My business friends in the US tell me the US economy is really looking good, with growth going more robust, additional jobs getting created and consumer credit continuing to be strong. Some are even predicting an above-average economic growth despite the risks posed by possible trade disruptions, saying these risks are short term.
This optimistic projection is probably the reason why US president Donald Trump has decided to take a hard stance with regard to China, saying he wants to correct trade imbalances as he has repeatedly expressed disappointment about the United States’ continuing trade deficit with China – a situation that Trump has described as “not sustainable.”
Much earlier, the US president decided to impose a 25 percent tariff on $50 billion of imports from China – and Beijing quickly retaliated by imposing its own 25 percent tariffs on $50 billion of products from the US such as beef, whiskey, industrial chemicals, passenger vehicles, small aircraft and agricultural products that include soybeans which happens to be the biggest import of the US to China. (China is the world’s top buyer of soybeans – which happens to be the biggest agricultural export by value of the US, exceeding $12 billion in 2017.)
China’s retaliatory move elicited an intensified response from Trump who instructed US Trade Representative Robert Lighthizer to consider $100 billion of additional tariffs against China and identify the products upon which such tariffs would be imposed.
This “tit-for-tat” has resulted in jitters with the global stock markets going on a slump amid fears of a full-on trade war between the US and China. In fact, more than a hundred business coalitions – both big and small – expressed opposition to the White House’s plan to impose tariffs on 1,200 Chinese products and have asked the intervention of the US Congress, saying that hardworking American families should not be made to pay for China’s “bad behavior” as many of the products on the proposed tariff list are consumer goods as well as materials that US manufacturers need for American products.
However, many of our business friends in Washington, D.C. and across the US are saying that Trump’s hardball stance was a long time in coming. But, there are also a number of US legislators whom recently met who disagree on the way it is being implemented. But let’s not forget, the US president is known to be a dealmaker and in fact, he wrote a book entitled – “Trump: The Art of the Deal.”
In his book, Trump said he understands the way the Chinese mind works, having read hundreds of books about China over the decades and having done a lot of business with the Chinese. And while others express their creativity through painting or poetry, for Trump, the creative process is in the deal making.
Several years ago, he tweeted, “Deals are my art form. Other people paint beautifully or write poetry. I like making deals, preferably big deals.” And the way he makes deals is quite straightforward and simple: “I aim very high, and then I just keep pushing and pushing to get what I’m after,” he wrote.
As explained by US National Economic Council Deputy Director and Deputy Assistant to the President for International Economic Affairs Everett Eissenstat, the US president’s confrontational approach has one goal, and that is “to help address imbalances in the international trading system.”
Judging from the statement of Chinese president Xi Jinping in the recent Boao Forum in Hainan, it’s possible that some semblance of balance could be achieved after the Chinese leader announced “a new phase of opening up” and promised several key reform measures, touching on expanded protection for intellectual property rights, lowering foreign ownership limitations on manufacturing, and easing barriers on foreign banks and automobiles – issues that are central to the United States.
Xi’s speech signaled a conciliatory tone that seemed to ease the tension as Trump immediately went on Twitter to convey his thanks for the Chinese president’s “kind words,” expressing optimism that he and Xi “will make great progress together!”
While this “trade war” between China and the US is a concern that we have to watch from the sidelines, I share the optimism of many that these two biggest economies in the world see the good in having a strong economic relationship with each other. Instead of a trade war, they (and the rest of the world) will benefit more if there is “trade peace.” Besides, “the objective of all war is peace,” to paraphrase Sun Tzu.
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The formal and public apology issued last Thursday by President Duterte for the August 2010 Luneta bus hostage incident that resulted in the death of eight Hong Kong tourists was a good move, but it is one that has been a long time coming.
Although Manila Mayor Erap Estrada made a formal and public apology in 2014 which the Hong Kong government appreciated – resulting in the lifting of sanctions and the easing of animosity against Filipino overseas workers in HK – it would have been better if the formal apology came from then President Aquino during the time of the incident since it would have been accepted, which could have avoided the negative vibes with China.
No doubt our relationship with China would not have degenerated so badly. Many analysts, politicians and businessmen who have had business dealings in China and Hong Kong have always maintained from day one that all it would have taken was a strong and sincere apology from President Noynoy Aquino. But all that is now water under the bridge; time to move on.
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