chains out of China in the medium to long run; and the Chinese were told the US would not stop its proceedings against Huawei; moreover, it would escalate its pressure on US allies to sever 5G investment plans with Huawei as well. And that was not all. As the China delegation made final plans to come to Washington, the US team signaled publicly that the US would retain tariffs even if there were a deal. The excuse was the US needed to retain tariffs as a threat if China didn’t fully implement its concessions to the US. And then there was the especially insulting demand by the US: China would have to share even its independent technology development in 5G, cyber, and AI with the US as part of a deal.
The China delegation came over anyway, but obviously, no deal was concluded. Perhaps it was to verify whether Trump really agreed with these onerous terms thrown up at the last minute by the Lighthizer-Bolton neocons. They left empty-handed. Apparently, it was true.
How Trump and the US Now Negotiates
The Trump approach was predictable. This is how he did business before becoming President. And it is how he now runs the US government: Make public declarations about what a great person his negotiating partner is. Make public statements how a trade deal is imminent. Then at the last minute throw up unacceptable demands, threats, and intimidating statements. Allow negotiations to break off. When the other side does so, blame them for failing to make a deal. Then wait and see if the other side makes concessions and signals it wants to return to the bargaining table. When they do, privately or publicly, return to negotiations with more demands for concessions. If necessary, play this same game over again.
China and Xi were burned once by these maneuvers back in May 2018. Now they met again at the recent G20 in Japan and the negotiations will once again resume. Trump adviser Larry Kudlow has noted ‘phone calls’ are occurring back and forth between the US and China negotiating teams. But there’s no indication of any meetings in the works between Trump and Xi. Nor will there likely be soon. It is not likely the Chinese will be burned again. In fact, they have publicly declared no deal unless Trump at minimum withdraws his May 2019 trade team threat to retain tariffs whether a deal is reached or not. That’s likely a ‘non-starter’ until Trump takes it off the table. Positions may be hardening, not softening.
In the interim, as during the days following Buenos Aires, following the most recent Osaka G20, Trump is again repeating platitudes and praise for Xi. He’s publicly announced that China has made great concessions to buy record levels of US farm goods. But China had conceded that and put it on the bargaining table almost a year ago! It had promised to buy $1 trillion more in US goods over the next five years. So Trump’s just repeating what has already been agreed to some time ago. Nevertheless, for Trump ‘spin is in’ once again post-Osaka.
That should hold US business and farm criticisms at bay for several more months—along with the $20 billion more in farm subsidies announced by Trump—likely paid for by cuts to US food stamps, housing subsidies, education funding, etc. Should another, third round of farm subsidies follow in 2020 if no trade deal is concluded, total direct Trump farm subsidies will exceed $50 billion.
What’s Next: More Déjà vu? Or a Deal?
It should be clear that as of July 2019 there’s no imminent China-US trade deal. Trump is just buying time. No additional tariffs—i.e. $325 billion on remaining China imports—will likely be imposed in the interim. A hiatus has occurred at least for the remainder of 2019. US business pressure and growing criticism of Trump’s trade policy, and growing farm sector discontent, will prevent Trump from raising more tariffs—at least for now.
But US pressure to drive China tech companies out of the US economy and, if possible, from the economies of US allies in Europe and elsewhere, will no doubt continue. So too will continue US pressure to isolate China company and University researchers in the US and force them to leave. And longer term, the US will continue to press US corporations to relocate their supply chains from China to elsewhere in Asia (Vietnam? South Korea?) or even Mexico.
When will a China-US trade deal then be concluded? Not likely this year. Trump probably now wants to wait until closer to the 2020 election. And the neocons still have his ear and are still driving US trade policy (indeed, US foreign policy on a number of fronts as well). And they don’t want a deal…ever! Unless of course China agrees to capitulate on the central issue of next generation technology development.
For the remainder of 2019, US policy will be to squeeze China tech corporations, to make operations so uncomfortable for them they will have to leave the US, as well as US allied economies. Trump will continue to collect tariffs from China imports, which he sees as a plus, while increasing his public threats that China not to allow its currency, the Yuan-Reminbi, to devalue which would negate the hikes in US tariffs. Meanwhile, domestically Trump policy ‘spin’ will try to publicly make it appear (to Trump’s farm base and US business in general) that the US and China are working in good faith toward an agreement.
Longer term, into 2020, if the US neocons retain control of negotiations and Trump’s ear, they will continue to insist the US retain tariffs, insist on China capitulating on the tech issue, and continue to go after China tech companies in the US and worldwide. That means there will be no agreement even in 2020.
From Tariff-Trade War to Economic War?
It’s probably becoming increasingly clear to the Chinese that the US has not launched a ‘tariff war’, as Trump likes to call it. In fact it’s a stretch to even call it a ‘trade war’. US policy is driving longer term toward a bonafide economic war between the US and China.
In the nearer term, the current differences may well transform the ‘tariff’ war into a ‘currency war’ that will spread contagion and reverberate globally across other economies—at a time at which the global capitalist economy is slowing fast and approaching as well a new financial instability.
And China doesn’t have to ‘manipulate’ its currency. All it has to do is allow the Yuan-Renminbi to devalue naturally in response to US policy and the slowing global economy. That devaluation would more than offset most Trump tariff hikes. So far, China has intervened in global money exchange markets to prevent this—contrary to the Trump/Neocon charge it is manipulating its currency. All it needs to do is allow it to occur according to prevailing economic and market forces and just not intervene in global money markets further to prop up the Yuan.
Then there’s China’s $1.3 trillion of US assets, mostly Treasuries, held by its central bank. It could slow its purchase of new US government debt, which it appears it recently may now be doing. Should the trade-economic war intensify, it could stop or even sell off its dollar hoard. That would drive up long term interest rates in the US and the value of the US dollar still more, further slowing global growth and negatively impacting emerging market economies and US multinational profits repatriation from those economies.
Rising US rates and the dollar could precipitate another stock and junk bond sell-off, similar to that which occurred in late 2018. And Trump doesn’t like stock market declines.
There are numerous other ‘actions’ the Chinese could take in response to US neocons intensifying or prolonging the US-China tariff-trade war, further driving the US-China differences into a broader economic war. Even if US neocons don’t understand this, or don’t care, which is more likely, widespread business and banking interests do and could intervene more forcefully should the drift toward economic war continue.
And there’s a wild card in the trade war deck that may yet check the neocons influence perhaps. That’s the current softening of the US and China economies. That could force both sides to an agreement. Should the US economy slip into a recession by 2020, or even late 2019, as this writer has predicted—Trump may grab the major concessions already on the negotiating table, i.e. China purchases of $1 trillion more US goods and China’s concession to allow US majority ownership rights in China. Trump could then announce (and exaggerate) having a big victory in trade negotiations over China—all just before the 2020 US elections.
China’s economy is slowing, but so too is the US. The US 1st Quarter GDP numbers were propped up by temporary factors associated with inventory over-investment and net exports, both of which are fading rapidly this quarter. Moreover, consumption is barely growing and business investment is turning negative. The US central bank, the Federal Reserve, is projected to start lowering US interest rates this month, giving further impetus to the projected massive $1.5 trillion in stock buybacks and dividend payouts scheduled by Fortune 500 corporations this year. That may succeed in putting a temporary floor under stock markets. But the real economy is being driven to slowdown, or worse, by year end. And the bond markets and yield curves are clearly signaling that development.
A more rapidly slowing US economy, now clearly beginning, may change the trade negotiations dynamic. And if the US slips into recession the pressure to cut a deal will grow. Trump may yet be convinced to take the China concessions on the table and postpone US demands for a China capitulation on nextgen technologies, to be raised anew after the 2020 elections or even before to allow Trump to appear aggressively ‘America First’ targeting China to his political base in the weeks just before the 2020 election.
Because for Trump a ‘deal is never a deal’, it’s never concluded, but reopened whenever he wants it to be.
Breaking an agreement is standard practice for Trump. Just ask the Mexicans, where Trump threatened more tariffs even after concluding a new NAFTA 2.0 deal. Or the Iranians, who thought they had an agreement with the US. Or the Europeans who thought they had a Climate deal. For Trump, negotiations are a long term process, punctuated by happy talk events, followed by more threats, insults, new sanctions, and intimidations, and the reopening of deals once thought concluded by opponents.
In other words, even if a China-US trade deal is done next year the trade war will not be over. It will have just begun, as it evolves toward a broader ‘economic’ war after the 2020 elections, or even before.
The key to a China trade deal sooner rather than later is whether Trump and US big economic elites can convince the neocons and military industrial complex to agree to a short term deal with China that provides only token nextgen technology concessions—with the assurance that the US will reopen and resume the trade-economic offensive after the 2020 elections once again.
For US economic and political elites are in general agreement with the neocons behind the Trump daily trade war circus. They will not allow China to challenge the US next decade by leveraging the nextgen technologies that are the key to both economic and military hegemony by 2030. It’s just a question of timing. Should they decide for domestic political reasons to take two bites of the bargaining apple from the Chinese now, and come back later for the big bite: i.e. the fight over nextgen technology. Or will they continue to insist on three bites now, all at once.
This writer’s guess and prediction is that the slowing US and global economy will result in the former. The US will grab the China concessions now on the negotiating table, and demand more after the 2020 elections. For the current tariff-trade war is just the opening salvo in an epic struggle between the US and China. The technology war dimension between the two has already begun, albeit still in early stages. What appears on the surface as a trade war is to a significant extent the cover for a more fundamental technology war beneath the surface, and a broader economic war over technology that will fundamentally characterize US-China relations in the 2020s.
Just as European and American imperialists jockeyed and maneuvered in the years leading up to 1914, with a focus on markets and natural resource control, in the 21st century the jockeying and maneuvering has begun—albeit with a different focus on nextgen technologies and control over global money flows, currencies, and other levers of financial power.
The 2020s decade will prove a highly dangerous period. The global capitalist economy is slowing, as it does periodically. A new restructuring of the US and global capitalist economy is on the agenda next decade, as it was in the late 1970s, in the mid-1940s, and on the eve of 1914.
Trump trade and other policies should be understood as a broad reordering of US economic and political policies in order to ensure the continuation of US global economic and political-military hegemony for the coming decade. Nextgen technology development is at the core of that restructuring and restoration of US hegemony. Trump is just the appearance and the human agent and vehicle of the deeper transformations in progress.
About the Author
Dr. Jack Rasmus is author of the forthcoming book, ‘The Scourge of Neoliberalism: US Policy from Reagan to Trump, Clarity Press, September 2019; and the recently published ‘Alexander Hamilton and the Origins of the Fed’, Lexington books, March 2019. He blogs at jackrasmus.com and his website is www.kyklosproductions.com. Dr. Rasmus tweets at @drjackrasmus and hosts the Alternative Visions radio show on the Progressive Radio Network.