Commentary
After U.S. President Donald Trump increased tariffs on $200 billion of Chinese goods to 25 percent from 10 percent, he warned Beijing on May 13 not to take retaliatory measures.“There will be nobody left in China to do business with. Very bad for China, very good for USA! But China has taken so advantage of the U.S. for so many years, that they are way ahead (Our Presidents did not do the job),” one of Trump’s May 13 trade tweets read. “Therefore, China should not retaliate-will only get worse!”
In another tweet on the same day, President Trump said explicitly that China backed out from a great deal. “I say openly to President Xi & all of my many friends in China that China will be hurt very badly if you don’t make a deal because companies will be forced to leave China for other countries. Too expensive to buy in China.” He wrote, “You had a great deal, almost completed, & you backed out!”
At about the same time, the Chinese regime announced its retaliatory measures. Starting on June 1, China will increase tariffs on $60 billion worth of U.S. goods, ranging from 10 percent to 25 percent.
In light of the current trade tension, it is very unlikely an agreement can be reached in the near future that satisfies both sides.
Some people may ask, Beijing’s habitual practice in negotiations, such as the trade agreements China signed to join WTO, is to play the game of signing the agreements first and then refusing to enforce them later. This time, when faced with a “great deal,” why did Beijing decide to back out?
One of the main reasons is that the Trump administration has implemented enforceable supervision and punishment measures in the agreements, which is very different from the practice of previous U.S. administrations when they negotiated with the Chinese Communist Party (CCP). If these agreements are signed, the CCP hardly has the chance to act as a scoundrel as before. As a result, it will lose control of China’s economic growth.
1. Carry out tax reforms to allow fair competition between Chinese and foreign enterprises; 2. Break up the state-owned monopolies in electric power, telecom and oil industries to allow fair competition; 3. Reduce government intervention in markets, abolish various inspections, supervisions and fees; 4. Ensure freedom of the press and freedom of the internet; 5. Strengthen intellectual property protections: Stop forced technology transfer and trade thefts from foreign countries; 6. Respect human rights; 7. Protect foreign businessman’s private assets, freedom and personal safety; 8. Halt all subsidies to state-owned companies and export-oriented companies.
If the Chinese regime indeed makes structural reforms according to these requirements from the United States, it is equivalent to giving up control of the Chinese economy; that is, these requirements are equivalent to asking the CCP to give up political power and control in China.In the past several decades, all the actions that the CCP has taken in politics, economy, military and diplomacy come down to the bottom line of maintaining political power and political stability. Anything that jeopardizes the CCP’s rule and control, even if it brings great benefits to China and the Chinese people, the CCP will try its best to stop it.
If the U.S.-China trade war or trade agreement can ultimately lead to the structural reform of China’s economy and the disintegration of the Chinese Communist regime, from the long-term perspective, it will strip out the CCP—a vampire—from the Chinese economy.
Without the CCP, China’s economy will enjoy a sustainable and healthy growth, which is beneficial to China and the Chinese people.
With the escalation of the U.S.-China trade friction, the CCP does not care about other things, but holds onto its bottom line—preserving its grip of political power. Therefore, “maintaining stability” has become the main priority for the CCP.
The CCP is currently in the process of mobilizing all state machines and utilizing all resources to stabilize the political power at all costs. These include manipulating the depreciation of the Chinese currency yuan to offset the losses caused by the increase in tariffs; intensifying the plunder of Chinese people and private companies; and passing the losses from the trade war onto the Chinese public.
