Sirius XM on March 23, 2018 hosted China expert Michael Pillsbury, Hudson Institute, and author of The Hundred-Year Marathon: China’s Secret Strategy to Replace America as the Global Superpower (2015). Excerpts below:
Pillsbury noted that Trump praised Chinese President Xi and thanked China for its assistance with the North Korean nuclear missile crisis even as tariffs were announced, framing the situation as a “major negotiation” between friendly states with competing interests rather than an all-out “trade war.
He’s offering them some solutions that he hopes they’ll move toward,” Pillsbury said. “One of them is, they simply purchase $100 billion worth of U.S. exports.
Pillsbury found it necessary for Trump to take aggressive action to move negotiations forward because China simply has not taken American concerns seriously until now. Adding to the pressure on China is the release of a study that details “what China really has been trying to do to the United States.”
The Chinese treatment of the United States has gotten more unfair [since 2015], if I can put it that way, than was the case three years ago when I wrote my book trying to sound the alarm.
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“They’re going to put enormous tariffs on American imports to China, they’re going to stop buying soybeans and sorghum and live hogs — three of our biggest products in the farm states — and so the farmers are going to be angry at President Trump, and this is all going to be terrible for world trade, because everybody sort of knows that as tariffs go up it’s a tax on all the countries involved so the world growth rate will drop.
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“My own view is quite different from the critics of President Trump,” Pillsbury countered. “I think he’s on the right track and this is really a historic decision that takes the past presidents, like…Obama – [he] whined and they complained and they made speeches about Chinese unfair trade practices, but they really wouldn’t do anything about it.”
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Pillsbury cautioned that many Americans retain an “out of date” image of China as poor, technologically backwards, and reluctant to provoke economic warfare with wealthier nations while so many of its people struggle with poverty.
“I wrote my book against that idea,” he said. “One of President Trump’s key advisers, who was obviously present today at the meeting with the president and has gone on television since, is a gentleman – a professor, actually, University of California Irvine in the past – named Peter Navarro. Very courageous fellow, he wrote three books blowing the whistle on Chinese unfair trade practices.”
“One of his books is called Crouching Tiger: What China’s Militarism Means for the World. What this caused is the opening of a debate among China experts in America: are the Chinese really as friendly and poor? Often people say they will collapse soon. They sort of present a picture of China as about to collapse. While all this debate has been going on, the Chinese have doubled their economy again. They’re quite close to passing us. This is really a shock to most people. How can a poor, backward country surpass the size of the American economy? It’s just astonishing,” he said.
Pillsbury pointed to the new United States lawsuit against China in the World Trade Organization over the behavior outlined in yesterday’s report as another serious measure against Chinese trade practices, and further evidence that President Trump appreciates the scope of the problem.
“We’ve sued China before. China is the country we’ve sued the most in the World Trade Organization, but never this scale of criticism,” he noted.
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The products targeted by the new tariffs and the rationale for including them will send a strong message to China. “It’s going to be examples, as this report explained today, the examples are based on a kind of reciprocity that if China has stolen intellectual property, stolen trade secrets and then made money off of it, that is the kind of product that will have the tariff placed on it. It’s kind of like a stiletto, if you will, not a sledgehammer,” he explained.
Pillsbury predicted that the Chinese will now understand Trump means business, and will make concessions to hold off further sanctions.
“I happen to think they need us more than we need them,” he said. “I don’t measure just trade. I measure all the things we’ve essentially — I hate to use this phrase — given away to China over the last 30 or more years. They still need our investment, our technology, our goodwill, our buying their products, the scientific programs we share with them – there’s an extremely long list of the benefits China gets from the United States, counting everything.”
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“My own forecast is there’s not going to be a big trade war. The Chinese are quite afraid of being demonized in the United States and around Asia…I think what’s actually going to happen is we’re going to have some successful negotiations for the first time,” he said.
“The kind of stonewalling they were doing last year is going to end. They’re not going to roll over and just suddenly buy $100 billion worth of products in the month of April, but I think we will see a number of steps by the Chinese that will justify what President Trump did today in this historic decision,” he anticipated.
Pillsbury lamented that many people don’t appreciate the severity of the challenge to American interests posed by China.
“But they will when China begins to fight back, at least rhetorically,” he told Mansour. “They don’t understand…that China is wrapped up with the loss of jobs, the competition for resources in Africa and Latin America – just a whole range of competitive things we’re engaged in with the Chinese.”
Even as the Trump administration pursues what Vice President Mike Pence described yesterday as “the end of the era of economic surrender,” Pillsbury advised keeping areas of productive cooperation with China in mind, most notably North Korea.
“That’s a brilliant way to start out,” he said of President Trump’s remarks on Thursday. “He didn’t say, ‘You’re bastards, I hate you, I’m going to bring China to its knees with my memorandum today.’ He didn’t say anything like that.”
Furthermore, he noted that even the American freedom of navigation patrols in the South China Sea, which the Chinese frequently complain about, do not represent an aggressive challenge because the American ships follow “innocent passage” protocols, keeping their weapons radars off and avoiding military maneuvers as they cruise through the area.
“We have not challenged China in the South China Sea yet. That’s the important thing to understand. Some people think we should.
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Pillsbury quoted U.S. trade representative Ambassador Robert Lighthizer’s statement that in addition to imposing tariffs and blocking intellectual property theft, one of the Trump administration’s top goals is to place “restrictions on Chinese investment in the United States.”
“They blocked large sectors of their own country, and they say, ‘We will not permit foreign investment in this sector,’” Pillsbury said of the Chinese. “We’ve negotiated with them for more than ten years to try to reduce that list – it’s called the ‘negative list,’ for lack of a better phrase – and the Chinese just won’t budge.”
Pillsbury found it telling and encouraging that two days ago, with the Trump tariffs looming, Beijing for the first time signaled a willingness to open new sectors to foreign investment.
“The Chinese anticipated this, and they’re trying to deal with it calmly.
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“They want to continue what I described in Hundred-Year Marathon as a kind of stealthy acquisition of the role of the Number One economy in the world.
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“We need to harden our own economy against Chinese theft, Chinese investment,” Pillsbury recommended. “Sometimes it can come in a small company. They will buy a technology in a joint venture or through a small company, let’s say in Silicon Valley, that no one’s ever heard of. Back in the days when robotics and artificial intelligence wasn’t a household word, they were acquiring these high technology companies, sometimes very small.”
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“So China will be not only the dominant economy in the world, which they’re well on their way to doing, but they’ll be the dominant military power in the world. Now, this isn’t in the next few months or the next few years, but this is the trend. What President Trump is doing is trying to halt that too with these restrictions on Chinese investment in our high-tech sectors,” said Pillsbury.
Comment: Opening up to China was a wise move by President Nixon and Secretary Kissinger during the Cold War. The failed policies of Democratic administrations in the United States in relation to the Soviet Union were based on the false belief that the communist society in Russia would with time become open. The same failed policies have been dominating in regard to China. The rising economic wealth in that country would create an open society in the worlds’s most populous nation. Progressive elites in the West allowed China to rise to become a serious challenger to the West. President Trump is taking action to prevent China’s continuing rise. March 2018 is an important turning point.
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