If there is such a thing as a “hot economic war,” we have been so with China for the last two administrations, albeit on a low but steady and manageable flame. I would council deep, cleansing breaths as we begin to examine the situation before tensions are ratcheted up even further, to levels that are dangerous to the stability of the international order.
It didn’t begin with the slow, almost lazy drift of the Chinese spy balloon across the territorial United States in real time. Nor will it end that way. But we are, at present, at a dramatic low point in US-China relations, so much so that the almost romantic portmanteau “Chimerica,” that which once delighted Monocle magazine reading elites in previous times, now leaves us with the bitter taste of ash. And it is probably not a coincidence that anti-Asian hate crimes in America are on the rise. But here we are.
It could not have come at a worse time. The balloon was first spotted over Montana — the state with the most vulnerable Democrat Senate seat! — less than a week before the State of the Union address, the most important national speech of the year. One could literally not have scripted it better (think: The West Wing) for maximum dramatic tension. Republicans, with a slim majority in the House, were, until the Chinese spy balloon gave them sharp focus, essentially a pudding without a theme.
China relations are no longer sanguine, if they ever even were. We have come a long way from the days of Bill Clinton’s open salivation at gaining access to Chinese markets at the turn of the millennium, not looking out for America’s middle class — the one that brung him — during the WTO deal debates. Independent analysts begged to differ at the time, but the conventional wisdom, through sheer brute force, won the day. Guess what happened? From World101:
... labor unions in manufacturing and factory work opposed a WTO accession deal, certain that cheaper labor in China would cost jobs in the United States. And they were right: between 1999 and 2011, almost 6 million U.S. manufacturing jobs were lost. A landmark study attributed nearly 1 million of those manufacturing job losses, and 2.4 million total job losses, to competition from China. But because major technological advances such as automation occurred in that same time frame, economists disagree about exactly how responsible Chinese competition was for job losses in manufacturing.
The pendulum swings. The Trump administration and, increasingly, Biden’s as well, have been hawkish on China. Congress echoes the zeitgeist. It is a corrective political mood, anti-Clintonian, and increasingly skeptical of Beijing. The only thing more surprising about Donald Trump’s China tariffs is the fact that Biden has basically maintained the structure of his predecessor’s trade policy, despite their deep, deep philosophical differences. President Biden, truth be told, is actually tougher on China than his predecessor, although no Republican in Congress would ever agree with that assessment on the record.
This is truly one of the most underreported economic stories of our time, the bipartisan opprobrium of Beijing. From Bloomberg:
The Biden administration has kept in place a set of tariffs imposed under President Donald Trump and confronted Beijing over what it sees as human-rights abuses, unfair trade practices and threats to US national security.
But hundreds of US businesses big and small have made a fresh push for the removal of the levies — which were instituted in waves starting in 2018 — saying they have raised their input costs at a time of accelerating inflation.
As the White House reviews the tariffs, there’s little indication that the White House is inclined to significantly roll back the tariffs on the imports that span industrial inputs — such as microchips and chemicals — to consumer merchandise, keeping them in place as leverage against China and amid concerns that repealing them would be politically risky.
Further, the President’s sweeping sanctions on chips directly thwarts Chinese technological ambitions.
Biden, a Scranton, Pennsylvania-born product of a working-class Irish Catholic family, identifies with the working class in a way that Clinton, of a similar upbringing, but a different tribe, never could. Bill Clinton, at heart, is always looking for the next limb to climb; Joe Biden, by contrast, seeks to uplift the working class. And never the twain shall meet. Ever wonder why we haven’t see Bill Clinton on the campaign trail during the last two election cycles? He’s just not Joe’s kind of people.
Ever since the Trump administration, the saber-rattling over China has only increased in intensity. Enter: the Chinese spy balloon, which demands more sabre rattling. At the State of the Union, no less. “I am committed to work with China where we can advance American interests and benefit the world,” the President said. “But make no mistake about it: As we made clear last week, if China threatens our sovereignty, we will act to protect our country. And we did." Because Biden, politically, could do no less.
Now, even if there were a will in Congress (and there isn’t), removing or scaling back the tariffs of two administrations is significantly more difficult. Our economies are so intertwined from the now-bygone Clinton era-thinking. "The annual goods-trade deficit with China widened 8% to $382.9 billion, the biggest on record after the $419.4 billion shortfall in 2018," note Eric Martin and Ana Monteiro in Bloomberg. With that in mind, is Chimerica headed for a “Conscious Decoupling”? Are American businesses? Or maybe this will be just a trial separation between the superpowers? The world awaits with baited breath.
The hyperventilating of the feral GOP is more than just performative theatrics. It is a powerful mood — the zeitgeist — and even Biden knows that. They smell blood, not Chinese spy balloon parts, in the water. The President’s decision to continue on with a lot of the Trump trade architecture on China, while refining it, demonstrates a certain political potency to the trade issue, for sure. And Congressional Republicans — as well as the Fox News media machine — are not above performative theatrics claiming Joe Biden is “weak on China,” a claim sure to be repeated, ad nauseum, on TV ads in the upcoming election season now less than a year away.
Finally, Treasury Secretary Janet Yellin, to her credit, is doing a good job ratcheting down the tensions between these two great, macho superpowers. There’s a lot of testosteronal musk in the gladiatorial fundament, let me tell you. But when two nuclear armed superpowers have been engaged in a trade war for the last four years and things are only escalating, well, it does not augur for a serene next few years.
wow. Just: wow.
"It is not news that the justices favor a handful of law schools in doling out clerkships, a glittering credential that all but guarantees success in a profession obsessed with status markers. But the study adds another factor: To get a clerkship, it really helps to have gone to college at Harvard, Yale or Princeton. Albert Yoon, a law professor at the University of Toronto and one of the study’s authors, said the finding was disturbing." (NYT)
“The paper focuses on 3,122 bones, tusks and teeth thought to derive from more than 70 straight-tusked elephants — some skeletons of which were virtually intact — that died 125,000 years ago in a heavily forested lake basin of what would come to be east-central Germany. The researchers argue that, for at least two millenniums, Neanderthals hunted there for the giant, now-extinct herbivores as part of what the paper’s lead author, Sabine Gaudzinski-Windheuser of the Monrepos Archaeological Research Center and Museum in Neuwied, Germany, called their ‘cultural repertoire.’” (NYT)
‘This Could Be a Career Ender’: Elizabeth Banks Risks It All for the Gory, R-Rated ‘Cocaine Bear’ (Variety)
Microsoft has the edge in AI race, with the help of ChatGPT (SEMAFOR)
Fox Corporation Ad Revenue Climbs 4% on FIFA World Cup, Midterm Elections (TheWrap)
Madonna Dismisses Critiques of Her Appearance at the Grammys as “Ageism and Misogyny” (VF)