China may be Trump’s best hope to ‘make America great again’
China is not America’s enemy or competitor or whatever name the US anti-China crowd labels it with. It is not challenging US global supremacy or stealing its jobs, as many in America claim. On the contrary, the Chinese and US economies are increasingly intertwined, becoming each other’s largest trade partners and major investors.
What’s more, a large number of US states (such as Iowa) and cities (Los Angeles) are dependent on the Chinese market and investment to sustain economic growth.
The two countries are also cooperative in geopolitics, working together to defuse the Korean Peninsula nuclear issue, holding frequent high-level dialogues to pre-empt potential conflicts and reaching an agreement on climate change.
Every US president since Richard Nixon has recognized the importance of the US-China relationship, doing what they could to prevent it from being derailed by an anti-China Congress, media and pundits. Donald Trump, though he castigated China before and immediately after being elected president, has made a U-turn on his anti-China rhetoric.
To prevent future conflicts in areas where their national interests collide, the two countries have set up mechanisms since George W Bush’s presidency. His successor, Barack Obama, upgraded the dialogues, establishing the Strategic and Economic Dialogue. Trump went further, raising the S&ED to four high-level talks – comprehensive economics, diplomatic and security, law enforcement and cybersecurity, and social and culture – at a summit with Chinese President Xi Jinping at Mar-a-Lago, Florida, in early April.
Judging from the successes achieved in each of the four dialogues, Trump seems to recognize that China may be the key to fulfilling his campaign slogan “Make America great again” and his “America First” policy. The two countries have established a mechanism to address the chronic trade-deficit issue, the US agreeing to sell high-technology products to and buy cooked chicken from China. They have reached agreements on security and cyber-hacking. Both countries have also agreed to increase people-to-people exchanges as a way to improve mutual understanding.
How China can help ‘make America great again’
China regained the title as the world’s fastest-growing major economy in the first half of 2017, estimated at 6.9%, overtaking India’s 5.7% in the same period. With the International Monetary Fund revising China’s 2017 and 2018 growth rates to 6.8% and 6.5% respectively, its economy is set to meet the targeted average annual growth rate of 6.5% over the next five to 10 years.
The reasons for China’s upbeat economic outlook include resiliency in countering dynamic changes, continuous gradual economic and political reforms, and the promotion of globalization, just to mention a few measures that the government deploys to sustain the economy’s high and stable growth.
China’s effective economic management over the past four decades has created an increasingly affluent domestic market that in turn should sustain long-term growth. China’s humongous consumption and investment spending power could spur US economic growth, buying more American products and increasing the health of its industries.
Huge financial toolkit
China’s financial toolkit is huge, having more than US$21 trillion in deposits or loanable funds, $3 trillion in foreign reserves and $1.1 trillion in US Treasury holdings. The money is held at China’s central and state-owned commercial banks.
Given its huge capital reservoir and China’s proven efficiency in building roads, bridges, railways, power plants other infrastructure, it offers the best hope for Trump to fund his $1 trillion infrastructure expansion and repair programs.
Moreover, the US is Chinese investors’ preferred destination for funds because of its advanced technology, large domestic market and political stability. According to US consultancy the Rhodium Group, Chinese companies invested more than $46 billion in the United States last year, creating almost 150,000 jobs there. Had it not for a paranoid US Congress that blocked many investments deemed a “national security threat”, that number could be much higher.
Large, affluent domestic market
China has a huge population, numbering over 1.35 billion, most of whom are able and willing to buy considerable quantities of US products. Its middle class, defined as a person earning between $8,000 and $34,000 a year with net assets of $36,000, has reached nearly 500 million and growing.
With only 11% of the population living on less than $3.10 a day, it would seem that more than 1.2 billion people are in the lower- to upper-middle-income groups. What’s more, their debt is less than 40% of gross domestic product, far lower than in the developed economies. Indeed, they save more than 25% of their disposable income.
The large, increasingly affluent domestic market is perhaps the reason Alibaba’s founder, Jack Ma, expects to create a million jobs in the US over the next five years. His e-commerce empire is growing by leaps and bounds, enabling it to sell large quantities of US products to hundreds of millions of customers in China and other parts of Asia.
China is also the major source of international students and tourists to the US and other parts of the world. In 2016, China sent more than 300,000 of its young people to study in America’s schools and universities, injecting more than $9 billion into those institutions, sustaining their viability. They spent much more buying food, housing and other goods and services.
Of the more than 120 million outbound Chinese tourists, nearly 3 million visited the US in 2016. According to US government statistics, they spent more than $33 billion.
The numbers of both students and tourists from China are expected to grow over the next five years. Chinese parents value education, willing to make huge sacrifices to fund their children’s studies overseas, particularly in the the US. Statista, a US consultancy, estimates that the number of Chinese tourists visiting the US will grow from 3 million in 2016 to more than 5 million by 2021.
China can also be a good partner of the US to defuse many of the world’s geopolitical and environmental issues. Though its leverage over North Korea is limited, China could help the US minimize the peninsula’s nuclear problem. Accepting China’s proposals of a “double freeze” of ending North Korean nuclear testing and US-ROK military exercises and resorting to diplomacy may be the only ways to lower tensions. That in turn would keep America safe.
The military option, on the other hand, can only lead to mass destruction and killing of millions of people in Asia and beyond. Had it not been for fear of massive retaliation and the high probability that China and Russia might enter into fray, Bill Clinton, George W Bush and Barack Obama would have bombed North Korea. They attacked Afghanistan, Iraq and Libya because those countries had no means to retaliate.
The China opportunity is real
Contrary to the rhetoric propagated by US media, some members of Congress and the neoconservative crowd, China is not a threat to America. It has in fact been reaching out to the US to strengthen the world’s most important bilateral relationship, addressing differences through dialogue and cooperation.
To that end, China has a lot to offer the US, buying more of its goods, increasing investment, and working together to address global issues. Judging by his deeds and not his words with respect to China, Mr Trump may have come to same conclusion.