Does China cheat? I take Friedman's word for it. Does the US cheat? Does the US do business ethically? Those are rhetorical questions. Martin Altman
1
The freshly printed paper “Sovereign Issued” US Treasury bonds and other US securities denominated in US dollars that the US government periodically prints on paper and then sells at public auction to (Communist Chinese and other wealth creating industrialist individuals in the taxable wealth creating BRIC nations in return for foreigner's US Dollars they got by manufacturing and selling their products to US citizens) raise funds to pay for various taxable wealth consuming US government activities actually have absolutely NO VALUE at all.
These financial instruments are however easily and quickly redeemed by foreigners for (when they purchase) title to privately owned businesses, movie houses, factories, casinos, hotels, farms, land, ports, refineries, forests, ports, breweries, distilleries, and other privately owned national wealth and other assets located in the USA that do have value and were created by previous productive US generations prior to the USA de-industrializing (instead of Gold from Ft. Knox or the NYC federal reserve bank).
After the USA has sold all of the privately owned national wealth and other assets located in the USA to mortgage and/or redeem our US currency and our freshly printed paper “Sovereign Issued” US Treasury Bonds, foreigners will then stop buying any of our freshly printed paper US Treasury Bonds, and then the value of the US Dollar will approach the value of monopoly money, toilet paper and/or Bitcoins.
7
Wily Chinese, waiting for this moment to challenge us in many arenas when we are "led" by someone as ignorant as Trump.
4
Overall, China seems to have solved its basic problem: How do you feed, clothe, and shelter 1.6 billion people?
Now America needs to solve its basic problem: How do you take care of people with poor job skills, lousy educations, and decadent attitudes in a country that survives on a service economy that manufactures few goods for export and is led by a lying narcissist and amateur statesman?
25
I’m betting on the United States.
4
"...before China gets too big."
Uh, that horse left the barn in about 1949.
7
Trump is making this very complex. All he needs to do is because of tariffs on US Cars, place 100% tariffs on shoes and clothes for all imports effective in 6 months and on Chinese retaliation triple that with a comment that other industries coming next. Then waive that for all countries except China.
Here is what it will do.
1) Kill the two industries that can be replaced overnight without a shortage.
2) Create a worker surplus for China to employ elsewhere or pay while they sit and curse Xi
Then Trump should do what he does best. Tweet on his next move that he will never take and watch industries take their business elsewhere.
2
The American view of the world is often limited by the country's short history. We forget China has been a major world power for much longer than the United States has existed. Compared to the length of Chinese history, China's vulnerability from mid 19th century to late 20th century was an aberration. A country with about 1/6 of the world's population will inevitably be a world power.
That's why the current wave of panic over China's power is ridiculous both in that it assumes the inevitable could be prevented, and that the United States' future somehow depends on keeping China "contained."
China's current order will have its own troubles. Authoritarian regimes hide problems well, but hiding problems don't fix them. As North Korea's sudden shift in attitude shows, we on the outside can rarely see the tipping point until it happens.
Instead of obsessing over "fighting China," the United States should take a measured approach and focus on adapting itself for the future. We refuse to invest in education, clean energy, infrastructure, and even basic quality of life like healthcare. We refuse to cultivate good relations with old and potential allies, which is the best response to any potential threat from China, and instead butt heads with everyone from Germany to Mexico. This self-destructive lack of foresight is what will kill America's future, not China.
19
This is a war that both Trump and China will lose. It will end in an economic collapse for every one - something bigger than Lehman. It all depends on who can pick up the pieces better after the collapse. China will not be in that great a shape because an economic collapse will mean the end of the one-party system. The US will not be in good shape either, because Trump will have destroyed its institutions.
The economic/political map of the whole world will need to be redrawn.
1
Yes, Trump is right about China.
Yes, Trump is right about militant Islamism.
Yes, Trump is right about indefensible borders.
The problem is that when it comes to basically any topic at the level of the US Presidency (TPP, Iran, NATO, DACA, so forth): these are games of chess and Trump apparently only knows how to play thumb wars.
It's really sad that such an incompetent man/administration/voter base can have such a deep impact on all our futures as free Americans.
3
There are two parts to the equation. First, stop China from stealing our intellectual property and level the playing field between the U.S. and China. China is no longer a developing country. Second, educate our own citizens in technical areas and science so we can produce high value added products. Improve our infrastructure. Stop being anti-education and anti-intellectual. Respect education and brains. Trump seems to be interested only in the first part of the equation. Too bad.
2
If China wants to win it all, all it has to do is adopt the Democratic Socialism of the Scandinavian countries. This would temper it's value-free ruthlessness around the globe and leapfrog it into world leadership.
2
I have been to Asia many times in the 2oth century before they industrialized, and I believe that the future de-industrialized USA will probably resemble those pre-industrial nations after the USA completely destroys all of the wealth creating US industries and their wealth creating manufacturing jobs.
5
Don't forget the complicitness of corporate America transferring and outsourcing manufacturing to China to increase barely-taxed profits and keep Walmart's minimally-taxed profits even higher while those Americans who earned fully-taxed wages became unemployed and wage-less.
And trump style genius of trashing the TPP is a blessing for Xi - and Putin.
As for China's best and brightest, they are under increased pressure, surveillance and control regardless where they happen to be outside of China. Chinese living in Australia are a scary example of the Chinese autocratic reach.
7
The fight for supremacy between China and the U.S. is ongoing. The former, being a dictatorship, may be more efficient in the short term financially, able to 'dictate' unambiguously what needs to be done, especially given there are no human rights to speak of, and there is the muzzling of their press in favor of official propaganda. Unless Mr, Xi shows more trust in his own people's potential for greatness, allowing dissenting voices to strengthen their governmental system, China will go on wasting the best it has, human talent. Not that the United States is flawless in it's behavior, trying to do business with other nations by bullying them into compliance, imposing dumb tariffs that will only be deleterious for all involved. And this chaos may go on as long as Trump, a deeply ignorant, and arrogant thug in the Oval Office, remains tweeting lies and nonsense...and disregards expert advise and seeking cooperation instead of division.
2
Instead of Communist China invading and conquering the USA, their Chinese businessmen are redeeming their foreign trade surplus US Dollars by buying privately owned businesses, movie houses, factories, casinos, hotels, farms, land, ports, refineries, forests, ports, breweries, distilleries, and other privately owned national wealth and other assets located in the USA that do have value and were created by previous productive US generations prior to the USA de-industrializing (instead of Gold from Ft. Knox or the NYC federal reserve bank).
Industrial individuals in China and other industrialized nations might decide to or be directed by their government to stop buying US Treasury Bonds as they are printed and auctioned off by the US Treasury.
This will result in the US government printing more US Dollars to pay US government expenses, which will reduce the purchasing power of the US Dollar.
The US Government actually Creates UD Dollar Credits out of thin air and purchases US Treasury Bonds at these auctions, but that is the same as just printing paper US Dollars, which will diminish the value of the US Dollar to nothing.
2
Of course China cheated the WTO rules, and of course they stole innovations from the west. But the companies that went to China prostituted themselves in order to gain access to cheap labor and a booming Chinese market, and didn't care that they were creating a long term problem. . However the biggest problem hurting the United States is American arrogance. Americans were so confident in their innate superiority that they absolutely could not imagine that one day China would catch up and eclipse them. Mr. Friedman is correct - something does need to be done. But the mere fact that it is Trump and his administration that is leading this puts us at a clear disadvantage. Trump was dumb enough to tear up the TPP only because it was an Obama initiative. Trump is too dim witted to see that the United States cannot win this battle alone - it needs allies like the EU, Canada and Japan, yet he is constantly going out of his way to offend them with his idiotic tariffs. But most of all, if the US wants to remain the world's economic and technology leader, a systemic change is needed. China directly invests in industry, they tax profits heavily and the proceeds are re-invested in infrastructure, technology and education. We, on the other hand, are trying to cheat our citizens on medical care and retirement funds so that Apple can buy back its own stock. Yes, the Chinese are going to eat our lunch, and if we keep electing racist buffoons, we deserve to go hungry.
13
A person can move to USA live here for 5 years and become an American and be treated as such. A person can move to China, live there for 50 years still won't be a Chinese and will be a foreigner for ever. That right there is the most important trait that will keep America great.
As Americans we need to overcome our tribal politics and unite under one country, one flag and one god to propel our greatness well beyond 21st century.
I think our we needed a maverick of a President to take on China and I believe we got one, albeit a maverick child but a maverick indeed. Our unity should go beyond our borders and encapsulate Japan, SoKo NoKo, India, Aus on the pacific. To put a check on Chinese abuse of laws and human rights.
Force apple to manufacture here or heck anywhere but China. Expand propaganda to expose the cheapness in Chinese goods. We hit them where it hurts them the most.
4
Let's hope Trump has the intelligence and temperament to listen to the experts on this one. I suspect anyone dealing with the Trum has the upper hand because Trump believes he knows everything.
It was Reagan's policies benefiting companies closing down US manufacturing facilities and the enormous amount of money that businesses and corporations invested in Chinese manufacturing, that significantly helped to propel China into the position of power they have today.
1
So can we put back together the TPP after Trump leaves office, or it will be too late by then to alter the balance of trade power?
1
Are you upset by the pablum and narrowed irrelevance of commentary, the deception and pain? The battle royal paradigm is part of a bigger fight over power, domestic and global.
For America, who has the bigger vision? Pence, honored to meet a convicted racist? Pruitt and cronies trading millions in illegal favors? Bolton barking for war? Kelly saving the idiot? Mnuchin and wife, gripping sheets of new bills? Or Stormy, crossing the moat to silence dispute: “I spanked him, slept with him; didn't want to, and I am not a victim.”
The new American vision has two parts: one, the racists' myth, people taking comfort in their anger and hate; two, a rapidly accelerating privilege fetish of corruption and theft, a growing injustice emblazoned by lies and fiats (separating families, deporting soldiers' spouses, cutting women's health services, banning transgender military service; tariffs and quotas. “fFree thinking.”
Corruption and the seizure of power is at storm strength; Israel steals old files, Russia drops chemical bombs and buzzes US aircraft; America slams its doors, turning off the key to its vitality and innovation. Gays and raped women are global scapegoats, blamed and shamed. Families, divided, are sent to separate countries; fiat pricing replaces regulated markets. Old choices revisited: workers or the rich; Martin Luther King or Robert E. Lee, racism or civil rights, peace or force threats.
Resist the disruption.
2
As twhusky85 says, "... , the robots are coming." While the robot programmers and installers will make money - it will be the feeders, tenders, and the catchers will be paid cheap money. But these are city people. I think I read that whole cities were abandon in China because they were not productive. The other problem was that male farmers had no mates due to the "One Child, One Family" policy back in the 20th century. Unless told, i would follow the women that now live in the cities that are looking for a rich man. Thus, no farming. Yes, China is old and do I have to remind everyone that it is communist?
1
It does not matter what form of government that the USA, Venezuela, Greece, Nigeria, or any other city, state, nation or family selects.
Every Republic, Democracy, Theocracy, Capitalist, Communist, Socialist, Fascist, Dictatorship, Kingdom, Principality or any other form of government still has to have their privately owned businesses continuously create sufficient new taxable national wealth in their nation so that there is enough available taxable wealth available in that nation for that nation's government to confiscate a portion of that new taxable wealth and/or profit through income taxes, sales taxes, property taxes, tariffs, etc., and other taxes to pay for their wealth consuming government activities such as creating new infrastructure and federal debt repayment.
This can only be accomplished by limiting government spending to less than the government collects in taxes from non-government supported businesses or that nation will face bankruptcy.
Hopefully this can be done by each government without borrowing wealth from other sources (mostly individuals in the wealth creating industrialized manufacturing nations) to pay for their various wealth consuming government activities including any distribution of wealth confiscated from the wealth creators and then handed to the tax supported citizens.
Nations such as the USA, Greece and Venezuela should re-industrialize or take other similar actions ASAP as required to generate as much new taxable wealth as possible.
2
The main thing the US has going for it in upcoming negotiations is that everyone sees America heading toward political collapse. No one regards that as a benefit -- not China, not the EU. Better that the chaos be eased and mitigated. So some calming concessions may be in order.
With the advent of Trump and American institutional decline, the question of China's eventual ascendancy to world primacy is no longer in doubt to anyone beyond the US borders. So it really just becomes a question of how best to effect it. China now sees no need to be belligerent. Patience will suffice.
2
The USA is emulating the deficit spending economic policies of the Greek Government, and expecting a different outcome.
When others will not buy any more of our freshly printed US Treasury Bonds, does anybody think that the EU will buy any? The EU bought Greek Bonds when nobody else would!
2
Those were Euro Bonds. The US has it's own currency, unlike Greece.
"The Capitalists will sell us the rope with which we will hang them" (Lenin)
6
The blame for the malevolent ascension of China lies with the four previous presidents. At every turn, whenever there was an opportunity to put China’s feet to the fire, those administrations instead chose to overlook China’s transgressions.
China used tank treads to grind into the pavement unarmed students, they employed slave labor in their export industries, they have shamelessly stolen every manner of our intellectual property, they held our plane crew and took apart our reconnaissance plane on Hainan Island, and they built artificial islands in the South China Sea and armed them. At every point, they have dared us to stop or punish them, and in every case, they have watched us back down.
One should have no illusions of peace in our time. It is clear that force is the only thing that the Chinese government understands, so we need a president who will push back hard. He may be awkward and doesn’t always shoot straight, but at least he’s trying to push China instead of trying to pat them on the back.
7
China. America. If you had to pull 2 photos out of the library of history, photos that encapsulate the psyche of the two countries, and how they differ, I would pick 2 of the most famous photos in history. For America I would choose the flag raising at Iwo Jima. Five free men, all volunteers, after a day of fighting on the most godforsaken spec of dirt ever created, they work together to plant the American flag in that volcanic soil, as an almost perfect symbol as America as a spring of freedom and protector of liberty and justice in a devastated world, the conquered people of the world could look to that photo, that flag raising as American justice as an unstoppable force. There is no 1 % or 99 % in that photo, just Americans of all walks of life working toward a goal, working toward victory and a world free of fear. The other photo is just as iconic, and this one represents China, it is the photo of a single Chinese man, standing in front of a column of Tanks in Tiananmen Square. It was a crackdown against student protesters who expressed a desire for more freedom. What is unique about the photo is not the act of valor, of a man standing in front of Tanks in an effort to keep them from passing, but the fact that in that country of a billion people the man stands alone.
5
President Trump and President Xi will continue to get along or not get along about the same as major power adversaries have gotten along or not gotten along for centuries. There can be no real understanding between nations or individuals until we discover what we have done and are doing to ourselves with our various beliefs and set values - and this cannot be done until we have programmed the human mind in the computer. Such a program of the mind can only be built with a "survival" program at its base, and it is this survival program that will show us how we have tricked the mind in society about just what is supposed to survive - leading to all unnecessary human suffering and deaths. For a full explanation of why Trump and Xi, as well as the rest of the world, need the program of the human mind to change behavior, please visit RevolutionOfReason.com
Good opinion, but for one aspect--the perspective is one from the West--China must play by Western rules, and Western hegemony must continue to prevail--China is an usurper.
The pendulum has swung, 300 years to the West and 300 year to the East. There has come a new world order, and the West must adapt.
China has paid its dues, with the blood, sweat and tears of its people, but has overcome and moved beyond the exploitation, unlike the Africans, Arabs and various Latin Americans.
Gunboat diplomacy, the tried and true method of the West, including the US of A, is no longer effective, and a weapon of choice. The Europeans and the Americans are no longer bwana by default. The European century has ended, and the American century is ending.
The world is more than just West European and American to own. The Africans, Arabs and Muslims, etc., the rest of the people in the world deserve a good life also. China is a champion of the third world, and this disturbs the prevailing order.
Education and infrastructure--yes--but look at what Donald Trump has done to the US of A? He robbed both. Even had a Trump University scam. And he pocketed the infrastructure money with his tax heist.
Don't blame China for America's problems. Look at the devastation of America caused by Trump, and ask how this could be happening and is allowed. China did not steal anything from the USA that greedy American business interests were not willing to impart.
10
Backbutton,
This is brutal truth that many in the west simply don't want to face. Denial is better than truth obviously. The days of western hegemony funded by flood of native American resources and resources from colonies are over. China is back, as is India.
A smarter west will accommodate the rising Asia and bring them under the global rules and give them a share of global control commensurate with their population. This can't be won by trade war because the western market together is only 15% of world market. They cannot survive shutting down Asia, Africa, and S America. China and India alone are 1/3 of the world market. By 2050 the top economies are developing economies with China, India, Brazil, Russia, Indonesia, and Mexico rising.
History doesn't have to repeat itself with winners take all, like what the west did. But the rules have to be drawn now before the west loses grip on power.
2
The US government has destroyed the economic wealth creating capacity of the USA!
The USA no longer has the human STEM database to create any new products, processes or systems that the USA could sell to other nations.
The USA is headed for economic collapse!
My reaction to anything Friedman says is just the opposite.
It has been a lot of years with no variation.
What this article ignores, and Bannon (and his mouthpiece Trump) to his credit did not, is that big business in the West made a lot of money as China's fixers knowing full well the long term trajectory was to benefit China at the expense of Western Democracies. And these fixers took cover under the free trade mantra while knowing full well that China does not do free trade! It was absurd. So full points to Trump, I mean Bannon, here to have peeled off that facade.
3
The Chinese have long memories, and the national resentment is about the western dominance of it since the British opium wars, and even earlier.
China was one of the worlds most innovative societies for centuries, and was taken over by western imperialism. It now is establishing its place in the world order.
China can upset the economic order also, it can create a banking system that can not be sanctioned by the U.S. It can decide to do business with those countries whose banks have been sanctioned, and there will not be a damned thing the U.S. can do about it.
5
Your 3rd paragraph is now. China has already done all those things. It's a matter of time before the US goes to war over the Petro $.
1
If US government borrowing (by actually raising the debt ceiling, then printing and selling newly issued freshly printed paper US Treasury Bonds) to pay federal government expenses that are in excess of the tax collections continues at the present rate, then the US dollar purchasing value will diminish to a tiny percentage of today's purchasing value related to other (industrialized nation's) currencies, and then the Chinese Yuan (or Renminbi) might be the "last man standing" with any value for use in international business transactions.
I forgot about the Indian Rupee, the Pakistani Rupee, or the Brazilian Real which will also have purchasing power after the US dollar purchasing power is destroyed with the US government deficit spending since those nations (or their industrial manufacturing businesses and industries) are creating wealth instead of consuming wealth.
1
Uh, Tom, I think I can call you Tom because you have been sharing your views and thoughts with me for oh, I would guess 20, maybe 25 years.
You forgot something here. The TPP, the treaty forged by President Obama to do precisely what you are ready here to concede to China, save our economy and its allied economies in the 21st Century from the robotic ravages of China, of its "one road, one belt" over-reach across the developing world.
A column on this subject that does not even mention the TPP and its destruction by Trump and instead credits him with starting an unwindable trade war with China, is pure and utter nonsense and you know that because you have written it.
In the next five years, maybe less, our national debt will exceed our GDP. When that happens there is no getting back what we surrendered when Trump discarded the TPP and began these moronic trade wars.
We built the American Century on free trade. We are losing this one on counter-intuitive, counter-historical trade policies.
And no, I am not a Republican, I'm a Dem, who understands what FDR bequeathed us at Dumbarton Oaks and Breton Woods.
Instead of Dumbarton Oaks now we have the dumbest of oafs in the White House, surrendering that legacy and all it delivered to the United States these past 73 years.
4
Let’s identify one major issues in this lopsided equation. Even if China played by the book, we’d still be witnessing an asymmetric potential for growth. Take any engineering or science journal today, and you’ll find most of its current authors are Chinese, Japanese and Koreans. What happened to U.S. dominance in these fields?
One of the uncomfortable parameters today is the lack of government support in education in USA in general. After doing a PhD, a physicist today is most likely to get a temporary post-doc appointment if she is lucky. It is even worse with a math degree. Research fund is forever a dwindling resource in North America. Even with a massive cash back through recent tax-cut, industries are not necessarily willing to invest more into an uncertain economy – they are treading it cautiously. How could research and development advance in such an environment?
7
The simple reason why the U.S. will lose this fight with the PRC is they have a grand strategy and we have no strategy. Returning to the 50's industrial base is gone. The future will be lead by countries whose governments are organized to grow and develop their economies. 19th century laissez faire economies are long gone. The GOP vision of little or no regualtion, privatization of social services and free market solutions to a countries problems is a dead end.
5
Re: China ignoring some WTO rules... "boo hoo."
The WTO was never intended to help developing nations grow large enough to compete with the West - it was about "opening up" these countries to Western development thus ensuring that the profits from all their most profitable industries would acrue to the West, even as their meager social services were rolled back and their populations kept obedient servants of their new, distant masters.
This was never anything other than neo-Colonialism. China, India, Brazil and the rest have every right to grow large and powerful enough to have a say in the "New World Order."
And anyone who looks at the USA from abroad can see that our supposedly "free market" is just unfettered monopoly power, government farm subsidies that encourage tremendous amounts of junk food that make our population fat and sick, subsidies to religious and for-profit "educational" institutions that do nothing to educate our population.
This is not at all to excuse China's horrific record on human rights or their dictatorial government, but their industrial policy is something we should be copying, rather than castigating.
And re: democracy - we have disenfranchised a huge percentage of our population with our criminal policies, and even more with our jerrymandering. Most people's vote doesn't matter, and even if they elect someone, our system is so corrupted by industry's money, it ensures nothing will change.
Hardly a principled record to stand on.
8
If you think China has any interest in international cooperation, just look at what's going on in the South China Sea.
4
New jobs for US workers and new taxable wealth for the government to confiscate could be created in the USA to design, manufacture, build, operate, maintain, and repair the future manufacturing robots for worldwide sale if the USA had a human STEM database with STEM educations so that these college graduates will have the critical thinking skills, concentrated focus abilities, and technical knowledge required for US citizens to be employed in the creation of these robots.
Without a Science Technology Engineering and Mathematics (STEM) human database in the USA, the artificial intelligence and hardware for any of the future robotic and automation machines for manufacturing products will NOT be designed, developed, manufactured or built in the USA, but in Asian Nations.
The USA would also need a technical workforce with the STEM knowledge that will be required to operate, maintain, and repair these robotic manufacturing systems after they are created by the STEM educated Engineers and Scientists.
The US education system has recently been producing large numbers of college graduates with degrees who are not educated in any of the subjects that would help them to even learn how to design, develop, operate, maintain, and/or repair any of these future automated robotic manufacturing systems, so maybe the taxable wealth creating manufacturing businesses and their new associated jobs will not ever again be located in the USA.
2
An excellent summation:
“No one can contain China anymore.” You hear that confidence in Beijing a lot today from Chinese: Our one-party system and unified society can take the pain of a trade war far longer than you Americans can. And there is a trade imbalance today because we’ve been investing in our future and you Americans have been eating yours.
Hindsight is always 20/20, but think back to “Who Lost China” in the ‘50s and what the repercussions that still reverberate today...
3
“Fair” is in the eye of the beholder. “Fair” to whom?
The US imported 34.6 million metric tons in 2017 valued at $29 billion, an average price of $838 per metric ton.
https://www.trade.gov/steel/countries/pdfs/imports-us.pdf
Imports will surely decrease as a result of the 20% tariff. So will the world price of steel, because of the decreased US demand. However, for the sake of argument, assume everything remains the same, the US government would receive up to $5.8 billion in taxes.
Production during 2017 was 81.9 million metric tons.
https://marketrealist.com/2018/05/us-steel-production-still-waiting-for-...
US production should increase due to the tariff, and US producers should be able to increase US prices by under $168 per metric ton, for a total of up to $14 billion.
US consumers will have less money to purchase other goods and services. Is this “fair” to them?
US steel processors will have to buy their steel at US prices and compete in the US market and overseas with foreign producers buying steel at the lowered world market prices. Is this “fair” to them?
How much of the $20 billion will be kept by US steel producers and stockholders, and how much will flow to US consumers? Is this “fair”?
How many American jobs will be lost, 50,000, 100,000, 200,000?
How much pain is “a little” pain?
2
It's not just China. It's every country in the world where education is free, especially higher technical education. In some places, (China), technical aptitude is identified early and directed into specific roles.
@ 1/3 of Americans have 4 year college degrees. Less than 1/4 are STEM degrees. Worse still, the US illiteracy rate ranks among the lowest in the Western Hemisphere and far below Europe and Asia.
Even worse still, the robots are coming. The 25% low skilled, unemployable and uncounted labor force dropouts, will swell to 40% by 2020 as automation replaces workers across all industries.
My advice, play nice with China or the US will go to bed without supper.
25
twhusky85,
Instead of producing Science, Technology, Engineering and Mathematics (STEM) college graduates needed for technology leadership, the USA continues to produce mostly liberal arts graduates, MBA graduates, history graduates, philosophy graduates, English graduates, foreign language graduates, economics graduates, musicians, artists, social workers, government graduates, political scientist, and/or other similarly educated US citizens that will not contribute anything to correcting the foreign trade deficit or to the re-industr¬ialization of the USA? The economically successful industrialized countries (not the USA) produce almost 70% STEM graduates, and very few graduates with liberal arts degrees.
4
If robotics displace 40% of the workforce that is 400 million chinese. I think it will be a much bigger issue for the Chinese. People forget China has 1.3 billion people.
2
It's worse than producing mostly liberal arts graduates. It's not producing enough graduates period. It's also not producing enough skilled tradesmen. I'd recommend a plumber's license over a 4 year IT degree. Point being is, too many Americans are just plain lazy and willfully ignorant. It's easy to believe what you want if hearing what you don't feels like home work. The President even said he doesn't like to read so he relies on news that makes him feel good to shape policy. Insane...!!!
"The U.S. and China Are Finally Having It Out"
Hardly, this is just a skirmish. When China has technology that is a decade ahead of ours, that will be the real fight. I expect a lot of conservatives will have their heads blown off by robots.
3
A fine column, allowing readers to think through the nuances of the trade-development dispute. I know of no reason why the outcome cannot be successful for both china and America by each conceding some and working together on domestic development needs.
1
"Trump seems to believe that he can reshape how China approaches the next era of global trade without allies — just American brute force. Good luck with that."
This is something I truly do not get. Who in the White House does not understand that we need our allies in order to effectively confront China? And if they do understand that, who would support placing steal and aluminum tariffs on them and rip up trade partnerships.
Mr. Friedman is right, we need our allies and trading partners if we are going to effectively persuade China. The power of the US economy is not only in its size, but our ability to form coalitions that lead the charge on establishing rules and norms.
2
What is really sad is that China will be using Trump (and his incompetent administration) as the poster child of why "democracy does not work." Obviously, the Chinese history books will conveniently forget that what brought us to this tragic moment is the fact that we do not have a real democracy, where the majority gets to pick the president. Instead, we have this mockery of democracy called the electoral college.
3
Many on both sides of the aisle were against the TPO. Now it seems that only Obama saw the true benefit. It was nice to have allies only a short while ago. Fighting a world wide economic war all alone is no way to move forward. Way to go DJT. Instead of cleaning out the swamp, he's making the entire USA into a swamp.
DJT president, the gift that keeps giving...
2
This is one of the first well thought, authentic criticisms of the Trump White House's approach to anything ,that I have read in the NYTimes for a long time.
It would be impressive to see where we could advance as a country if media criticisms were less Russian and Porn Stars and more productive as Mr Friedman has proffered.
Trump if nothing else seems to care about his public image. I imagine it wouldn't be as easy to ignore a mountain of productive criticism as it would a mountain of salacious smut.
3
Free trade: a code word for easy access to labor camps in third world countries. That is all it has ever been about.
P. S. If you believe global warming is real then you must come out against free trade. Shipping hundreds of billions of tons 9,000 miles by ocean freighters each year is one of the main contributors of global warming. Local production and shipping must come back into style whether we like it or not. Free trade and the associated labor camps already belongs on the ash heap of history.
4
Against stupidity the gods themselves struggle in vain. In 1775 King George III and his Parliament believed the British empire was at stake because America was on a path to becoming so large and powerful the mother country would lose control. Hence, they believed cracking down hard on Massachusetts was vital, before its influence spread to the rest of the colonies. The order to General Gage to force the rebels to submit was a height of folly, provoking the very colonial unity and independence the British meant to suppress. The fools in London thought the colonial militia cowardly bumpkins, not the determined and trained warrior woodsmen who outnumbered him four to one that Gage reported. They ignored American overtures for a peaceful settlement to all disputes if colonial interests and rights were respected.
Today's fools in the White House believe China must submit before it is too late, oblivious to Chinese strength and determination and believing America is so great under Trump that allies can be ignored or ordered rather than recruited. This isn't likely to end well.
4
Re-writing trade agreements will not make the United States more competitive.This is the real problem. The Koch brothers,the science deniers, and Donald Trump and their policies are what is holding the United States back ,not trade policy.Trump wants to blame the government for policies that were pushed by big business over the last 30 years.It was big business that benefited from these agreements as well as American consumers due to lower prices.American busineses created the monster and now they are running from it,hoping that trade agreements will solve the problem. Whatever happened to all the talk about free markets?Now that Republicans are in power,they seem to have forgotten that often repeated mantra they talked about endlessly during the Obama administration.Where are Paul Ryan and Ayn Rand when you need them?
3
It's about time. China has for many years stolen things they could never figure out how to do themselves. They are crooks, thieves and have a not so well hidden propensity to outright lie. Let's undig our grave.
6
Mike,
We are also crooks, thieves and liars because thats how we arrived at the top. We stole technology from Europe, stole land and resources from Native Americans and used free slave labor for decades.
7
US secret technology has usually been for sale in accord with the INSTITUTIONALIZED “PAY TO PLAY” methods of doing business with the US government.
When the Chinese Communist missiles would not fly on course and usually had to be destroyed in-flight, the Chinese Communists gave Bill Clinton $100,000.00 in cash for an export license for TOP SECRET classified military Hughes Aircraft Rocket Guidance Software Technology to Communist China as a part of President Clinton’s secret “Chinagate” (treasonous bribery) deal with Johnny Chung (as the bagman).
This was Treason!
President Bill Clinton was not arrested, tried and/or hanged when his Treason was discovered!
When President Bill Clinton got caught taking this bribe, his Secretary of State Madelyn Allbright stated that, "the world needs more than one superpower."
5
A primary reason for China's economic rise is simply greed. Companies chose to move factories to China to reduce manufacturing costs and increase profits that mostly benefited wealthy Americans. The China of today is largely the West's creation. Going forward, short-term gains will do long-term harm. All of this could have been avoided if a more careful China policy had been instituted as China turned to capitalism.
6
"Beijing was able to force multinationals" - I think its as much the greed and incompetence of multi nationals leadership.
1
What is being lost in the discussion is whatever unannounced pact KJU and Xi worked out when KJU took his private train to China.
2
Although it is catchy to frame the undeclared US-China trade war as about the Trump and Xi legacies, it is really about two people, American vs Chinese, and also about two political systems, American-style Democracy vs Chinese One-Party rule. Which one will emerge with the stronger economy and as the next world leader? Based on current facts and statistics and ignore stereotyping, China looks like the hare and USA more like the tortoise. The question is not whether the tortoise will ultimately win the race, rather, can a tortoise morph into a hare?
Friedman's often discussed 2012 op-ed described a chaotic scene in Washington DC. I am curious about that broken escalator in the parking garage at Union Station. Has it been fixed? Based on James B Stewart's NY Times report (Feb-8-2018) "From (Crumbling) Airport to (Broken) Escalators: An Infrastructure Odyssey", don't be surprised that the escalator in DC is still broken.
One more thing: Hilary Clinton also promised to scrap the TPP. She said during the election: "I will stop any trade deal that kills jobs or holds down wages — including the Trans-Pacific Partnership. ... I oppose it now, I'll oppose it after the election, and I'll oppose it as president." Trump made it real. It was a bi-partisan American demolition effort.
3
It seems Mr. Freidman, while attempting to give our current glorious leader his due in being willing to stick his thumb in Chairman Xi's eye, you seem to forget that early -on it was the Obama Administration who attempted to alert the US and Europe about the approaching economic and political deluge that the Chinese were unleashing on the West. Unfortunately during the previous Administration however, the majority Republican Congress were to caught-up in their own scorched earth campaign against anything Obama, to support more stringent action or sanctions against the Chinese- And yes who, BTW, who can forget Mitch McConnell's own early and conflicting business ties to China via his wife Elaine Chao's industrialist father's connections with former Chinese Pres. Jiang Zemin?
So, no long before the Trumpians came on the scene, the West was warned about the nefarious dealings of the Chinese and the high price the US and Europe would pay for their inaction, but seemingly the thought of the burgeoning China market was enough for the quick buck artists (like the McConnells) to keep the flow of easy money going; until that is, it began to dawn on the voters that both the jobs and the source of the West's wealth was flowing in only one direction-East.
3
So to sum it up, the US is toast. Trump's go it alone approach with China will cause us to fail. God forbid that China should ever decide to stop buying US T-bonds as retaliation for a trade war, which would be devastating to the US economy.
3
Imagine if some British newspaper columnist had written a similar article in the 1880s about the U.S. "Hey, the U.S. is growing fast, we've got to stop them, make them play fair, stay on top, etc." Nations rise and fall. Trying to stop this is like spitting in the wind.
4
Because US corporations sold out to the Chinese to get into China and then started to get squeezed China is somehow the villain? Why didn’t US corporations demand a level playing field from start? Why do all of us now have to pay for their greed and expedience? Thomas you’re off mark on this one
The US does not have the ability to cut off access to financial markets that they use against other countries, and the Chinese hold a trillion dollars in US Treasury bonds that they can sell at any time.
2
When a democracy trades with a non-democratic country it is never a level playing field. People in democratic countries enact legislation to safeguard the environment, prevent exploitation of child labor, and provide consumer safeguards. Non-democratic countries do not. And hence in the U.S. we are dismantling all those things and giving corporations and banks free rein to do what ever they want, because that has become the norm the global economy.
1
Act IV: 'Deplorables' --that cohort which suffered the consequences of America's de-industrialisation duly aided and abetted by both legacy parties, saw the writing on the Great Wall unlike the rest of us and voted for Trump.
China dumps steel and Aluminum through our so called allies. Hence Trump's tariff on them too.
Can NY Times tell us what exactly is in TPP? How do we sign an opaque contract?
1
Vasantha Ramnarayan,
Why don't you blame the US government for creating NAFTA, MFN/PNTR for Communist China, all the other subsequent Free Trade Agreements, and the other anti-business laws that allowed and also economically required that US businesses to move as many as possible of their US factories and those associated jobs for US citizens overseas in order to reduce manufacturing labor costs.
1
"Why don't you blame the US government for creating NAFTA, MFN/PNTR for Communist China, all the other subsequent Free Trade Agreement..."
That's exactly who I'm blaming...the legislators from both parties who mindlessly allowed off-shoring as well as immigration completely ignoring quality of manufactured product or services rendered. All for the bottom line. As if all that were not enough, Federal Reserve engaged in financial repression for the last 30 years by holding interest rates below inflation rate which bankrupted pensioners, so that corporations can gorge on low interest loans and 'grow' their zombie ideas into trillion dollar profitless decacorns. Talk about avarice and looting. And to distract the public, oligarchs spent meager tax payer dollars on wars to 'resolve conflicts' which never existed in the first place. Serfs to displace citizens, debasement of currency, starving citizens, fat oligarchs mouthing platitudes ('Democracy Dies in the Dark'), skyrocketing crime, increasing tax burden (look at Illinois). All in all we could be living in 2nd century Rome. And to those who rejoice in fall of America, I've got to say this. Remember Fall of Rome was followed by the dark ages. Civilizations all over the world was affected.
Vasantha,
Do not fall into the western chicanery of centering world history around Europe. Except for Europe no other place went into dark ages after Rome fell. Chinese empires weren't affected, Indian empires weren't affected, The middle east actually grew during the European dark ages without any restraint in Europe. The mongols expanded too.
The US wants to blame everyone but the GOP policies for its RELATIVE decline. What is wrong with the rise of China and the rest? Aren't they humans and don't they deserve prosperity as much as the West has?
For the Chinese, the memory of white men ganging up on them burn deep. The appearance of that happening again will make any compromise much more difficult. By going alone, Trump is doing exactly the right thing with China.
If EU countries, like France, want to be dominated by Chinese government backed companies, they can choose to do so. I doubt they will.
History, my dear professor, history. It is very important. Especially so to the ancestor worshipers.
1
kwargs, You are retro-actively adding a reasoning that was never mentioned by anyone. All the reality show president is doing is acting in another show for his audience to make them believe that China was taken on and he made America Great. The chinese have caught on, they will put on a show as well and quietly agree to do some changes on the margins so the show can end with the show chief declaring victory for MAGA.
It makes sense to rethink the 330,000 PRC expatriates attending US universities. It is the Asia Pipeline for the greatest intellectual theft in the history of the world. Yes, of course, the PRC could be a superb partner to fundamentally advance humankind. However, objective looting human and intellectual capital from the West is not the way forward. Simply recall the greatest genocidal maniac of the 20th Century, "When we hang the capitalists they will sell us the rope we use." - Joseph Stalin
1
John, How is it a theft when American universities give them admissions and they enroll and learn. By your logic, US also stole a lot in the 1800s because Many Americans went to Europe for education and still do.
US also stole and lied and cheated to get to the top. No one is an angel. Just read the Breton Woods declaration to see how much was stolen from rest of the world into American coffers. How do you think a country with 5% population gets to enjoy 25% of global wealth?
2
Working class Americans believe that Democratic President Bill Clinton (and his Labor Secretary Professor Robert Reisch) should now say, "Once you were employed and were able to feed your family until I signed NAFTA into law and that economically caused your manufacturing job to relocate from the USA to Mexico because you would not agree to work for the same wages that Mexican citizens would work for."
Working class Americans believe that Democratic President Clinton can also say, "Once you were employed and were able to feed your family, until I unilaterally created PNTR for Communist China and this economically caused your manufacturing jobs to relocate from the USA to Communist China because you would not agree to work for the same wages that Communist Chinese citizens would work for."
Working class Americans believe that Republican President George W. Bush should say, "Once you were employed and were able to feed your family, so I unilaterally created fourteen additional Free Trade Agreements (with Jordan, Morocco, and other young democracies of Central America) and this economically caused your manufacturing jobs to relocate to these third world nations because you would not agree to work for the same wages that citizens in these third world nations would work for."
Working class Americans believe something similar about Democratic President Obama and his whole bunch of multiple new Free Trade Agreements granted to third world nations.
4
And tell me what happens next if China or the EU shuts down all of Trump's operations in their respective countries? We have a President deeply involved in running his multi-national business which puts him in a very compromised position when it comes to representing the US interest vs his business interest. The framers of our constitution weren't so dumb after all when they banned the President from receiving foreign emoluments. Problem is, our Congress dominated by Republicans has zero interest in following the Constitution. Let's see what happens!
1
John,
Thats why its all a dog and pony show and everyone is putting on a show to make changes on the margins so the show chief can declare victory and #MAGA. Nothing will change on the ground.
Who could have guessed? Oh yeah, those protesters in the 1999 “Battle for Seattle” who were trying to stop the entry of China into the WTO.
It’s not like nobody looked at the mega-investors on Wall Street and saw the greed in their eyes. China, with its huge population (aka, “market”)! China, with its oppressed, cheap and submissive labor force (note: that’s not a “work ethic”; that’s near slave-like conditions)! China, with its weak-to-nonexistent environmental laws (Hey China, how ya’ liking that air and water pollution?)!
“Yummy, drooooool” went the investors and their boot-licking politicians (aka, GOPs and Clinton-faction Dems).
Reminds me of something I heard – not too long ago – that seems to fit well with this globalization fiasco: Y’all were warned… y’all were given an explanation… nevertheless, y’all persisted.
It was clear, before the first decade of the 2000s ended, that China was ripping off and copying products. The joke was that, within two weeks of a U.S. product being made in China, the Chinese had stolen the manufacturing and production plans and created their own version of the product. And, yes, it just might be too late for any fixes… whether or not we had Donald Trump and his tariff/trade threats sitting in the White House.
4
Sounds like we need another FDR to rally the nation again.
1
Thomas Friedman has forgotten his rah rah cheer-leading of outsourcing to China. It was people like him who provided the policy and "moral" arguments in support of business with China.
5
Excellent article! Mr. Friedman has outdone himself in stating the obvious that wasn't put into words before.....
Seems simple, Paul. China might just keep stealing the technology. No need to worry about keeping innovators at home.
1
"Don’t get me wrong. I am a free trader and genuinely not afraid of some state-directed 2025 plan beating Western free-market innovators. I welcome China focusing more on 21st-century industries. It could be better for everyone."
Yeah, right. For whom, please? Because we now have forty years of this tripe--the DLC variants of conservative trickle-down blather--and we already know just how bad it goes for many many Americans. Why does the NYT continue to provide a platform for this knuckle-headed Pangloss?
3
For most of the past 2200 years China has been a relatively insular isolated socioeconomic political educational technological scientific educational demographic diplomatic military superpower.
China absorbed and altered foreign invaders and occupiers like the Mongols and the Manchus. But the Europeans and Japanese proved to be far more dangerous and deadly to ethnic Han Chinese hegemony and independence.
Modern China's rise began with Deng Xiaoping's accepting capitalism as the Chinese economic model while implementing a term limited collective one-party rule. Thereby rejecting Mao Zedong 's communist economics and cult of personality. Along with the one-child policy this led to 300 million Chinese moving into the middle class while enough food and shelter was availabile to all Chinese.
While China has the nominal #2 GDP on a per capita basis it ranks #79 behind the Dominican Republic. Plus China has an aging and shrinking ethnic Han majority with a massive male imbalance. Environmental degradation and a lack of basic commodity natural resources are a threat to China.
Xi Jinping has become the 1st 'core leader' of China since Deng Xiaoping and the 1st Chinese Communist Party leader since Mao Zedong whose thoughts are deemed worthy of study. With the elimination of term limits Mr. Xi has the 'Mandate of Heaven ' of the Chinese emperors. But Trump is the most ignorant immature incompetent inexperienced intemperate and insecure President ever.
1
So, is the only way to compete with China now is to become them? We could easily become a one party system soon as well, with GOP gerrymandering likely soon to be legal with a SCOTUS decision, Citizens United, 80% of GOP voters supporting a wannabe dictator, and just this week Texas won voter ID in federal court. Maybe that's the only way to win - become them, except the GOP is more fascist than communist, but hey that seems to be what American voters want.
1
The Chinese have a different philosophy of capitalism which is focused on their people. Patents, intellectual property rights, and other elements of corporate protectionism are not relevant. Jack Ma, the founder of internet giant Alibaba, expressed it well when he said: Customers come first, then employees, then shareholders. This is not Western-style capitalism.
The Chinese will win.
3
"Here’s how we got here: In Act I, U.S.-China relations were all geopolitics, with the U.S. and China against the Soviet Union. That lasted until the late 1970s, "
Your history lesson is missing a few key chapters, it didn't begin in 1970 but rather 1940. What about the part where China and USA worked together to defeat the Japanese. The part where USA saved many Chinese lives. Then that turned over with China (Now Red) working with Russia during the Korean War, where Chinese Communists killed and maimed many good Johnny and Joes, which made us hate those "Reds" (better dead than read).
So, in actuality "we got here" through a very circuitous path, and wait another 10 years or so it will all change again. It seems we always have to hate something, hatred keeps a people together, while prosperity creates narcissism which leads to Nihilism. When people have too much money they center their minds eye on their wealth to the exclusion of other people, which includes other countrymen. Every successful world leader is a master in human psychology and they know all this. So how will it all play out: Just follow the money! Money always takes the path of least resistance. And the language of money is universal. the rich and powerful never realize, they don't own the money, the money owns them, and can make them dance to any tune it wants. One thing we can say about Trump is that he always puts money and the deal first, the Chinese are very similar, and will respect him for that.
3
China will dominate 10 next-generation industries, including robotics, self-driving cars, electric vehicles, artificial intelligence, biotech and aerospace. because the USA has abandoned the STEM capacity of the USA, and that killed that golden goose who laid those golden eggs (created new wealth), won WWII, and created the abundant lifestyle that US citizens enjoyed for a few decades after WWII.
The US government has since de-emphasized science, engineering, technical and mathematical (STEM) education and this caused the USA to no longer be the world technology leader.
Prior to the 1970's, the USA emphasized STEM college educations that created a human database of critical thinkers and technological innovators that created new products, started businesses, and hired employees to manufacture new products that foreigners purchased and this created new national taxable wealth that could be taxed to pay for government expenses like the construction of infrastructure that all US citizens enjoy.
Very few of the college students in the USA are pursuing STEM educations are US citizens.
New STEM technology creates products and wealth in that nation.
New products and new jobs will be created in Asia where STEM educations are promoted instead of the USA where Liberal Arts educations are promoted.
3
A bit of prospective on China's economy: second largest economy but GDP/capita still lower than Romania's slightly higher than Bulgaria's thus still a poor country albeit with vast potential to develope her domestic economy.
About the Pacific trade agreement: Obama loved it, Hillary called it the gold standard, then Sanders and Trump called it a jobs killer then Hillary too unloved it and now Thomas Friedman loves it again.
We a debtor nation with unsustainable twin deficits: federal budget and trade both adding to our national debt. Reducing our trade deficit with China is a step in the right direction albeit a tough proposition. Mr.Friedman this is the purpose of this week's talks in Beijing rather than your theatrically announcement of a next Act (no pun).
2
I don't remember anyone holding a gun to the head of America's CEOs demanding they close the U.S. factories and move production to China. Since aristocratic America could no longer import slaves to do the labor, they decide to export the work to a slave state, in this case, China. State owned factories where employees both work and live, and have nets installed to prevent suicides.
Rather than impose tariffs on China, change the tax code to reward U.S. companies who manufacture in the U.S. and punish those who don't.
5
It wasn’t or isn’t a gun, but rather the desire and ability to increase profits through lower labor costs. Our shared celebration of the capitalist ideal in the relative short term has now cost us the strength and stability of our national interests for the foreseeable future.
1
Some could say that the chickens are coming home to roost for all of the exploitation China faced by the West with the opium wars and the opening of Canton by the British. Fast forward to 2018, and the Trump administration could make some real strides with China, economically. Unfortunately, Trump ignores history, so his fly-by-the-seat-of-the-pants approach could backfire. Then what?
1
Could you explain what’s wrong with massive government intervention? Don’t we have that with oil and gas subsidies? Ethanol? And isn’t that what isn’t necessary to jumpstart climate action? We have massive government inaction here. To everyone’s peril.
4
doe,
Some people here in the USA are saying that the USA should borrow more money and spend that money on infrastructure, jobs, wars and other government activities that only consumes taxable wealth, and does not create any new taxable wealth!
The primary source of money for government spending and government debt repayment is the money that the government confiscates from the non-government taxpayers whose activities create new taxable wealth in that nation.
Government activities only consume the available taxable wealth in any nation, and do not ever create any new taxable wealth!
There are real limits to how many wealth consuming people and contractors paid by the US government that the taxable wealth creating US business people in the USA (or any other nation) can afford to support without bankrupting and destroying the USA as a nation.
Why do most US citizens believe that the US government can emulate the Greek Government Economic policies (borrow and spend lots of money on wealth consuming government activities that transmits borrowed money to Greek citizens) and get a different outcome?
1
Big American importers have for decades mandated that Chinese exporters give up their IP (trade secrets, patents, TMs, copyrights, you name it) as a condition of selling into the American market. If there is to be a reconciliation of the IP lost to appropriation without due compensation, the deficit is a net of trillions of dollars of harm in suppressing the development of IP in China.
This should indeed be a WTO issue.
Steven Mnuchin should act the fair minded American, and on this trip offer to invalidate, by agreement between nations, all contract terms seeking to rip off China firms of their IP without compensation. What is good must be universal, right?
1
"And there is a trade imbalance today because we’ve been investing in our future and you Americans have been eating yours."
One example of this is what happened during the Great Recession and Global Financial crisis.
The Chinese stimulated their economy in the long term with a 12,000 mile high speed rail system built in a few years for about $350 billion, which pay for about 350 miles of HSR in the US.
2
Excellent review of the evolution of U.S.-China relations and trade strategies going forward. What is missing is a comprehensive global view. China has already won that war. They have complete domination of the U.S. in Africa, Latin America and Asia. So what you say ? It means China has an endless supply of natural resources, their companies are well established on all three continents, they have much more political presence and clout in virtually all of these countries. They have even facilitated migration of millions of their workers to many to these regions. Trump's policies greatly speed up this ongoing transition.
Game over.
" before China gets too big."
100 percent correct! I think America does not understand what a threat (environmentally, resources, financially, quality of life, noise, etc) China is. They have one fifth of the population and are looking for land to expand. Expand population. If we want a standard of living, we have to limit their expansion. Otherwise, we are in trouble. They will not assimilate. I have been teaching them for long enough to understand that. They draw the expansion lines on maps at our school showing China's boundaries around Korea and Japan. This is their youth. They are not playing. Neither should we.
2
Pilot, You don't even realize the irony and hypocrisy in the statement you made. The chinese with 20% population should not expand and find resources BUT we with only 5% population should continue to enjoy a disproportionate share of global wealth and go to trade war so we can continue to grab as much as we can by whatever means necessary. This is the problem with America that the rest of the world resents. But you won't understand because you see everything as binary or zero sum game.
1
The United States is well-positioned to compete with China: the best real estate on the planet; best universities; a young, well-educated population; democratic institutions.
The problems that seriously threaten us are all self-inflicted: political division; strategic investment overly tilted to the military-industrial complex; social injustice; failed, costly foreign "adventures."
Empires always fail because of internal decay. If China comes to dominate the 21 century it will be because of American weakness, not China's economic superiority.
5
Unhappily for the author, and his liberal fans, President Trump is doing what needed to be done years ago, but the globalists allowed this imbalance to continued as the USA lost it's industrial and technological edge. As the world's number one economy, our allies need us much more than we need them. They will join us, even with tariffs, and everyone realizes China must be brought to heel.
4
It is this arrogance that the world doesn't like and you exemplify it very well. We are a country with debt equal to GDP without much money to spend on education, infrastructure, healthcare or research. We are a country that spends like drunken sailors on the military to maintain a far flung military and wars in many places with a credit card funded by China. We give tax cut after tax cut for the wealthy who end up hoarding it to their children while the mass is addicted to opioid/drugs and don't have skills for the modern economy.
What exactly has the reality TV actor done? He is just putting on a show for the audience under his spell to believe while nothing changes on the ground. Make a show like taking on China and China has understood the game and will make a show of putting up a fight while quietly endorse the existing rules or change on the margins allowing trump to declare victory for the consumption of his audience. MAGA indeed.
Friedman's description about China's trade strategies sounds too much a generalization to me.
Devil is always in the detail. A rough sketch about such a multilayered issue involving so many large and small players is destined to mislead.
Any consensus built based on generalization doesn't do good for real problem solving, namely trade imbalance. But that's often how policymakers and politicians approach an issue--they use generalization or slogans to feed the public thus creating a sentiment of something-must-be-done-immediately.
Excellent overview of the current dynamic. Most telling is the quote that China is "investing in our future and you Americans have been eating yours." Pure economics aside, the most troubling thing is that the US has no strategic vision or roadmap nor does the US have the political cohesion to execute such a vision. China clearly does.
The US has squandered its potential and has not re-invested in its people. China and the world senses this. Case in point, more than 90,000 Americans are STILL without power in Puerto Rico. If I were in Puerto Rico, the surest way to get more help would be to publicly call on Beijing to help.
10
Trump's shift away from America's previous benevolent "what's good for China is good for the world" stance is the only good feature of his presidency so far.
What is at stake is a global order defined by liberal democracy versus one led by autocracy.
Too bad his plan for dealing with this is trashing the former and encouraging the latter.
1
China's trade goals and games has been a consistent character for at least 2 generations. Anyone who has worked in China could have told you this was coming.
6
I would ask one question: Why is the American consumer's role in all this not even mentioned? WE decided, with our wallets, that it was more important to have CHEAP products than save jobs, or protect our own industries. WE DIDN'T say NO to buy products from companies that had not only exported whole manufacturing facilities, but advanced technology AND know-how, with the full blessing of a string of politicians from BOTH sides of the isle, after being forced by China's demands. This story may have been different.
WE bought into the outsourcing trap, expecting we could have it both ways: high paying manufacturing jobs AND lower priced imports.
The average consumer has reacted negatively ONLY when the job lost (or the one to be lost) used to be his/hers.
One thing has to be recognized, though: China has managed to pull a really big one by combining a Communist government WITH a Capitalist economy.
15
A very interesting column this week, Mr. Friedman. Some very important observations. We are deluding ourselves by promoting outdated economic models and mythologies about who we are. The Chinese Leviathan is now showing us the way into the 21st Century. There never really was such a thing as "free trade".....as China well knows.....free trade is often enforced with gunboats and cynical oppressive foreign loans. In the end, the MBAs trained in the USA to go forth and dominate the World thru "free trade" turned their diabolical skills .... on the USA and devoured it no less effectively than the Corrupt Mandarin operation on Imperial China right up thru 1900s. Where do all those opiate pills come from, anyway? Capitalism is as much an ineffective mythology as Communism.....the Capitalism-Communism Duopoly of the last century no longer applies in a world of multiple trade alliances. The world, as described earlier by Mr. Friedman, is peer-to-peer...."flat".....except that China intends to impose its "open standard" on the entire world.
10
Mr. Friedman spends the first half of this article rightly describing the reasons why free trade policies have empowered China economically to the point of not just building a robust economy for itself, but of exerting influence over the economies and politics of the US and Europe, and increasingly, Africa and South America.
Then he ruins it all, by reiterating his devotion to free trade.
It is exactly this inexplicable disconnect from the responsibility that unbridled free trade practices have had in empowering an ambitious anti-democratic regime to sow the seeds for its economic and political rise in influence, if not (yet) dominance around the world, and in helping to wreck economic security for workers at home, that has populists rightly calling it out as elitist myopia.
(Of course, those same populists have also been blind to their own responsibility for empowering the Republican Party to enrich the robber barons, crash the US economy in 2008 and undermine workers rights and the democratic institutions that are the source of their own political power, but that's another post.)
It is high time that a correction is made in our economic policies, both at home and around the world.
Donald Trump has the hubris to take a wrecking ball to free trade practices, but is his brand of "America First," any better?
Or is it a case of "out of the frying pan, into the fire?"
Given who Donald Trump is and the ideologies and the agendas that he has served, I'd say the latter.
5
We are in big trouble considering the people negotiating for us. They are in way over their heads.
6
Look around your house and count how many things are manufactured in China. Almost all of our phones, TV's, clothing, appliances,etc. are made there, even if the bear the name of an American or European brand. It's the same all over the world. Most international companies choose to manufacture there because of price and flexibility. Corporate profits are the priority. China does steal our ideas and technology, but many Western companies have acquiesced to this for the sake of their bottom line. We all like paying less and very few of us think about the people who make our goods.China has exploited our consumerism to gain its power and it's hard to see Americans or Europeans paying more for all of the " stuff" (as George Carlin used to say) that make up our materialistic lifestyles.
10
As war is politics by other means, so to is politics economics by other means. China has been waging an ongoing economic conflict against its matrix of trading partners that is a reflection of how it exercises it's lower internally against its own people. It is now transitioning once more back to totalitarianism from authoritarianism. How that will be expressed in its deal vs with the outside world is beginning to be shown with its rejection of the international al court of justice and seizure of its neighbor's sovereignty in the South China Sea. Everyone better be concerned for the the future. Trumps actions cannot be viewed in isolation, but as part of a comprehensive whole of many moving parts internationally.
1
Friedman writes about "... China’s willingness and ability to bend or ignore rules of the World Trade Organization and, at times, outright cheat, but then talks about agreement on a new set of rules - as though China will not cheat again.
The three stooges that preceded Trump all were in the pockets of financial and corporate interests who saw the potential for profits from trade with China: America and Americans be damned. Wasn't it John Kerry who, during his failed 2004 bid to become POTUS, talked about "Benedict Arnold CEOs?"
It saddens me to say it, but Trump has been right about China. Whether he is capable of developing and implementing a strategy to retain American - and Western - economic strength in the face of China's economic aggression is another question.
Deng began what could be thought of as a Chinese version of Lenin's New Economic Policy; Xi is following Soviet economic history by imposing a Stalinist regime of political control. He realizes that in a world of nuclear weapons, the Stalinist emphasis on militarism alone will not work. Instead he understands that the future will be in the hands of the country that dominates the global economy.
Don't kid yourself with nostrums about free trade, etc., even if everyone gains, which is debatable, some will gain RELATIVE to others - and this is demonstrated in history. Either the US faces China, as it faced the Soviets, or it will become a second rate power with nuclear weapons, like Russia today.
4
So China's long term thinking and planning is met from the West with "We need new rules"? Instead of "Maybe we should try some long term planning ourselves".
No, here in the graveyard of the free market we don't look past the next quarter's P&L statement.
The koch bothers have a long term plan, but that plan is to turn the U.S. into their personal duchy and to turn our democracy into something more resembling the Russian or Chinese model.
t rump's wild gesticulating and careening around has done one thing useful; it has awakened the world into the reality that Nations will need to act in the own interests and not wait for the U.S. to lead the way.
5
How sad that when the US and E.U. finally, and rightfully, stand up to China on trade, the US President and his retinue are complete idiots, who are highly likely to screw up. I hope the E.U. leaders and some of the more knowledgeable people around Trump ( Mattis?) devise a work-around around these fools.
2
Oh come on, at least Trump has the guts to take on the Chinese. All we got from the "wiser heads" was talk, no action.
4
You mean trump has the guts to put on a reality TV show of "taking on china" for the consumption of the audience under his spell while nothing changes on the ground or changes marginally.
Well maybe but it’s more than what we’ve seen so far. The big corporations and their lobbyists have more or less sold us out.
This is it? May 2018. The deciding point. *Finally* having it out?
You make some good points, but give me a break. There is no end point with US and China relations, in any arena. It's ongoing, evolving, as it has been for the past 40 years and as it will be for the rest of our lifetimes.
This may be an important moment, made so by the buffoonish trade moves by this administration. But finally? Not so much.
This reminds of a commercial, I think it was for Apple computers, where a guy comes up for air and announces that he has finished the internet. Um, no.
7
Excellent summary. The trade situation we have with China certainly needs to be addressed. The problem we face is Trump is absolutely the wrong man for the job. Obama spent 8 years positioning the US to take on China. Trump bails on the TPP almost on day one then proceeds to start a trade war anyway. To quote Rex Tillerson, "moron." If we get rid of Trump no later than 2020, we might still have a chance. We can apologize to the world and move on. If we can't get rid of him though, things are going to get ugly. I wouldn't trust Trump with a stapler. I can't fathom why anyone would trust America's long term economic prosperity to this man.
4
So Friedman is saying that Trump was correct - the US got into some rotten treaties - the WTO being one of them.
WTO is absolutely the best of treaties for the US. How else could the US corporations expanded into so many markets so easily? What is wrong is how the profits from those new markets are shared within the country. The issue is not WTO but the wealthy walking away with all the gains leaving the mass without education, healthcare or infrastructure.
Let me get this straight. Because China is 'breaking the rules' the U.S. itself is going to breach its own commitments at the WTO and bring trade measures that are clearly illegal and will be challenged successfully in the dispute settlement panel, even if it takes a very long time. Read Lighthizer's and above all Navarro's statements on this. They don't give a hoot about the 'rules' and are ready for a new Smoot Hawley moment.
What Trump wants is for countries to agree to export to us ONLY as much as we can sell to them so that all bilateral trade is balanced. This is the type of rules that held among Comecon countries and is the death of the system the US sponsored and nurtured and what we knew as the international liberal order. If they succeed, they will make the world poorer. We need the EU and others to stand up for WTO rules instead.
1
I find it so odd that the only place where a reader can get some factual information about an issue as important as this is in an editorial essay. We are indeed living in a crazy, mixed-up world.
3
Thank you Tom Friedman for the perspective, very hard to come by these days
2
Shocking to see a Times columnist supporting a Trump initiative. I guess the world isn't as flat as Mr. Friedman asserted in the book he wrote on that subject that poured millions of dollars into his coffers.
1
Fed ex this article to the President please.
American "capitalism" has not been simply an open, just system of hard working competition. Its history is filled with crony-capitalism, cheating, stealing, imperialism, extracting others' resources, child labor, and polluting industries.
China was one of the many victims of this "capitalist" game of thrones. They have been recently taken up their own cause of capitalist affirmative action, making up for many injustices.
Sure, there has to be an end to tit for tat. But when we do not even know if our president is president because of dirty business deals in Russia, and where our friends to our south cannot forget the banana-republic maneuverings of the US foreign policy down there, where Nike et al use sweat shops in others' territories, it will not be easy to create a system (for the 1st time) of a fair world economy.
China first established itself as a modern state with full sovereignty after 1949. It built on a history of wide-spread education, organized governmental institutions with complex bureaucracies, and experience in all sorts of economic activity, along with new methods of organizing a huge population in a dangerous and tricky world (it even dealt with Tricky-Dick) to retake center stage.
We have to wipe away the deceptive fog created by our corporate think-tanks and right-wing media blabbering about their cheating and our playing fair, and open our eyes with a stream of clean water (if the EPA does its job) to the real history of our world.
4
Worrisome to have Captain Quig at the helm.
2
Let's just say I don't feel that confident in our Pres. Trump is so full of hot air and grandiose promises, but when it comes down to a bareknuckle fight like all bullies he'll back down. Xi legacies will definitely be stronger than anything that Pres. Trump is telling the American people what he's going to get for us. Our president is fighting a war it home, he's alienated his European allies[ when he needs them most], and let's face it is a terrible businessman. Think of all the companies he is bankrupt, now think about how shaky the US stock exchange has been acting. And let's face it, our president does not know how to ask for help, when he's in over his head. This is one time the cheater is going to be out cheated.
5
Well, yes, long overdue. Obama should have duked it out with China, but he was too cool a cat to fight.
Your awakening is too late Mr. Freidman. All the seasons of tilling and nurturing the Chinese industrial garden while actively plowing corrosive salt into our own has yielded expected results. 2025 outlook is much brighter looking to the west (from California) than looking to the east. Morning in America for our diminishing workforce is looking grimmer.
3
trump proves that if you say many things, sometimes something you say may NOT be a lie. The Chinese are stealing our secrets, taking advantage of our generosity, and otherwise just abusing our kindness. This has to stop.
But, our allies must work with us and alienating them, as trump makes a point of doing, is not the way forward. Dropping out of the TPP was a terrible mistake and lost opportunity.
trump is likely to back off on anything that may hurt his ability, and Ivanka's, of selling their brand in China, so I have no faith he'll do what is best for anyone but himself.
Let's hope there are some pieces to pick up when this criminal gang is gone -- sooner rather than later!
3
“that is why many E.U. countries are now scrambling to pass new laws to prevent China from buying up their most advanced industries.”
Once upon a time Thomas Friedman published a book “Understanding Globalisation – the Lexus and the Olive tree”.
It explained how globalisation benefited everybody – why even very poor countries should remove all barriers to trade and should allow the unfettered movement to the ‘electronic herd’ of corporate finance; foreign direct investment (FDI) that will “buy up all your rights and all your wrongs” (Erica).
Mr Friedman deliberately misrepresented Globalisation, it was never like that; now he tries to reverse it, or as he put it so eloquently in his book he tries to “throw sand in the gears”.
2
The “Made in China 2025” plan is only part of the story- the full story has been written about in "The Hundred-Year Marathon" subtitled "China's Secret Strategy to Replace America as the Global Superpower" by Michael Pillsbury. There is an hour long interview of the author on the Asia Society web site.
1
But the world is flat and global freetrade and all those years of neoliberal promises you made while supporting any missile attack on Iraqis Mr Friedman. Why did you not foresee this, or the collapse of the megamall real estate industry?
1
Personally, I don't think China will win and America will lose, or that we'll win and they'll lose, or that will both win. Apologies if right now I'm very much a pessimist who thinks we're on a "lose-lose" path at present cause global leadership is in the sewer, and the geopolitical situation right now rivals those of the "global storms" of our past. Sadly, there's the worst dearth of good statesmen right now....just when we need them the most!
2
Oh, my, where are my pearls? The next thing you know, China will be embarking on world-wide imperialistic adventures of military dominance and economic exploitation. Oh, right that's only the white man's burden, phew!
2
Previous administrations released technology to China and we were warned that it was a bad plan. Dictatorships getting higher technology is never a good plan. We sold them multi launch technology when Clinton was president, super computers when Obama was president and didn't engage them when they stole technology when Bush was president. We will win if we can keep the left from giving them the farm. The fact is, Trump is good at making deals. You might not like him but he brought North Korea to the table because he understands what drives people. Europe will do what ever helps them and they are no strangers to having ruled subjects. The dictatorships don't bother them. The trade war with Europe will drive Europe to us because we will use it as leverage. For all the people who say we should have an "A" team dealing with this, it was your "A" team that got us into the mess. The "professionals" caused this so expecting them to get us out of it is foolish.
3
Donald Trump eats his chocolate cake and brags about it to the world. Xi Jinping eats our lunch and quietly bides his time.
The insatiable desire of the GOP to enrich the rich while sacrificing our economy, our health, our educational system, and our infrastructure, to name a few of our losers, will lead to our ruin.
When the future is written, China will figure prominently – the United States, on its current path, not so much.
Assuming that all you say is right, this is the worst possible time to engage in a negotiation. This is not about buying an apartment. Trump will be owned. The Chinese government will fly a couple of war planes, make a march to honor Trump, propose that Trump get a Nobel prize, push North Korea towards an agreement, then pull it out to unnerve Trump... They will play him like a yo-yo.
1
I hate to say it, China will win virtually any 'contest' with America. This will include the military in the not too distant future.
Over the interval spanning Reagan until today, America has been scaling back sourly needed investment in education (reflected in huge student loan debt), infrastructure (just look out your car window), and scientific research.
China graduates 5 times as many STEM students as the America. America is not EVEN in the top 20 for math, science, reading, etc. One third of America's electorate is hopelessly ignorant and gullible - 63 million voted for Trump, really??? America cannot remain on top with this sorry state of affairs. Xi plays chess, Trump plays whack-a-mole. America's once huge lead in all things STEM has eroded to the point where china now has the fastest supercomputers in the world.
It's over folks. The sun is setting on the American 'empire'. China is ascendant.
2
There is hardly a better example of the malfeasance of Republicans than the US v China.
For 40 years, Republicans have starved education, enacted payday loan after payday loan masquerading as tax cuts, watched our infrastructure crumble because they were unwilling to pay to repair it and endlessly pimped religion as a panacea for stupidity and short-sightedness.
Thanks to Republicans, we've lost.
Glad I'm old.
2
I'd much rather have Hillary at the helm....
2
The USSR followed Marxist-Leninist Communism, a system that failed after 70 years. China says it now follows Marxist-Xiist Communism, a system where control of the means of production is determined by market forces. This is a really revolutionary form of Communism. The US is now in the Thucydides trap, so the response to this Marxist-Xiist Communism is unlikely to be optimal, especially with the current president.
"And there is a trade imbalance today because we’ve been investing in our future and you Americans have been eating yours."
Before we get too carried away with the self flagellation, let me quote from a Paul Krugman op-ed published here just a few weeks ago: "Trade balances are the flip side of capital flows ...... trade surpluses are not the sign of success and trade deficits are not the sign of failure."
Partha Neogy,
I believe that trade surpluses are the sign of economic success and trade deficits are the sign of economic failure!
1
The return to political thought control by Xi Jinping, the Chinese Monarch-for-Life is going to spell the downfall of China's desire to be the worlds' economic leader.
The worlds' individual consumers prefer intellectual and political freedom over enriching Chinese military along with all the other accouterments of fascist power over people's lives.
Our problem is our own leadership. Under Trump all of our freedoms are being eroded by the day. Like the fascistic one-man leadership of China, Trump wants to destroy our 1st Amendment Freedom, especially as that freedom applies nto a free press.
The money-laundering chump Don al Dough Trump is not our leader. The nation does not support him. For success with China it may turn out we need to put out Trump.
"U.S. and European businesses tolerated all of this because they were still making money in China or were afraid to be frozen out of its massive, growing market"
Lenin supposedly said that "capitalists will sell us the rope with which we hang them." I'll bet he didn't think that a Chinese would be holding the other end of the rope.
3
And therein lies, in part, the sadness of "tearing up" the TPP. Knowing nothing about it, Trump failed to recognize that it was largely about China's theft of intellectual property. "Legal" theft, that is. The TPP was designed to cut that back, sharing advancing technology with S. Korea and Japan in both directions and freezing China out.
We also shouldn't entirely overlook China's military moves in the China Sea. With the building of artificial islands and development of existing ones for airfields, China is looking back to Japan's WW II "inner defense ring", where islands took the place of its decimated aircraft carrier fleet. The China Sea is the most widely traveled commercial sea route in the world, and modern China isn't 1944 Japan.
We must ask ourselves: how would we react if Iran were to try to close the Strait of Hormuz? With aggressive Chinese overflights already occurring in the China Sea, that's the kind of stake we're facing.
61
I suggest reading some of the recent books by Robert Kaplan......Geopolitics rules the day. It is probably foolish for the USA to directly challenge China's primacy in SE Asia....simply because this area of the world is attached to China and NOT to the USA. Perhaps the TPP is a miscalculation ... an self-delusional, overreach of power ..an arrogant dishonest attempt at "free trade" in the name of US dominance of SE Asia. It was doomed to failure.
President Trump does appearantly have some vision and effective bargaining skills........While I personally disagree with a lot of his style, I cannot argue with the results he has obtained so far. A radical change in US Foreign Policy is long overdue. BTW....free trade, much like free lunch, free rides, free beer.....is an illusion.
3
The only thing you got right is the US can't challenge China in SE Asia...or anywhere from India to Guam. The TPP was a response to China's One Belt, One One Road. Dropping out gave the entire region to China. China owns the US Treasury market and is now buying oil with Yuan. The US can't afford to leave Korea to China and will go to war to protect the Petro $. The Russian oil oligarchs will be attached at the hip.
U.S. government officials of both parties need to take advice from someone other than corporate CEO's, such as university experts. It seems to me that one way we got to this point was treating corporate executives as all-knowing gods. As we have seen, businesses too often focus on short-term profits, while governments should do as China does-take the long view, and carefully assess what other countries are likely to do.
1
Great article! However, it does leave out one critical fact though. Yes, the US taxes car imports at only 2.5% (mentioned in the article as a counterpoint to China’s 25% tax on car imports). But the US puts a 25% tax on truck imports (including SUVs), which make up the majority of US auto sales. The US flouts WTO rules too.
6
Thorough analysis of what is going on.
I venture that contrary to what some foolishly presume, China, the EU, and all other nations which trade with the United States, will all accept negotiated revised agreements beneficial to all parties.
The plan is not to destroy relationships, but to revamp them so all parties feel and see the benefits of economic cooperation.
Few understand that Trumps' negotiation tactics, all stem from his myriad business deals, successful and failed deals; in his world deals occurr only after treats, bluster, and all manner of head-fakes weaken and or destroy adversarial tactics, and playing the game in public view is just what he loves, as the exposure of adversaries tactics further the confusion sowed in the now confused and distraught adversaries.
It's not very nice of course, but in business, generally speaking, the end justifys the means.
2
Yup thats why he failed in actual businesses and only succeeded when it came to reality TV because in TV it is playing the role of a successful business man and the only skill needed is to make the people believe he is suited for the role NOT necessary to be suited for the role.
All he is doing is making enough people believe that is changing the rules in favor of America when in reality and on the ground nothing really changes. Every country has figured the new game and they all play their role of initially putting ona show of a fight and then quietly go back and endorse the same old rules in a new name. Then Trump declares victory and hopes no one has seen through the con. Unfortunately unlike reality TV people who don't see coal jobs increase and manufacturing jobs come back will sooner or later figure it out. Then what do you do?
2
We be interested in hearing Mr. Friedman discuss the equally callous disregard for workers shared by China, heads of MNCs, investors generally, and Trump administration. It's not really USA vs China. It's workers vs corporatists, oligarchs, and the gov'ts who are owned by or conversely control them.
5
So when the central banks of the unplanned economies pumped tens of trillions of dollars, euros, yen, etc. into their economies over the last eight years that was playing by what rules?
2
We don’t need to have trade talks with China. This president needs to have trade talks with the real trading powers; our own corporate boards. Ditto for the EU and it’s corporations. As one comment here rightly noted- we’ve sold our form of government, our belief in human rights, fair trade...for that ‘mess of pottage’.
A corporate summit- maybe in...Detroit...bring your manufacturing back to the U.S., now. Not by 2020, next year... now. Build for, us. Grow crops, for us. Plan for doing what’s best for, you know, your own country, now. Trade with real democracies, that treat their people fairly.
The carrot for the deal- well, the giant tax giveaway looks like the greens; the veggie part might be other assistance. The stick? New incorporation laws, federal and state. To mandate what we need here, now.
Rightly, China will do what it will. Our corporations dictated this disaster, they are the ones to meet with to fix it.
3
Thats a dream. Wakeup! Dont you realize our corporations and the wealthy prop up the politicians and hence they receive all kinda subsidies and huge tax cuts. What you suggest will never happen and if it happens will actually kill millions of jobs because most companies make most of their revenue outside the US, many in China. GM Alone will lose thousands of jobs because China is the largest market BUT many engineers, designers, marketing and sales people HAVE A JOB BECAUSE OF CHINA.
1
The US and the West have been outplayed for decades by China- through arrogance and hubris. None of this should be a surprise....
3
Words to the effect: "don't get me wrong; I'm a free trader".
Really?
What about FAIR trade? How about that, for a change?
Here you are, talking about all this cheating and thievery that China has done, and you say you're a free trader?
this is the same philosophy that enables China to justify its excesses!
Unbelievable.
2
The "team" picked to negotiate with the Chinese are hardly up to the task, but the proof will be in the actual results. Mnuchen, a Treasury Secretary who apparently thinks he is on a personal services contract with the President and his business interests. Navarro, a second/third rate economist who apparently advised the President to denigrate and abandon the Trans Pacific Partnership, gratuitously handing the second/third largest trading market in the world to the Chinese. Larry Kudlow, basically background noise. Leightheizer, an afterthought.
2
What's next after "Made in China 2025": "Innovated in China 2035" and "Dominated by China 2050" (2049 is the 100th birthday of the PRC). Be concerned, be very concerned.
2
TD,
Why are you worried about another country trying to grow? Hasn't the US done so by cheating the rest of the world off its resources since it set up Breton Woods after WW2 denying non-western people any say in the global affairs.
We should focus on setting our country right by spending on education, infrastructure, research. But endless tax cuts for the rich and military spending has left us no money for growth and we are rotting from within. Our population has NO SAVINGS and our country's debt is 100% of GDP. Our country is divided by setting white people against the minorities by inciting white identity politics and culture war. We have 2/3 of our high school grads NOT going to college and not having any skills to make a living in modern economy. We have to fix all this before telling others NOT TO GROW.
Friedman did a good job but he forgets that the main threat is China's enrichment, due to the skewed termsmof trade combined eith their cheating. It is the huge enrichment and their resulting ability to spend roughly 400 billion every year in the West that is the main threat. It is strange Friedman ignores this, the most important problem to be eliminated. If we do not even see the essentual problem, how can we ever solve it?
2
I would bet on Xi Jinping for a made in China25 policy before I would trust Mr.Trump.He has a habit of thinking of time in short intervals, five minutes maybe an hour.Long term strategic planning is foreign to him.That is why he has already pulled out of the Trans Pacific Partnership.He has filled his cabinet with backward thinkers and has not the slightest interest in science and technology.He also seems not to recognize that the U.S. owes China millions of dollars of debt.There is nothing auspicious about this scenario when it comes to "negotiating "with China.China is not a country the president can "bully".They hold too many of the "trump" cards.
1
China has been waging and winning a trade war for 20 years, while we pretend that such a war doesn't exist.
China has had a national industrial strategy, to acquire technology, and make themselves less vulnerable to trade disruptions than we are. That puts us in a very weak position.
The very low prices of Chinese goods compared to US goods, means that the "real" trade deficit is much larger than what it appears to be, measured in dollars.
In the short term, getting a lot of manufactured goods in exchange for paper notes and commodities seems like a sweet deal. But in the very long term, we are undermining our economic, and therefore also, our military security.
And don't even start talking as if TPP would have been some kind of way to "contain China". TPP was written to get more money from patented goods, and to usurp sovereignty of US governments (federal, state, and local), via courts staffed by corporate judges. Written by donors, for donors - not with US interests in mind, let alone the interests of workers. Workers don't have a "seat at the table", and consequently have been "on the menu", in regards to trade negotiations. Long term US national interests have been ignored by our government, while other nations have National Industrial Policies - which benefit their Nations.
And no amount of pressure will make China (or Germany, Japan, S. Korea, etc) abandon their National Industrial Policy. Only the U.S. is stupid enough, or corrupt enough, to do that.
5
Spare me your insights Mr. Friedman. This is not:
"... a defining moment for U.S.-China relations,” said Ruan Zongze, executive vice president of the Chinese Foreign Ministry’s research institute. “This is about a lot more than trade and tariffs. This is about the future.”
This is about Donald Trump, a man with the instincts and morals of a mob boss, getting into a turf war with what he views as a rival mob.
1
I think Friedman has a major case of cognitive dissonance.
This article started off good, but it went off the mark, I believe.
I think Friedman is right to blame the origins of the world's modern political economic problems to the fight between the somewhat democratic capitalism of the US and the totalitarian communism of the USSR.
However, I don't accept his reasoning. I believe that the US economic view of the world was driven by three things: 1) A very rational fear of war 2) A confused understanding of Marxism 3) Corporatized views of markets.
Friedman is not understanding one important fact of Marxism, which was that the theory of communism was largely born from a rejection of colonialization -- in modern terms emperilist capitalism -- and as such he made some mistakes interpreting the theory. In addition, he mistakes the communism of the USSR with Marxism. And finally he mistakes socialism with anticapitalism.
I think the world is drifting away from democracy and freedom, and I find it troubling. I'm not as cynical as some in that I believe democracy still exists, but I can see it only exists in our minds and not in the actions of nations at this time.
Economic efficiency is not the root of democracy, and it has been proven by China to be the enemy of such.
Corporations have no democratic tendencies, so why does Friedman fear China when they are only a characature of his own beliefs?
Again, I suggest this is a major case of cognitive dissonence.
1
There is a ring of unreality to the situation. China announces it intends to develop high-tech, it scares US/EU, and we are going to make a trade deal. Deal what? What is our end game? Do we expect China to say: "okay, you win, we will forever produce cheap plastic for your Walmarts, and never aspire for high-tech domination, buy your opium, because as you say, we are unfree, corrupt, with what not."
Our position (we won't let ya), and their's (we are there already) - are nonsensical. We can't stop them. They are not there already. If they were, they'd be doing it, not announcing it to trigger negotiation. The only way out is from this dysfunctional co-dependence (we spend like drunken sailors, you produce cheap goods, and close off your markets) is to work toward interdependence.
I.e., one-to-one parity. We give you the same deal you give us on trade. We have zero tariffs, and open markets for everything (banking, finance, logistics, insurance, manufacturing). So will you. You own our businesses, we own yours in somewhat equal proportion (China is the second largest economy, i.e., a first world exists outside of third tier cities and country). And if that interferes with their party's control over their own country, we should let them deal with it. We cannot get to a win-win if we try to embrace problems they created (unfree, corrupt, crony capitalism, lousy capital markets, corrupt military), and fail to solve problems (debt) we created.
2
Right! China does not have to deal with our messy democracy, in which a majority electors occasionally give the presidency to fools and crooks. Appallingly, Trump is just the capstone of ignorance and tribalism that has taken over most State house and governor's mansions. The U.S. put itself in a poor position by deciding--through Free Marketism--to have most of our consumer goods made for less money in China. So, yeah, we need to work closely with our allies on this. However, President MAGA is working to dismantle our allied relationships. What an American hangover is coming when people finally come around. And what will it take? What will it take?
1
China is playing three-dimensional chess and, as usual, Don The Con can't figure out how to play checkers. Instead of building a coalition to pressure China into behaving, The Trumpster is bullying every one at once. No nuance, no diplomacy. Just angry red meat for the base. So tired of winning!
4
Each time a top US journalist says or writes China as “the world’s second-largest economy” Chinese leadership probably note the further evidence of a prestige-preoccupied thin skin. Accordingly they might baby talk the US.
When John McEnroe dropped to #2 in world tennis, he didn’t go wandering off the court to never be heard from again. He became a living legend, and an authoritative voice and presence in a related occupation.
Evolve.
Mr. Friedman ignores the complicity of our recent generation of homegrown business leaders in this scheme. Rather than invest in ways that could give companies an edge in production efficiencies or boosting usefulness of products, US business leaders were content to concentrate their efforts on lowering costs by moving production to China and reaping the benefits of the consequent increase in profits. That all the gains for a generation have gone to the very wealthy has given the vast majority of companies zero incentive to innovate to compete in the future. As long as China pulled the wagon at low cost we were happy. Consumers got cheap products. Owners got easy profits. Meanwhile business leaders bought enough politicians to dictate the terms of taxation policy and labor relations in their interests. Cushy deal.
Blaming the Chinese is easy; taking our own greedy shortsightedness into account is much more difficult.
19
Democratic President Clinton can now say, "Once you were employed and were able to feed your family, until I unilaterally created PNTR for Communist China and this economically caused your manufacturing jobs to relocate from the USA to Communist China because you would not agree to work for the same wages that Communist Chinese citizens would work for."
US businesses that do not relocate to China will have higher labor costs than other US businesses that relocate to China and might then go out of business!
1
Sure would be nice if someone in the current administration would articulate a rational argument for any policy including but not limited to relations with China.
This could be an historic moment but how can anyone feel confident this administration will competently execute any strategy much less our highly complex relationship with the second largest economy in the would.
3
Long term, China is economically doomed.
It simply does not have the natural resources per capita for sustained economic growth.
When every country has its own robots to manufacture what they need at home, what will China have to sell for the natural resources it must import.
2
China is the largest trading nation in the world and have significant investment in Africa, Asia and S America. Besides in a world with gmo food and hybrid crops there won't be food shortage. You are missing the point that the huge population which is productive can drive the next generation technologies as the chinese are already doing with renewable energy and robotics. They have rapidly climbed to #2 and reducing the gap with #1 in attracting Venture Capital.
Do not underestimate the competition and over estimate your own abilities. That won't end well.
5
Mr. Friedman is spot on all the points he made.
He did leave out one weakness in China..which is the relatively recent massive influx of workers from the countryside to the cities to work in the factories which make the goods the rest of the world consumes.
If demand falls for these goods, that leaves the factories idle....and billions of workers w/out jobs.
What does China do then to promote civil stability.. when there are fewer jobs.. and amongst a population where the men are already frustrated over having far less women than men.
If China's option is to have them join the People's Army.. that becomes a very potent army to contend with...once capable of overrunning Taiwan and South Korea at the same time.
But..be assured, China will not sit idly by with the prospect of civil unrest.
Wm form Charlotte
2
China is four times bigger in population and moving faster in its economy, decade after decade moving much faster.
How can this possibly turn out? Not with endless American predominance.
Friedman's solution is to make the present last forever by containment and trying to limit China, with trade agreements and trade rules. That is like trying to make water flow uphill.
The US has a larger base of existing wealth, natural resources on which to draw, and per capita economic activity. The best we could do would be to build on that by going faster ourselves. A race from far ahead is likely to be a long race and successful for a long time.
That would require reforms that are pretty much the opposite of everything America has been doing. We have been focused on concentrating wealth and privilege, and justifying that, and telling people who lose out that it is their own fault.
Other countries don't do that, and they are therefore moving faster, like China is but without the autocracy, as for example much of Europe.
The story here is not what China is doing to us, but what we are doing to ourselves. More exactly, what our elite is doing to the rest of the country in pursuit of their selfish narrow interests.
16
The most interesting aspect of this new conflict with China is the fact that the U.S., with its recent bent toward isolationism, has practically ceded the world stage to a country that shows no interest in slowing down its efforts to take its place.
And while Mr. Trump's recently announced tariffs against China may makes waves, it's this country's intent to take further protection measures of its intellectual property will ultimately create a virtual tsunami, because everyone knows that's where the future lies.
Of course it didn't help matters that in his rush to repeal every piece of legislation put into place by the Obama administration, like the TTP, that Mr. Trump tipped the trade balance in China's favor, even though now he seems to think that he can backtrack this -- but in many instances it's too late, especially since he has already managed to alienate practically all the allies this country once had.
And sooner or later, he'll come to the realization that this isn't what "winning" looks like.
6
If this is a battle for the future we are not only late getting out of the starting block but racing to the past. While China invests in infrastructure and education we have allowed our infrastructure to crumble and stifled education spending. As a result, we have fallen far behind the rest of the world in STEM graduates. While Xi focuses on next-generation industries like artificial intelligence, renewable energy, biotech and aerospace, Trump wants to reopen coal mines, keep us dependent on fossil fuels and restore a nostalgic but hopelessly out of date manufacturing base. While the rest of the world embraces science and accepts the challenge of climate change, we have a political party in charge of government that denies science and dismantles the environmental protections enacted by prior administrations. And we have a president intent on tearing up all the treaties and alliances that help preserve our national security.
159
Thank you Christy. You nailed it!
7
US citizens will never accept the working wage scales of third world nations until we are all unemployed and starving.
The USA should have re-tooled the educational system to produce 75% STEM graduates to emulate the Asian nations (that got our STEM manufacturing jobs) so that we could have retained the creative high tech design capabilities that the USA had until the 1970s.
7
Is it possible that it is precisely all those old treaties that are holding the USA back?
We gave "most favored nation" status to China....look what happened? With the best intentions we invite foreign students into our universities and deny those slots to our own children.....look what happened. We demanded that our politicians sabotage NAFTA.....look what happened.
The most consequential dynamic that will play out this century will not be the US vis-a-vis China, but India vis-a-vis China. The question underlying all others is whether democracy or authoritarianism provides a better social basis for economic development. This isn’t just about whether a society can produce goods under one system or another, but whether one or the other can produce the good—that which is humanely valuable. My bet is on India.
6
Chinese will be Chinese regardless of the political systems under which they live. That is why Xi is betting that his control of free speech, the internet coupled with state-supported capitalism will surely produce some dissidents but will not derail China's drive to become a new superpower and dominate future technologies. Reading Chines history is one thing but understanding it is all together a different thing.
5
I try these days to not be reflexively anti-Trump, but we’re going to get our clocks cleaned in this one. For all the reasons Friedman mentions - Trump and his team still think it’s the 1980s. And Larry Kudlow - Larry Kudlow who is almost always wrong about everything - is leading the charge. China is indeed looking at the future. Our current government is ovsesssed with regaining a glorious past.
14
Problem Trump and his clown car also have is they're extremely polarizing and unpopular with a wide swath of the country, to the extent even if there's some good policies to be had, he's got zero goodwill to get the American People on board. 25% of the country loves him, 50% hate him, and somewhere in that remaining 25% are those lost who want Reagan back AND/or just don't even know what to believe anymore, other than perhaps they want to cry for the country right now.
For decades the US has built and carried, at enormous expense, the largest military, by far, on the planet. And recently it has fought wars of choice using a credit card largely provided by China. Meanwhile, China has been building its infrastructure and industrial base, admittedly the latter using some unfair tactics. Now the US suffers under a regime that disrespects the environment, science, education, and long-standing allies, and is intent on dragging the country backwards while concentrating and pushing the nation's wealth ever upward. Meanwhile, China is investing in Europe and Africa, building a modern day "silk road". And we're still blowing places up. Yeah, I'd say this looks like a disaster in the making. For the US that is.
20
I congratulate Friedman on going public with this. It is time someone did. The American public needs to wake up to what will be a long hard struggle, with no assurance as to how it will come out. He is also correct that it makes no sense to start a trade war with your allies while trying to contain Trump. The US needs to get its act together.
7
The Republicans and DT unilaterally surrendered by abandoning the TPP and passing their tax education bill last year. We go it alone and spend on consumer goods: Gucci handbags, yachts and McMansions. The Chinese on infrastructure, research, education and technology. This is the real "trade imbalance". We can't effectively negotiate until we get our own house in order.
9
"That lasted until the late 1970s, when Act II began: China shifted toward capitalism, becoming a huge factory and new market — and 30 years later turned into the world’s second-largest economy."
Any analysis of China's rise that doesn't mention the HUGE role played by Western FDI is incomplete. Deng's decision to say "yes" to foreign investment was the single biggest factor in making China what it is today, for better or worse.
This is an "own goal."
5
Troublemaker, Our major problem is that somehow we have to pat ourselves even in the rise of our competitor. China is going to arrive as a major power sooner or later regardless of what we did or did not do. To say otherwise is disrespecting the chinese and overestimating ourselves. Underestimating the competition while simultaneously over estimating our own system will end in ruin.
2
If Trump was smart he would use this moment to leverage to green industries, as China has done and not protect the old fossil fuel industries through tariffs. But by undercutting probably overdue efforts on international trade with retrograde policies domestically he puts us all at risk.
4
Outside of the perception of a new diametrical relationship for the US, an enduring peaceful relationship is likely with China because of a truly applied hardliners doctrine evident in both sides:
Mutually Assured Materialism.
1
America’s share of global GDP was 50% after WW II, it is now 15%. This is why we can’t negotiate with China without our allies and partners.
This is a humbling fact, one that was completely ignored when he pulled out of the TPP. Trump is “negotiating” like it’s 1947.
The question is, can the U.S. come to grips with the fact that it’s not the 500 pound gorilla any more? Or rather, can we do it before it’s to late?
10
JL,
Remember we are only 5% of world population so even 15% of global wealth is disproportionate. So we are still eating someone's fair share.
Having said that even when our share of the pie has fallen, the pie has grown much bigger with China, India and the rest joining the world trade. So our loss is only relative NOT absolute. So we haven't become poorer but others have grown making us feel like we have lost power. That most of the global wealth ends up with the 1% Americans is a pointer to poor income distribution and we are to blame for that.
We cannot be the 800 pound gorilla forever and we shouldn't be because that is being greedy. I would say do not grudge the rise of other powers feel threatened , over spend on the military on a credit card, let the wealthy siphon off all the wealth, spend nothing on education or health and crumble from within. Thats what all the declining power do. OOps...Lil too late because thats what we are doing.
The smarter way is to accommodate the rising power, give them a say in global affairs and build a system together with our allies so we still regain a say in the future affairs of the world. History is witness that no power lasts forever and an over extended declining power with loads of debt, without aces is not in a position to take on a rising power with all the cards.
3
We've become poorer too though. Go to downtown newark and walk around for awhile.
To understand poverty you have to walk in streets of Somalia, not newark. The very fact you made a statement like than indicates the lack of understanding of the real world. A poor American is over weight, has a smart phone, a car and yet not even a job. Thats wealthy in most part of the world.
A few years ago this column about the ascendance of China would have bothered me greatly. Not now. The jingoism of Trump and his supporters will lead to some hardships for the body politic which may result in a needed wake up call. There is a silver lining in every cloud.
4
"Finally Having It Out"?
Yes, and the most positive outcome, has been that the truth still can be quite an elixir. For it is the truth, that has contradicted those Progressive notions that were prompting threats of nuclear attack.
E.g., “Worse, Trump tore up the Trans-Pacific Partnership, which would have brought together the most powerful economies on the Pacific Rim around a set of trade rules perfectly aligned with U.S. interests and focused on all those things, like intellectual property, that we want China to embrace as it moves to 2025.”
"Worse" for? The US. "... we want China to embrace"? Lest we forget, we are no longer the No 1 consumer in many markets. Our Western governments are mired in bankruptcy; entangled in societies that struggle to function. Why would China want to look like us?
“… clearly our No. 1 priority — Trump is also risking a trade war with the very allies we need to move China in the right direction ….”
What "direction"? Whose "direction"? This article as much as any, highlights the mendacity in Progressives intentions in Asia, the world. For the 'right direction", "perfectly aligned with U.S. interests and focused on all those things", is the Progressive notion of world that has never existed. That was being rejected so resoundingly, that the world was engaged in threats of nuclear exchange.
I say, good riddance. More truth!
1
"Don’t get me wrong. I am a free trader and genuinely not afraid of some state-directed 2025 plan beating Western free-market innovators. I welcome China focusing more on 21st-century industries. It could be better for everyone."
You should be afraid. SOEs are even more government-controlled than before. I guess you felt you had to include this paragraph in order to be able to enter China again.
The EU, with its democratic principles, should most definitely join the US in a united front vis a vis Madebin China 2025 and all the WTO rule bending and breaking Friedman describes.
The reason they haven't yet is because each country's respective business sector is applying maximum pressure on their governments NOT to do so. This is also a battle about who is in control of trade policy and who decides what the goals of that policy should be.
11
Lenin said: " The West will sell us the rope which we will hang them with."
His communist Russia was never able to generate enough wealth to buy that rope.
China is a different story. We traded our technology for rights to compete economically in their nation. Reagan allowed them to buy the world's most sophisticated computer, at that time. They cheated and stole, and suffered no penalty. They used patented technology without compensation. The Chinese received sweetheart tariff rulings from their trading partners. They got very wealthy.
Now they have the money, and have been slowly, but steadily, accumulating that rope.
12
FJG,
Everything you said applies to the US as well when we created the Breton Woods after WW2. We created financial systems that siphons money from rest of the world into our coffers. We cheated Asians and Africans and Latin Americans trillions in the name of developmental loans and send our corporations to implement projects with huge profits. Everyone cheats and teh losers whine. Now we are whining which means China is winning and we are not able to cheat with abandon and they are able to.
1
Note how CNBC and Bloomberg have chosen not to point out in the past five years or more than China invests in its future but America has been eating it.
Its a simple, clearly understood fact which the top 2 percent couldn't care less about, as our bottom 80 gets up every morning and gets on with it or have given up.
3
"...the work ethic of the Chinese people, the long-term thinking of China’s leaders and the government’s massive investments in infrastructure and education."
This is why America will lose this 15-round heavyweight title bout. And it may not go the distance. The American Congress, the redoubt of the Republican Party for 50 years, is more worried about long-term debt (see: Paul Ryan, et al) than it is about the threadbare infrastructure that is no everywhere to be seen.
Another thing that the the Chinese value is education. Americans do not. Examine the Trump Cabinet. Betsy DeVos is far more interested in privatizing American education than in improving it. And the hard-right its still in a 1950's time warp. The Koch Brothers with their iron grip on A.L.E.C., continue to promote racial segregation by neighborhood and by school, thereby imposing a never-ending Jim Crow approach to broad social problems that a nationally-driven quality educational system would destroy.
So China, mindful of internal (and never-solved) dynamics in American life that paralyze the Congressional will to spend the money needed to propel America into the 21st Century, continue to dole out money to its donors and corporations. They, in their turn, park their profits overseas. These funds, badly needed here, never see the light of day.
China can afford to wait; but it won't. America can't afford to wait; but it will, hamstrung by an ignorant president, driven by greedy ideologues.
9
Knowing Trump's track record, after watching Trump: an American Dream, I can't put any faith in his team or his logic.
1
US is over-reacting and China is over-confident. China is still a developing country and it is still far behind. Of course America is winning. These are the real Chinese dreams: attending Harvatd, Yale or MIT, buying a house in NY or CA and becoming US citizen. Chinese can actually vote with their feet. Chinese society is unhealthy. Most importantly, trust is missing and there is no rule of law. Westerners got it so wrong. China is the most free country in the world. You can do whatever as long as you are not against CCP. China is more capitalism than US. Money is everything. Further, the Chinese economic model is not sustainable. Put aside environmental damages, China has the craziest retirement system in the world. People retire at 55 or 60. With the aging population, economic growth will come to an end! BTW, Chinese healthcare is rudimentary and wealthy Chinese want to come to this country for healthcare.
So tell me who is winning? Apple makes a fortunate and Foxconn makes pennies. ZTE's oparation is stopped without American chips. Politicians will want you to believe America is losing. The military-industrial complex benefits. Populists benefit. But the truth is this. Chinese love America. These two countries should and can work out a bilateral deal. Trump makes sense because Chinese will be pragmatic. Trump may not have any clue but Xi knows too well of the weakness of China. Just like North Korea, China will be the next breakthrough! Second Nobel!
4
You nailed it. China has way more and more fundamental problems than America.
1
Sounds like a troll but when we don't have jobs, I'd argue we are losing. And we no longer have jobs and make things. Mostly our fault, but China is at blame too.
1
JC, If your dreams feel so good, keep living in it. For those who is fine with facing reality, we are the country without a single high speed rail, highest opioid/drug addiction rate in the world, highest gun deaths in the world, poorest health among developed nations, lowest education attainments among the developed world(saved by high achieving asians), an ever increasing income inequality, debt that is 100% of GDP, over stretched and over spending military etc.
3
Like many articles in this vein, there is an undercurrent of "they are being smart/cunning, while we are being foolish/naive' .. implicitly proposing that we be more like them.
I believe we can protect our interests without being more like them. I value our ideals and our freedom too much. Our intense consumerism? Not so much.
5
I wish we had someone who could or would read a detailed briefing, who could listen to nuanced opinions and arrive at reasoned conclusions. There are reasons to think this is impossible for the current guy in the White House, given the number of people in his sphere who seriously question his intellect, his grasp of the complex issues involved, his ability to learn. We have overestimated the ability of his advisors to control his worst impulses.
So while acknowledging the seriousness of the concerns about China, with respect to President Xi, Trump appears seriously overmatched. We all need to hope for improved, educated leadership at the top.
4
We had that. It resulted in endless dithering, an inability to make a decision, and general actions that were harmful to America. Fortunately, Obama is gone and has taken his Marxist philosophy with him.
1
Is providing healthcare to our citizens marxist? Is providing education and lowering college cost marxist? But it is not marxist to let the people die of opioid addiction or be poorly educated that they fall prey to a con man interested in his own self. It is not marxist to let the system rot from within while the wealthy siphons money from education, healthcare, infrastructure or research leaving the mass unhealthy obese, addicted to drugs, uneducated and driving on crumbling roads without any mass transit. We are the only developed country without a single high speed rail. Its a shame!
But you will believe anything done as part of the "MAGA Reality TV" when nothing actually changes on the ground. How many coal or steel jobs have come back How much has opioid addiction stopped? How much has the GDP growth increased? How many have received better healthcare than Obamacare? But we all can surely say wealthy have got their tax cuts, over extended military has received even more money to spend. Its a joke if it ain't so sad!
We cannot fight any trade war because our population has close to ZERO savings and even a slight increase in price will bring many of them to the streets.
Our debt is 100% of GDP because of constant tax cuts to the wealthy and as a result we can’t invest in education, infrastructure, research and innovation.
Our military and maintenance of the far flung empire eats a big shared of the budget even though nuclear weapons made it moot to spend so much on conventional weapons. And there is no need to have such cutting edge weapons to fight the second level powers.
The party of tax cuts and super high military budget keeps winning using slavery era Electoral College by inciting white identity politics and blaming the “others” for American decline when they are the main culprits.
We are a divided nation because 2/3 of high school grads don’t even go to college and they don’t have the skills needed for the 21st century knowledge economy.
We are a divided nation because 40% of the country stands behind a con man who undermines our judicial, congressional and government institutions daily and has created a spell on his followers who don’t believe in facts or data BUT just the conman’s tweets and lies.
We have only ourselves to blame because we have let the greedy 1% take the reins of the country and they have ruined the nation for a few more dollars. Now we are a country that is broke, uneducated, and divided but we don’t stop spending on tax cuts and military.
5
China’s rise was due to a massive shift towards capitalism. With that shift China entered the economic races. It’s policies largely mirror those South Korea, Taiwan and Japan took as they moved to first class capitalism. ChinaIs only new because of the size of the country.
If Trump wants to do something useful then enforce the rules rather than negotiate a set of weaker ones. China will retaliate but enforce them anyway. If others join us that would be great. But Europe has huge problems right on their borders—Russia and North Africa. They are weak allies at best in a fight with China
China has its eyes on the big prize—dominating Eurasia and Africa, dominating where 8 billion of the 10 billion consumers of 2050 will live.
By dropping out of the TPP the US has largely conceded defeat. We will build our walls, cut off the flow of human capital that has helped drive our current dominance in many fields, try to slow down the pace of innovation with patents—although even in America the value of patents are usually gone in a few years. We like Great Britain are an island off the coast of the supercontinent
Now that China has largely caught up it’s going to be the fastest that win. And at this point in history to be fast means you have to be in China. We lack the infrastructure and talent and raw human human horsepower to stay in front: We are 4% of the world population trying to hold off 90%. Good luck with that
3
While our Capitalist investor class operates under few controls theirs is caged, fed and trained.
But the trend is and always to escape the cage and run.
Their corruption will only grow as they find themselves with an increasingly powerful rich class availing themselves of the same opportunities that abound- when one has the power to bend the rules- for good old price-fixing, influence peddling and buying the business with kick-backs.
In an ideal world-which exists only in our imagination- they will end up becoming more like us (more plutocratic power) and we will end up more like them, with our predatory Capitalist system more tightly caged and taxed.
In an ideal world...
1
25 years from now, history will look back on Trump's ignorant decision to withdraw from the TPP as the turning point when the US lost it's leadership in the world economy and began it's decline as a superpower.
American students will learn this in history and economics classes, alongside their foreign language requirement - Mandarin.
2
Could it not be said that China learned how to not play fair from the best? The U.S. is getting a taste of it's own medicine and is being led by the guy who never plays by the rules. So if our answer to the rest of the world is : "You aren't playing fair. Play by our rules. Or else", why should we be surprised that others are employing the same approach? It's a locking of the horns of two ruthless business men. Apparently,for the first time, this town is big enough for the two of us.
1
It may be a good idea for Mr. Friedman to step out of his Trumpesk bubble and reconnect to the real world.
Not just with Chinese and Saudi Arabian issues.
If you travel China these days, that is outside the world of government all expenses paid for trips, you will find a country that is also a unified nation of well beyond 1.3 bn people, that is roughly 4 times the population of the US.
You will find high tech clusters like the one in and around Shenzhen and Guangzhou with literally millions of brain workers that are dedicated entirely to just a small area of research like communications or Fintech.
Simple statistics dictate that if you use large numbers of well educated people you will get any result you aim for faster that if you have smaller resources available.
China is already number one in a number of fields in production, trade and research.
The US attempt to isolate China and to cut it back to size is simply ignoring basic realities of life.
Especially since the US has already moved quite a lot of its production and research and development to China.
So trying to get China under US control is a futile exercise.
The US negotiators may not like it but at least they know that their stance is a lost cause, while Mr. Friedman still does not get it.
If you want a future in a global working economic environment you need to do what other counties had to do in the 1960s and 70s with the US when it was still strong:
cooperate on a global basis.
That's the future
2
The U.S vs. China?
The big problem for the U.S. can be articulated without once referring to China: The U.S. seems incapable of presenting before the public anything like a daring conception of the political/economic future or even, say, a basic problem of our time such as this one: The future belongs to those nations that can most rapidly overcome the tendency to increasing population of low quality people to contained or ideally decreasing population of high quality people.
Vastly increasing population in nations leads to increased calls for caring for all people until a bureaucratic stiffness reigns over all, until all people are reduced to ant status in a stiff machine, and of course in such a state people don't even care for those they come into contact with much less all people; it's impossible to care for all when the all is increasing beyond all proportion and bureaucracy in such a situation assigns one an ever reduced role in life.
All art, science, politics, planning must move in the opposite direction: Reduce population/increase quality of populace. Then caring and effect of caring for all increases. Then small, flexible group behavior and individuality shines. The U.S. must press hard into the most advanced industries such as biotech, space, computers. It's a race to ethically turn a population from an overbreeding animal to an animal which breeds high quality, thinking humanity.
No amount of jockeying with other nations can prevent a nation from this task.
1
Best Friedman column in ages, providing historical context along with analysis. Bravo!
For close to 20 years I did science research at a major US university. The labs were filled with Chinese and Indian students. Sad fact is that American youth do not have that work ethic of which Mr. Friedman speaks. Why work so hard to get advanced science degrees to make little money? Another sad fact in our decline.
2
The historic struggle between China and the United States -- as Donald Trump would have it -- or between China and an alliance of America, the European Union, Japan, Canada, and others -- good sense would have it -- is a struggle which will determine the quality of life for people around the world.
Thomas Friedman understands this very well, but Donald Trump is ill-informed and too much under the influence of ideological protectionists. He is also consumed by the self-image of the lone gunslinger, ready to save the day for everyone without all of the meddlesome experts.
One thing which Mr. Friedman does not discuss fully is the fraud practiced upon Americans by American corporations from the late 1990s until recently.
Companies insisted that their practices in China and China’s flooding of America with products with Chinese substitutes should not be scrutinized too closely, because American companies and their investors were about to cash in on a huge Chinese market for western products and services. It never really happened.
Mr. Friedman does write about the American failure to invest in infrastructure and education. Let us remember that Republicans blocked Barack Obama at every turn on such investment, seeking to make him a one-term president. Those same Republicans appear willing to accept the Trump definition of “infrastructure” as including aircraft carriers and “education” as stressing the Betsy DeVos variety.
3
"China’s society, government and military were being eaten away by corruption from within, those allies say."
We can just as well substitute "U.S." for China in the above statement. No matter how well-intentioned any form of government may be when it starts out, it always falls prey to the worst in human nature.
2
Trump is very short sighted, in fact his long range plan is the next news cycle. Very sad its the same for most of government and many companies. China seems to focus on the long term, willing to make some concessions now for the future. If we want a "Made in American 2025" we should start to make some investments in America 2018.
2
This is where Trump for all his bluster and bravado excels obtaining his position on complex negotiations. The Chinese are big because they overleveraged. Xi became “benevolent” overlord because of the risk China is in. Exports still sustain the Chinese economy. Trump knows a trade war is not beneficial but neither is the status quo. The fact is the Chineese broke first. North Korea was the Chinese ante or pawn in the poker / chess match. It will be interesting what the orange haired one does I for one think it will be a much more effective foreign policy than the last four presidents
2
If we can win and they can win, why does China always play as if they are in a zero-sum game?
1
Trump’s nationalism expressed through America First plays well to his base but if he holds to that ideology it will be a disaster in trade talks with China.
Friedman’s point about having allies in negotiations with China is important and Trump, Bernie Sanders and Hillary Clinton all got it wrong when urging the country to stay out of TPP; the Obama negotiated deal with Asian countries in the region minus China.
By pulling out, the U.S. gave China an enormous gift, allowing it to build new trade allies in the region at the expense of the United States. It should be remembered as “Trump’s Folly.”
1
China has been waging and winning a trade war for 20 years, while we pretend that such a war doesn't exist.
China has had a national industrial strategy, to acquire technology, and make themselves less vulnerable to trade disruptions than we are. That puts us in a very weak position.
The very low prices of Chinese goods compared to US goods, means that the "real" trade deficit is much larger than what it appears to be, measured in dollars.
In the short term, getting a lot of manufactured goods in exchange for paper notes and commodities seems like a sweet deal. But in the very long term, we are undermining our economic, and therefore also, our military security.
And don't even start talking as if TPP would have been some kind of way to "contain China". TPP was written to get more money from patented goods, and to usurp sovereignty of US governments (federal, state, and local), via courts staffed by corporate judges. Written by donors, for donors - not with US interests in mind, let alone the interests of workers. Workers don't have a "seat at the table", and consequently have been "on the menu", in regards to trade negotiations. Long term US national interests have been ignored by our government, while other nations have National Industrial Policies - which benefit their Nations.
And no amount of pressure will make China (or Germany, Japan, S. Korea, etc) abandon their National Industrial Policy. Only the U.S. is stupid enough, or corrupt enough, to do that.
3
I hate to say it but China has a billion plus people with a median IQ of 105 versus only 98 in the US which has had a self destructive immigration both legal and illegal in the last 30 years, 90% from countries with a median IQ ranging from 60s to 80s. Practically we have been imported mostly the world’s dummest people. In terms of countries one extra IQ point alone accounts for a superior civilization. I was in China in 1998 and Shanghai had double the numbers of skyscrapers in Manhattan. Today almost every nice object in any mall in the world is made in China. This is power! Given the numbers, I’d say the future looks very good for China.
1
Can someone explain to me why China should play fair with the US that tries to contain it at every turn?
1
The focus on China's "cheating" should be put in perspective: Western countries have consistently "cheated" in their dealings with the developing world throughout the 20th century, especially in areas like agriculture. Breaking the rules is what the US is doing now in its dealings with Canada and Mexico over NAFTA. Befpre Westerners get on their high horses, acknowledge that China is not doing anything than what the West (especially the US) has been doing to the rest of the world for decades. China believes - correctly - that the West rigged the system to benefit itself. It bent the rules so it could take advantage of that system without being crippled by Western machinations. The other part of this is that the US (and the West in general) has had a monopoly on political and economic power in the world for far too long. The US, in particular, has abused that position - Bush's wars and Trump's current behavior speak to a US that believed it was too big to have to follow the rules and was prepared to bully and beat every other state into subjugation. The US needs to be checked; if China can do that, that is better for all of us. Finally, China's political system has enabled it to make enormous progress in combating pollution and climate change, practically overnight. In the end, China may save the world by developing the technologies for renewable energy that the US has obstructed. The US has proved an incompetent leader; it's time for it to share power in a multipolar world.
3
This isn't new. In the 14th century China, under one party rule dominated half the world trade. Same in the late 18th century. In both instances internal corruption was managed by strong rulers with ruthless aides and administrators. Weak rulers eventually emerged and corruption roared back, toppling the government. In the 17th century a new dynasty was born, same in the 20th, both following the same authoritarian model. Humanity cannot be made straight, we are all twisted branches. China's strength now will be its weakness later. But when will later come and at what cost? At least the Trump administration is recognizing and addressing the challenge, unlike the Obama and prior administrations that dodged and made it worse. Obamas failure to forcefully blunt China's militarization of shipping lanes in the pacific is a blunder that vastly eclipses other administration failures.
19
Look at it from the Chinese perspective. Don't you think the same logic applies to the US, which has gamed the world financial system, since Breton Woods, to favor itself. Now they are only trying to make it right and fair. And they are not wrong.
2
How do you propose Obama to have "blunted" China's militarization of the China Sea?
Here's a more specific question. China's military hasn't made a "great leap forward" since 2016, so since "blunting" is still an available tactic, how do you suppose TRUMP should do it?
Talk's cheap. Trump knows all about that "tactic".
8
Well the Problem with Laying the blame on Obama is his Administration helped to get the TPP going, which would have been a great tool to bring China into the fold of fairness or freeze them out. Trump has given away a great tool. Free trade has winners and losers, and it can be a race to the bottom until the bottom is higher world wide. Not fun if you are on the bottom but pretty nice for all the winners. The most you can really ask for is fair competition. The TPP did that. China is not fairly competing, and that is one reason they are cleaning our clock on some things.
And by the way, they are human beings too. Just like Johnny Jones from IOWA
3
I don't like the idea of the 21st century being led by a nation which has no concept of human rights, which doesn't care one iota about the stewardship of our environment, and feels free to steal the innovations of others with impunity. Something has to be done. I only wish we had real leadership in our country with which to do it.
92
Dominic,
That paragraph sounds very much like how the US has practiced OUTSIDE its own borders. The US has gone on wars in the middle east and killed millions with scant respect for human rights the effects of which are still felt in Iraq, Syria etc. The US is the only country that has withdrawn from Paris treaty throwing the environment down the drain. The same US has also stolen loads of other people's wealth since WW2. otherwise how can a country with 5% population enjoy 25% of global wealth?
Yes something has to be done and China is fighting to make it a fair share for itself and rest of the world. Thats the chinese and Indian and Middle East and Russian and South American view. Are they all wrong?
13
I agree with you, except, how you think China's "stewardship of our environment" isn't far, far superior to the US escapes me. It's investing a lot more in a 100% non-CO2 emitting energy production future than the US. It's the US that is the heartland of AGW denialism.
12
It's not entirely clear just which nation you are describing.
10
Tom, nothing new here regardless of your 3 part play. Some of us dumb intellectual property lawyers wondered 30 years ago why our US Fortune 100 clients had us draft joint venture agreements with Chinese companies that licensed US high end intellectual property to those ventures. We were told it was worth it to have access to a market of more than a billion people. Never happened but the Chinese got US technology and
US companies got rid of US factories and employees for higher profits of Chinese “stuff” exported to the US and sold at WalMart.
166
having managed a business in China, you nailed it:
companies couldn't wait to access the CHEAP LABOR market to replace EXPENSIVE LABOR back home.
it was no secret that the Chinese government would never allow a foreign company to dominate any sector. profits were also locked in-country. the untold billions from the huge market was a pipe dream. this was about cheap labor, pure and simple.
labor tends to be most aspect of any business so companies went to China to get it cheaper. what did Lenin say: "you can sell the Americans the rope to hang themselves with."
17
"...and a capitalist will sell us the rope."
5
For years people all around the world looked at USA as a model to follow wishing to improve their own societies, employers and employees.
There were the sick "always on war", but we more concerned about what we say as progress: good life quality inside the USA borders.
Things started to change in 80's, when less and less of the USA GDP get shared to employees. It was scandalous that the top managers would ask for sacrifice by common laborers and, at same time, justify the huge bonus they collected. But propaganda would take care of it and a blame shift to unions worked wonderfully. The seeds were sown.
From there a massive fight to extract the most of every penny by top managers just kept increasing. Everyone was only concerned about themselves. Watching from afar, I was chocked, that is not the best way to construct a society that aspires to continuous improvement of his citizens.
Worst, almost 40 years have passed and USA top leaders now are even more egotists and fought every inch they could against a previous president that saw the dangers associated to this path.
Really, I don't like the China society model but one thing is true, they got their acts together. And I'm inclined to think that with the vast amount of resources they expended on education, they will very probably end achieving a well balanced society before USA does, as enlightening is hard to push back inside the lamp, as you can see by South Korea, Japan and North of Europe examples.
7
The Chinese must have missed the memo, and the lesson learned, when the USSR collapsed. My college economics professors taught that centrally planned economies do not work as well as the market-driven economies of capitalism. The evolving hybrid Chinese system may prove that theory to be fallacious. Unfortunately, a pointless trade war with the EU, Pacific rim nations, as well as our North American neighbors, may hasten our waning in world influence while China fills the vacuum. We may not like the result of the Booboisie electing a chameleon-like President Munchausen, who gives free rein to GOP economic ideologues peddling failed policies of the past. This is an extremely dangerous time for the American Republic. There are no guarantees America will survive every crisis and/or historical event, especially when led by a President and a political party that places self-emolument, ideology, and their wealthy donor base above the welfare of our nation.
1
The elephant in the room is not the trade - it is politics stupid. The fight is between Western democratic politics
versus the Chinese system
with party dictatorship. Since the beginning of of the civilization style of governance was always a big question mark for the prosperity of a country - dynastic rules by kings, dictatorship of family, military dictatorship, citizens republic, democracy,... all types of systems were tried. In twentieth century it was felt liberal democracy and capitalistic economy policy is the winner. It seems Chinese style single party dictatorship with capitalism may be the new challenge to this conclusion. Economy is the efficient use of resources and free market capitalism was thought is the best way to achieve this. With computer and big data, it is now possible to establish a global resource allocation optimum by a government planning department instead of distributed optimization by market forces. China has a strong central planning system and the resource allocation strategy is government controlled. West has not taken advantage of big data and AI for national resource allocation. The next question is the optimal regulatory policy. - West has used science to drive this area and protected its environment, China has ignored this area so long. Finally education and labour laws - West has open system of education that creates creative minds, China has regimented school system that can created disciplined citizens. Who will win this game?
17
The "work ethic" of Chinese workers is the same as that of American workers. Despite state propaganda about loyal, hardworking, patriotic workers in China and state vs. state in the U.S., workers around the world work for the support of their families, not support of the state. Fear of being unemployed and, therefore, unable to support themselves and their families, means more to the average worker than any sense of pride they may have in their fellow workers. This leads to a race to the bottom for all.
What this article says, in essence, is that our approach to China must be strategic. It must be done in conjunction with our allies and focus on the long-term.
That is why it is scary to me that our interests are being represented by a person to whom "strategy" is a four-letter word.
5
The struggle US versus China to determine which country will dominate the high tech global economy in this century will probably end up in a tie.
The US, no doubt, has many cards to play but it will face a powerful adversary alone this time. Donald Trump is making sure to alienate post-WWII allies and friends, including Japan and the EU member countries.
8
What you say is alienating actually appears more to be motivating. The Euros have been slow economically, politically and militarily for a long time. They need the jolt. Pres Trump sees what the ‘elites’ never can see.
"The Euros have been slow economically, politically and militarily for a long time."...
Perhaps their "metered" approach to things has more to do with the notion that, on more than one occasion in their tumultuous history, they have seen the devastating effects that resulted from fascism, economic turmoil, over zealous nationalism, and militarization.
Mr. Friedman says, "Economics is not like war — they can win and we can win." I am no economist but my first hand experience with Capitalism says that that is definitely war - where there are winners and losers always. And it is capitalist economy everywhere in the world including China right?
The second paragraph gives away what this is truly about - "oldest and newest superpowers" doing what superpowers always do which is fight for power.
Yet another example of American love of instant gratification. The United States set China on the path she now travels by exploiting her cheap labor.
It was incredibly successful....for China. Whoops, unintended consequences, again.
Whether local or national, it seems no government is able to develop well-thought-out long-term plans. Next Tuesday is as far as they can see before the almighty dollar clouds their vision. Friedman is right, we could have controlled this at the beginning: I think it is too late now.
Thirty years ago Chinese college students lived in my student rentals and told stories of the opportunities they saw in this country and the differences between their lives and universities at home and what was available here. They were amazed that this country was so generous. We gave them the opportunity, and they took it!
1
There's certainly some truth to what you say. But the main problem is that the US has been dead in the water for a generation.
For whatever reason, the US has stopped producing its own graduates in science and technology. Most graduate departments - professors and students - are now branches of Chinese universities.
The same thing holds for manufacturing. American companies moved offshore to take advantage of lower costs and regulations, and to avoid the expense of modernizing production.
So Chinese, to their credit, control the knowledge and know-how. And as usual, we complain. This is all our fault.
4
We have lost our edge because we have lost our democracy. Within democracy there is the freedom to create and grow. Big money has taken over and stifled the energy and direction of our creativity. We can’t compete with China through authoritarian urges. They’ll win that game. Our only real strength and hope for the future is in democracy.
4
We don't save money. We don't invest in the education and health of our citizens. We don't invest in technology. We have opened back doors into all of information for the purpose of government and Corporate spying on our every move.
We have invested in weapons technology. We are exporting it all over the world and we are sending weapons techs and soldiers all over the world to train some terrible states to not just use it but to be continuous customers for it.
China is a world power. They will get weapons and other high technological skills either imported, stolen or developed. Just like we do.
The Chinese people aren't the enemy of the USA or it's citizens. They require, food, shelter, energy, education and health care.
Part of the problem of Nationalism, racism, religious intolerance, ethnic hatred, etc., etc., etc. While it might make us feel good even superior it tends to shape the same problems that all of us face across the globe as us against them.
The Chinese people and China is not our enemy. This trade war is ultimately about the economics of advanced weapons and constant global war they are dependent on.
5
You are so absolutely correct. And our enemies are the same ones they have always been ...
When was the last time Trump invested in anything American?
We all can win if we play fair. I like that. No bullying and no monopolies.
And let's show compassion for the less fortunate in all our countries.
4
Friedman's best column in a long time. We are in a low scale war with China and most Americans are completely oblivious. Go into any top US University and look at the graduate programs in computer science. The MAJORITY of students are Chinese nationals. And they aren't here to join our Democracy. They are here to get an education, perhaps get a job at a US firm for a couple of years and then head back to China. If anyone believes that the US will retain its leadership in AI and other computer technology, they are sadly mistaken.
14
Does quality have anything to do with our loss of manufacturing jobs, e.g., and the economic health of our so-called working class? Our automobile industry lost out to Japan's cars because they were better than ours.
And if it is true that our high-tech companies are dominated by Asian workers here in the U.S. and therefore getting U.S. standard pay, does that mean our workers are less able? Again, what does quality have to do with what we do and what we produce?
1
Making the world a flat playing field is a noble aspiration, but nations will continue to pursue hegemony using whatever means they can get away with (building artificial islands, favoring piracy over innovation, etc.) I would love to read a high school history text from the year 2118 and see how this all played out--assuming I could read Chinese.
2
The University question is the linchpin. We need to fund our schools so they can become less dependent on foreign students and actually serve the intended purpose of offering advanced education to our citizens for a fair price. Of course the GOP is against this and would rather have a patron system (see the Koch Bros and George Mason University as a recent example).
We are seeing the confluence of many hostile trends to our Democracy...and we have a game show host leading us. What could go wrong?
9
An excellent perspective Mr. Friedman, but don't you think President Trump deserves credit it for recognizing the problem and starting this effort.
5
If he recognized the problem he wouldn't have pulled out of the TPP.
5
If you review recent history, he is most definitely not the first to recognize the problem. Others, like President Obama, understood that multi-national pressure, as found in the TPP, could leverage China far better than simplistic bluster, which seems to be the only thing our bankrupted casino owner president knows how to do. Time will tell, and as this editorial clarifies, Trump has vastly weakened our hand in dealing with China.
5
NO, having spent time in China from 1975 through 1992, you have to understand that they have the time to wait you out. They play an asian called "Go" where you wait until your opponent makes an error and seize upon it.
I read all these comments about how China will inevitably win because their centralized control allows them to play the "long game." The current Chinese regime took power after WWII. What "long game," people? We have beaten economies over and over again, and we will beat this one, too. Why? Because we have a Bill of Rights, and they never will.
7
In principle I agree with you. However what a trade war really represents is the reality that we can no longer compete unless we redefine the rules.
The President has never advocated a "Level" playing field. He wants deals that favor the US. If that isn't a recognition that our people are uneducated, relatively unhealthy and ultimately uncompetitive what is?
The Republican budget coupled with the trade war is a slap in the face to our future. Massive investment in corporate tax cuts, less education, less health care, more tactical nuclear weapons or WMD's if you prefer.
On the other hand China is an aging paper tiger, who government will either change of the Country will also fail.
2
I happen to believe that "freedom" is one of our most dangerous (to China) weapons. It's a stealth weapon if used wisely.
1
Yes, but, they are one BILLION people.
1
History shows that this is the way that all economies change. Rome,, Ottomans, Austria, Britain, US each had hegemony over the conduct of economy usually with military strength as back up. Our great gift to the world was a non military, cultural hegemony. We actually helped our economic competitors like Germany and Japan. We still have trading "partners" but large corporations are actually international.
The biggest problem we will face from a big China is cultural. We (the West) currently define the world culture. We (the US) are multinational (multicultural) at home. We can theoretically accept any culture into our country comfortably. Thank you African Americans for forcing us to see and feel this. If economic hegemony moves to China as a superpower not a partner we will have a bigger problem. We can cede to China the biggest economy, because if they reached our standard of living they would have to have 3x GDP. However, that is not the point is it? Can we have China as a trading partner and anneal then comfortably to our culture? Is it going to be cooperation and partnership or war?
2
I saw over the years the disappearing of our industries. Instead exporting high tech consumer items, we export food, music and weapons. Not a good recipe for high paying jobs. Not a approach that will sustain our superiority in weapons with no investment in education and protection of technological base. Since current administration came in , we have lost lot more jobs. Random tariffs do not make industrial policy.
12
I cannot believe your hypocrisy. The last president did nothing to punish China for intellectual theft or trade violations.
1
While free trade can be win win as dr freidman says, the key question that economists fail to ask is who is going to win. In the last twenty years as China grew their people won and our top 1percent won. The working class in the US has been slaughtered. In the early 2000i worked for a Tier I auto supplier and in a meeting with an OEM we were told the product must be made in China. We argued that we had an efficient facility in Michigan that could build it and they said no. If we want the business then the answer is move the plant to China. We literally closed the plant and shipped the tooling to China. They said China can have a middle class four times the size of the US and they were committed to building that up. Even no tariffs would not have changed that decision. The executives were looking towards the next market and the US was old news.
13
I too saw this over and over again working in Logistics. Fertilizer, Steel, Paper, Electronics, the list goes on and on. All sent to China. The people running some of these large companies just don’t care or rather they care about their shareholders and not the communities that have fostered their growth.
The U.S.A. needed a “New Deal” with the American worker 25 years ago but the combination of Clinton/Bush free traders with no long term vision made that impossible. If are are going to win this round we need a whole new attitude in both parties and a new set of tools to do it with.
4
Thank you for your perspective.
Thank you for the belated realization of the China threat. Please proceed beyond your "play by the rules" solution. That is recycled World Trade Organization thinking that already failed. Quantitative measures of trade balance and composition of production are better metrics. China grew through undervalued currency that supercharged exports and limited imports. Japan and South Korea did the same, earlier. Nothing new. It's communist version of industrial strategy shape that advantage to the government owned industries it wanted to promote. They made good choices largely. They grew excessively from the US market. We gave up our market and deindustrialized, being left with low quality service jobs.
We have to get over our "rules" preoccupation and focus on results. Balance trade and improve the composition of our economy. That takes dollar devaluation and industrial strategy. Radical ideas for the US but not the world. It is the only thing that has worked to develop countries well.
4
Trump is blamed for pulling out of TPP. True enough, but what is not said here is that 44 of 45 Democratic senators voted against giving Obama fast-track authority for TPP. They argued the deal was opaque, harmed workers and unions, and damaged the environment. Trump can be blamed but so can the Democrats, and Obama too for forcing such secretive legislation on Congress and his own party.
7
No one ever mentions that our congressional leaders and supposedly brilliant economists simply ignored our slowly dismantling manufacturing base allowing the jobs, technology and work ethic to slowly ebb away for quick profits driven by the greed of corporate America. Where were the lobbyists for Unions and American workers when these jobs were disappearing? Anything for a fast buck.
We did at one time have a work ethic and elected officials who would have been horrified at the collapse of our textile industry, steel and electronics industries and even the medical devices made here, but now made in China. We used to be proud put our name on our products and stamp them "Made in the USA" but those days are gone. Can anyone really say no one saw this coming? When a nation cheats on trade they should be called our immediately so it can be addressed before we end up in the position we're now in. Not 30 years later when we have no more industry left. When we allow corporate lobbyists to own congressional leaders that could have prevented this we deserve what we get.
We could correct this now, but no one wants the pain involved with bringing industry back, especially corporate America and those that vote against their own best interests. If we don't take the hit now, the suffering will be so much more painful in the future when the situation worsens. And it will get worse when we have no essential productions here in the USA.
Wake up America.
4
Blame Nixon, Kissinger, and The Law of Unintended Consequences.
They opened the lid of Pandora’s Box, largely as a distraction from their domestic political problems.
And here we are!
Now Trump is doing the same with North Korea, adding another centrally-controlled, cheap-labor economy to the mix.
Our memories are short; our self-absorption infinite. And we learn nothing.
4
The one thing that keeps China inline is the fact that in a dispute with the U.S., it would have no friends except North Korea and maybe Russia. The Chinese would like nothing better than to drive a wedge between the United States and Europe, and our President is trying his hardest to help them do just that. If there is a conflict between to super powers, the one with the most allies and trading partners is going to win.
7
Trump has no Science advisor
In this Tech Age he is less wiser,
We have a fat chance
And none to advance
We're led by a backward downsizer.
7
Forget government, China has a cultural and family tradition that is unified and enduring.
Chinese saying, when the family unit is out of order all off society must follow.
We on the other hand have nothing, everyday a new form of society and family emerges to compete with long held beliefs.
3
The Chinese assert that America has a chronic trade imbalance because we don't save enough. But the American consumer isn't to blame. China has benefited from economic policies that have stacked the deck.
America's economy is now a post industrial information and consumer economy. While manufacturing represented 30% of GDP in 1960, it now only makes up about 10%. Retail and medical consumption now represent 70% of our economy. When Americans stop spending, the economy goes into a tailspin. Advertisers of all kinds chase the American consumer for their cash or credit.
At the same time, American wages have been stagnant for years. There are many reasons for that, but workers don't have much power in the low wage retail economy. This has left Americans struggling to make ends meet. Hence, the lack of savings.
It's disingenuous to blame working Americans for the lack of saving or for the trade imbalance.
11
One cannot deny that there is a chasm between the savings rates of Chinese and American citizens. Chinese ruthlessly save. Americans spend with the same fervor.
China is a ruthless trader. It doesn’t respect patents and is very protectionist. It is anything but free market. And unlike the USSR the Chinese are brilliant workers. The US is soft by comparison. And now the Chinese are becoming innovators. The US is in for a gradual decline
6
Let me just clue everyone in and say what's obviously true; it's not possible to have a good faith negotiation with the Trump administration. We'll have to wait it out and wait for the next administration. For Trump it's just PR, more about perception than reality, and he simply doesn't have the knowledge base for even a basic understanding of what this is about.
10
I never trusted China but can not fault them for doing what is right for them. I fault Western Governments for not waking up and for trading future of their citizens for short term benefit for large businesses. Author is correct a united front is needed. I do not have much faith in current US administration and their policy of going alone.
12
China expects to dominate electric cars, robots, aerospace, etc., with a program of national spending. Basically China is picking winners—something republicans are contemptuous of.
Let’s remember that the US today dominates health care, aerospace, aircraft, military, nanotechnology, information technology, etc., primarily on the basis of federal government funded R&D and early spending as the technology is commercialized. Remember that the internet and GPS andeverything in the early iPhones were based on US government funding.
Let’s remember that republicans are busily killing off research and spending on batery storage and new energy technology and want to cut subsidies for electric cars to protect our massive fossil fuel industry. Republicans have thus handed leadership to China.
And republicans have been cutting federal tax revenues repeatedly since 2000 forcing major reductions in R&D spending. The 2011 Tea Party budget cuts forced cuts in military R&D
Trump is not going to slow China down. He should stay home and act to speed America up
17
Of course, our own government could also try investing heavily in next-generation industries rather than in coal. Ronald Reagan’s so-called “Star Wars” initiative did just that, and fostered significant technological progress and economic gains. But when Barack Obama invested in solar energy, Reagan’s own party acted as if it were treason — rather than a strong foundation for a prosperous and sustainable future. We need to recover our sense of possibility.
40
I remember Reagan's first act upon taking residency in the White House. He had Jimmy Carter's solar panels removed from the White House roof. We're tricklin' down now. We don't need no free energy.
China is most worried about internal unemployment. If high unemployment, the state and Xi are at risk of an uprising. Much of Chinese exports are still low tech/high labor that high tariffs will drive to Vietnam, India, Mexico.
While no Trumpist, I think he is right on this one (as is Friedman). Its a battle worth having. However, we need Canada and EU to come along with us.
11
What goes around comes around. The OPIUM WARS of the 19th Century vs today's OPIOID CRISIS? The later afflicting much of the economically gutted (by China) parts of the U.S., the former afflicted on China by the West in an effort to turn that country into a nation of opium addicts.
2
This is far more than a historical coincidence of similar sounding names, or an abstract concept.
Don't believe for a second that China isn't aware. and participating fully, in the tit for tat of opium/opioid.
And don't even pretend to be surprised that American corporations, angels of Capitalism and Democracy, saviors of the nation and the working class, are the mechanism by which the destruction has been created.
Our corporations, meaning our executives and politicians individually, used us like any other resource. The American people became, to them, a big hole waiting to be filled with opioids at premium prices. No tactics too course or too manipulative, to include buying the apparently plentiful physicians unconcerned with health yet still true blue American enough to be deeply concerned with profit, and their fully corporatized medical center employers.
Media are too squeamish to look at the issue, or even say it, but this drug holocaust was created in America, on purpose, for profit, abetted by the Chinese.
This is what our corporations have become. This is who our Wall Street community are.
"U.S. and European businesses tolerated all of this because they were still making money in China or were afraid to be frozen out of its massive, growing market-"
To paraphrase Winston Churchill: Western Economies, we've already established what you are, now we're just haggling over the price.
4
People look at China and think, CHINA! They fail to see that China is a lot like the United States. China is a melting pot of different races, peoples, languages and cultures all living under a general label entitled Chinese. Well, maybe not in the melting pot sense. The old original "chinese" people still live at the top of their pyramid for the most part.
China, under the surface, has societal fissures and fractures; they are just as stratified as they have always been. Same with the United States. China just hides them better, or maybe it's more accurate to say the West overlooks them because it has been profitable to do so. Greed and avarice does that.
Both ascribe themselves, politically, to a certain ideological philosophy. Ideologies with strengths and weaknesses, and which historically have been at odds with each other. But they have both come to the same place haven't they? The interesting thing is in coming to that place they have strayed far from core tenants of their original ideological "faith."
They both are vying for the global throne, and both are mirror images of the other. One player with a structured, top down hierarchical heart, wearing a Capitalist face. The other with a chaotic free-wheeling Republic heart wearing a Capitalist face. Yin and Yang. It's Kabuki theater at its finest isn't it? Let's see where the music takes the dance of this performance shall we? I suspect there are surprises in store for everyone.
4
China was laying the foundations for an innovation economy as Bush launched the war on Iraq and advanced a tax cut for the wealthy of which a significant share wound up invested in China. The Iraq war and its results continue to bleed the U.S. and weaken Europe as a consequence of massive numbers of refugees fleeing from Syria, Libya and other conflict zones. That past cannot be erased.
The rise of India and the economic and intellectual capacity of Europe as well as the unrealized potential of Africa, on its way be the most populous, integrated region of the world, argue against a bipolar U.S.-China world. But, rules for a multipolar world order remain to be written. But the foundations exist in the international order shaped under postwar U.S. leadership. It took two world wars to create the conditions for this.
Leadership to shape a multipolar world order is unlikely to emerge in China despite increasingly impressive innovations and strategic decision-making. Trump is causing change that could lead to conditions where a stable multipolar order could emerge, but that could be as elusive as the solution to the 3 body problem. Perhaps, a sustained external force will emerge that will make it possible.
Whether the U.S. survives and thrives is dependent on major reforms that enable strategic goals - healthcare, military, science, innovation, and space.
Reunification of Korea would alter the U.S. - China relationship as much as Nixon's opening of China did.
4
It is a war of creative destruction and concomitant chaos versus centralized control. It is a war of innovation versus theft. In the last generation, the developed world allowed the Chinese unprecedented access to our markets and technology because it was important -- important morally AND economically -- that China increase the standard of living of its citizens. And the Chinese did so. But then growth rates slowed, the irrevocable limitations of the command-and-control model wherein the Central Committee makes all the important decisions based somewhat on economics but much more upon self-preservation, were subtly exposed. And then what happened? What always happens: there arose a totalitarian who consolidated control, clamped down on all the "outliers" in Chinese society who think for themselves (the list of outliers grows every day), and required undo fealty to Himself that he insists is good for the Chinese people. It is not. This is the stage of Chinese economic growth where they must innovate for themselves, but they may not be capable of that due to their economic model and their insistence that the only legitimate leaders are the Chinese Communist Party. We owe it to the Chinese people to not let them off easy. The CCP regards government by consent of the people and real capitalism to be sources of amusement, not a viable model. We owe it to the Chinese people to require their government to fish or cut bait. It is a moral issue dressed up as an economic issue.
9
China is a serious country led by serious educated people who believe in science and reason and planning. Serious long term planning. Heavily investing in infrastructure which includes both physical (roads, bridges, airports, high speed rail) and human (education, targeted poverty reduction, rapidly rising wages for all, improved social safety net) and a government that works. The Chinese society is not divided by racism and bigotry. The average person sees progress ahead. China is the leading trading partner of most countries in the world.
The politically divided USA where the least progressive rural areas dominate , where the fruits of the economy are directed to the 1% , where the poor are scorned and the government is felt to be the enemy is in no position to compete with China.
Oh I forgot to mention the American Empire. Bases and soldiers all over the world. 11 of the world's 19 aircraft carriers. The world's policeman. And racism and bigotry.
38
Visit any tech company or university engineering department. A majority of the skilled workers are from overseas, many from China. The U.S. is no longer supplying the skilled labor to staff its own tech industries, because taxpayers don't want to invest in education anymore (and our citizens would rather watch reality TV than learn to code or do math). In fifty years, we will be a nation of plumbers and real estate agents. Our industrial and military technology will be obsolete, and China will be dominant with the most advanced products and weapons.
15
As a university professor I was surprised that few US students seemed interested in pursuing a PhD in math, engineering, or business! Applicants were nearly all from overseas and the numbers from China and India were overwhelming! These students received stipends and after 3-5 years took well-paying US jobs in industry and academia. The same was true about US businesses. Most sold in the US market and few were truly committed to global business that required different packaging and modified products, like right hand, fuel efficient, high quality autos! IMHO we have been our own worst enemy.
5
Not in 50 years. We are already that nation. We have been for quite some time.
1
EDH:
Americans are in a highly competitive global economy. Unfortunately, they have been slowly brainwashed to believe competition is unfair and everyone deserves recognition. It's so much easier to eat our lunch now. We need to toughen up.
"- and 30 years later turned into the world’s second-largest economy.
In large part this was due to the work ethic of the Chinese people, the long-term thinking of China’s leaders and the government’s massive investments in infrastructure and education."
It was also due to US corporate investment in China, to the US economic 0.01% seeking to enrich itself without any regard whatsoever for the rest of the US's citizenry.
The Chinese leadership acted not only to increase China's national power but to improve the economic well-being of the vast majority of its citizens. China as a whole was strengthened. Pundits in the US lauded that hundreds of millions of people were being lifted out of poverty, while ignoring the fact that a authoritarian regime was being significantly strengthened.
And they were silent as the economic well-being of the vast majority of Americans stagnated or declined, the US was degraded as a society and culture, US politics became more extremist and polarised, the image and reputation of the US around the world was trashed and the legitimacy of democracy itself worldwide was brought into question.
The American economic leadership acted only to increase its power. They trained the pundits and politicians well to regard the empowerment of a nation as a whole as "nationalist" and vulgar - and if the US working and middle classes suffered, well that was due the noble workings of the "free market". Caring for them was "socialist" and therefore un-American.
19
The United States underestimated China but China was paying attention to our values and they played the long game when Nixon famously opened up trade between our countries. They knew that we worshipped at the alter of money and all they had to do was provide cheap labor and corporate America's greed would take care of the rest. While we were deregulating and no longer funding education and research at our post WWII levels, they did the exact opposite. While we threw ourselves into unnecessary wars, they focused on building relationships by building in underdeveloped countries around the world. We're playing catch-up and we did it to ourselves.
It's going to take at least a decade if not two of serious investment within our own country to catch up to China. They have a thriving middle class and an infrastructure system that is geared towards succeeding in this century. Our infrastructure is failing and isn't capable of handling the demands of the technology that China is going to unleash on the world. Intellectuals will go there if they want to create because China is willing to invest billions into the next big thing.
We're a first world country who's best days are behind us. After the economic inequality that has developed post recession we won't handle the economic uncertainty that comes with standing up to China. Our citizens won't tolerate it and they will rebel against our government. This is how Russia must have felt when the USSR collapsed.
26
@Ami...You are starting to become one of my favorite posters---on any site. Intellectually stimulating and factual. None of the constant anti-Trump blather found in so many other posts. No identity politics nonsense. A fan of FDR. You make me think.
Which brings me to your final paragraph. Eerily prescient? It is something for us all to think about.
China confused by US on a quest to find an escape route from decline due to social inequality. To some extent the West also in decline. Trade wars a brazen attempt to repair damaged economy with politicians in the boxing-ring to score points with the growing disenfranchised middle-classes. Chinese political system designed to avoid chaos with one billion people with many ethnic groups including Muslims. China evolved in part due to influx of US corporations establishing manufacturing operations like APPLE GM and Ford. Democracy a luxury that China has never recognized as an option; their one-party system works for them. As for the US it remains the dominant economy but it seems very unsure of itself looking for answers as China takes its place on the world stage. China Russia and Europe amazed the US now wish to start trade wars and reinstate "Cold War" to take us all backwards. We need a more self-assured USA that applies diplomacy rather than slamming doors in everyone's faces? Trump to perform miracles; more a man of mystery.
1
We are past the tipping point where we can no longer contain China. It was our hubris which enabled China to grow to this stage unchecked. We arrogantly assumed the superiority of our political system and the democratization of China was simply a foregone conclusion. We need a paradigm shift in the way we view China. We have to accept that the Western system is discredited in their eyes. They are united, we are divided. They are a manufacturing powerhouse with the industrial output almost the size of the US, Japan and Germany combined. We have no real plan for our struggling blue collared workers. Their middle class is exploding, our is imploding. And do we have anything to learn from them? Absolutely nothing. Our focus is solely on how they have cheated. Taking them to task today on the WTO is like crying over spilt milk. We can throw a few tariffs at them and all they will do is focus on leading in AI, robotics and the industries of tomorrow. We really need to dig deep and look at our own political system first. We have a real crisis of government but cannot get beyond the mudslinging of the two parties.
50
Before a brinkman’s gambit succeeds or fails, the two parties ALWAYS chivy, bluster and “oh, yeah?” It doesn’t mean that the gambit has succeeded or failed yet. So far, all it really means is that Xi is telling Trump to go to hell rather than cave in ways he regards as embarrassing and opposed to the buccaneering interests of China. We may yet see some mutually face-saving resolution that gets Trump the concessions he’s looking for AND gets Xi no tariffs. We’ll see. I never expected a trade war with Europe, Canada, Mexico, Australia and others, and it looks increasingly unlikely that we will see one – Trump will get what he REALLY wants, which is re-negotiation of bilateral trade agreements to better address U.S. interests. But China? That was always ambitious.
Yet, Trump has more guatamaliness than almost all of us, and he may sense a path to victory. As I write, we’ll see. If he fails, maybe we stop importing weird and disgusting foods from Guangdong and Guangzhou provinces, where it seems all the potentially-global-pandemic diseases seem to originate.
But make no mistake, with significant free trade barriers, we pay a fair amount more for goods … but China starves as its manufacturing ceases to employ millions. My money’s on Trump.
But Tom is ideologically disingenuous when he cautions that people shouldn’t be distracted that ACT III is led by Trump. It may well succeed. We should be asking what Trump has that has ALLOWED him to see the need and carry the standard.
5
At one time China was the world's largest emerging market. Over a billion people that needed everything. But, the Chinese leaders played a game, cheated even, and they won. China is now the world's largest manufacturer. But, make no mistake, they're still the world's largest emerging market too. They still have over a billion people that need everything. What's changed is that now they can make all the stuff they need internally. They don't really need the West at all.
The transition from export to consumption economy will be quite painful for China. It's not an easy switch and quite dangerous for the ruling elite. But, conveniently, a nice trade war will let them blame the evil West for all the people's troubles. Trump is blundering into another trap and will be doing his part in Making China Great Again.
A very long time ago, in the days of the Middle Kingdom, China made lots of stuff the West wanted. The problem was that China didn't need nor want anything the barbarian West made. So, to balance the books, the West exported drugs to China, by force when necessary. China will never make that mistake again. They don't need us, they don't really want us, and we can't force them anymore. Game, set, match to China. They have already won. They just needed a Trump to come along and pull the pin.
12
Trump's eyes are wide open and as someone who hails from the highly competitive and combative commercial real estate industry, he can smell a bad deal far more easily than the typical leader, who is a globalist far more interested in his one-world model where we all, say, fight climate change and for female rights "together". Globalist seek such togetherness to fulfill, in my view, a deep and strong need to actualize their own needs to be leaders for "good". In effect, they are more ambassador than effective trade negotiator. Trump doesn't worry about that (to the horror of globalists). Good to him means not being on the wrong side of a deal. Trade is a battlefield. Togetherness is a notion for world summits.
1
Very good.
Good. Better to deal with this now than later. China is welcome to a free trade world that doesn't include intellectual property theft on an industrial scale, massive currency manipulation, technology transfers to do business in China, artificial island squatting in international waters, and human rights and ecological abuses beyond being enumerated.
As I said, better to deal with this now.
7
United States has let China become an incredibly powerful empire due to its own greed and shortsightedness. Unfortunately, I do not believe Friedman that in the economic wars, both sides can win, because economy in China is a political tool for the establishment. They have not kicked the communist ideology, just tweaked it and instead of five year plans, they have a fifty year plan to make China the most powerful country in the world, economically. Chinese don't want an open war, but if they can control certain aspects on a foreign country's economy, they can force legislators to pass certain laws that can curtail rights of individuals, restrict certain personal freedoms, allow China access to people's personal information, etc. For what purpose? Well, remember the Mongolian Empire? Chinese, twenty five years ago woke up, looked around and decided that they were no worse than second rate actors and if their ancient cousin could control most of Asia and a healthy chunk of Europe with some horses, bows and arrows, then they could certainly control even more. Since China is an oppressive/repressive regime, they can force people to do whatever they want and kill them with impunity. There is no due process of law when it comes to the actions of its government. So China is seeking world dominance and human rights and fair play are not in their vocabulary. World beware, it's already too late. Just see the influence they have in Africa and Cuba.
2
With US-Europe ties frayed, I expect Beijing will test President Trump's resolve. Great analysis by Friedman.
6
Can someone explain to me why China is morally obligated to play fair with the USA when american intent towards China is not benign?
4
No one said that China is "morally obligated" to play fair, just that the United States should employ a strategy to force China to play "fair" insofar as we are able.
6
Who said that?? The issue is how to deal with a trade partner like China. We need to be as tough if not tougher and push for deals that benefit us. It's called "self-interest".
1
You are making unfounded assumptions about American intent toward China. Since 1972 all the United States has done is to assist China in every way a developed nation might be expected to help a developing nation. China has returned hostility and aggression in return. Blaming America has become such a knee-jerk that we sometimes don't stop to think about the situation at hand.
2
The fact that the Trump administration is first alienating its allies before provoking a trade war with China indicates that perhaps it really is not interested in reforming the world economy to make it fairer. It is either following a hidden agenda or is intellectually bankrupt.
And it's not as if the US does not have an industrial policy of its own. It's called the Pentagon.
3
Friedman says "Beijing was able to force multinationals to shift more and more of their supply chains to China". From what I can see, American corporations didn't have to be forced, they were eagerly outsourcing jobs to low-wage countries to improve their the bottom lines. Those who have worked for American corporations have undoubtedly seen jobs in their companies outsourced.
According to conservatives, the free-market system is the superior economic system. I think one of the flaws of the free-market system is that it allows intellectual property to be bought by the highest bidder. Sometimes the highest bidder is a foreign company or foreign country.
Did China steal intellectual property or did they buy intellectual property? Perhaps some of both. To the extent they bought it, then it's we who need to do something about our free-market economy to protect intellectual property. If you leave it to private businesses, they will opt for selling intellectual property to the highest bidder, regardless of whether it is domestic or foreign.
15
The problem is we concentrate on economy and economic fairness (based on rules set by the US etc. after the war) and ignore the fact economy, which is based on property rights (of plutocrats), can infringe human rights (of people). There are a lot of examples in China, I heard, which shows human rights violations in this sense as well as political. We should first address this problem, which I suppose is more universal and easier to garner the support from majority and then proceed to some specifics which can be disputable technically and have to factor in historic considerations.
1
Friedman is spot on, but it's even worse than he says: China wants to dominate not only the global economy, but also hard power and territory. They assimilated Hong Kong and eliminated its liberal democracy; they have taken control of the South China Sea with their new islands and military bases, in an area of ocean where the once-proud US Navy, humbled by its inability to avoid crashing into freighters, now fears to pass; Taiwan is next.
Twenty years ago, I would have said, America is a democracy and our system is superior to the Chinese dictatorship of the Party (now further reduced to the dictatorship of Xi Jinping). But American democracy has become a partisan circus, dominated by big donors (thanks to the Citizens United decision), and led by small minds (McConnell, Trump, Pelosi, Schumer).
Meanwhile, as China has become our only economic peer, we were distracted with a tremendously wasteful war in Iraq, and now by ridiculous posturing against Russia and Iran, two weak and impotent peacocks.
Thank you, Mr. Friedman, for sounding the alarm. May more Americans take heed.
57
alarm on what? individual chinese dynasties have been around longer than the US. USA as a superpower is an anomaly of history, not the norm
3
Thank you, Mr. Friedman, for a genuinely informative and incisive op/ed piece. Clearly, our country's problem with China rests mainly with our own CEOs who simply can't resist the lure of that country's massive number of prospective customers. They're happy to make deals with Beijing, even on terms that are clearly unfair, because their profit-share, while lower than it ought to be, is higher than what it would be if they stayed out of the Chinese markets altogether. What to do? Certainly, tariffs aren't the answer, and- as Mr. Friedman suggests- imposing tariffs on our European allies are clearly self-defeating. Our CEOs will simply have to stand up for themselves on principle and stop doing business with Beijing until the Chinese learn to live with less. And our feckless leader should reenter the Trans-Pacific Partnership if he truly wants to do something that would effectively combat China's abuse of trade laws.
14
Lets not forget Trump and Co have branding franchises in China. The Chinese know the hollow man is easily leveraged with a little grease. And so our nation gets sold down the river with the rest of Trump's business partners.This whole presidency schtick is all about big Don T taking care of number one. All he has to do is blame Comey and the Democrats for lousing up this deal and he is home free.
4
Don't let Trump hatred cloud your vision. Bush and Obama were afraid to say boo to China. Trump is the first to take them on; he may be despicable, but he's also right.
1
Friedman is not a historian, otherwise he would remembered what happened when Great Britain, a global wold power, felt that it passed commercially and scientifically by an upstart Germany that blossomed after being's its duchies, kingdoms and independent cities being united in 1866.
The British response was to settle conflicts with its enemies, France (the war of 100 years, Waterloo) and Russia (The Crimean War, The Great Game) and bind them with treaties to Britain, surrounding an ascent Germany.
It is the US policy in Asia, surrounding China with alliances with former enemies (Japan, Vietnam, )
The outcome of the UK policy was regional conflict in Serbia (an ally of Russia) and Austria (an ally of Austria) started WW I, as the network of treaties clicked in
One hopes that the US policy of the last 30 years that aimed to circle an ascending China, in order to "contain it"
shall not end similarly.
The US needs to acknowledge that is no longer the undisputed power of the world and work out a power sharing arrangement with China.
24
You did not mention specific aspects of China economic policy that leaders of other countries (hopefully) would now like to contain, such as industrial espionage against companies and forcing foreign companies in China to have a local partner which receives technology transfers. As the article states, other countries until recently have not even tried to contain or curtail these unfair practices. The world has believed that a developing China would be a positive force in the world and allowed WTO rules for China's entry in it, for example, that do not reflect a containment policy at all.
Besides China's economic nationalism, I also worry about a world in which the largest power (by virtue of having the largest economy) does not allow freedom of speech. What kind of world would we live in if all countries believe that people do not have the right to seek truth freely? Why then should the world's most powerful country have such a position? What kind of world will that be?
5
It is true that by the end of the 19th century Britain was no longer the preeminent industrial power in the world as Germany and the US developed behind tariff walls , but it was still the preeminent financial power---British capital played a big part financing American economic development after the Civil War and British per capita GNP was still significantly higher than Germany's . However, it sought alliances against Germany only after Wilhelm II sacked Bismarck and decided to build a German navy that could challenge British naval supremacy and threaten British island security. This was akin to an island naval power like Britain deciding to build an army to challenge German land supremacy in Europe. The consequences were obvious even if Wilhelm II was too obtuse to realize them. (Wilhelm and his advisors obtusely thought Britain would just seek a German alliance once the German navy could challenge the British.) Wilhelm also obtusely dropped Bismarck's alliance with Russia, as a result of which autocratic Russia sought unlikely alliances with liberal France and eventually liberal Britain, despite years of hostility. So there isn't much of an historical analogy here at all. Britain was content with a power sharing arrangement with Germany---Britain the dominant naval power, Germany the dominant European land power Bismarck had made it---but Wilhelm II wanted it all. Even Hitler recognized the mistake Germany had made.
3
Right on. Besides describing Chinese hard working
and disciplined, you should have mentioned they
are also intelligent. Historically they have made
many ground breaking innovations and are
capable of making many more in the coming years.
China couldn't be Bangladesh, being content to
stay at low end of manufacturing. Countries at
the beginning of industrialization borrow
technology from other countries, USA did get
technologies from England when it started
shifting from agrarian to industrial society. China's
behavior is not unprecedented. Now they have the
money to invest in research and development
and some talented people, they will make many
innovations. As a reminder, 2018 is not 1840's
when USA, England, Japan cornered China and
forced trade deals on highly favorable terms.
We may forget history but China remembers it.
Expect lot of resistance.
63
Well, gee, none of this was in the impressive and extensive 25-year marketing campaign for "Globalization".
It seems things haven't worked out as the economists and the globalization cheerleaders promised.
It was supposed to be win/win, and all that.
Well, the results are in.
China won. America lost. So did Europe. Call it a win/lose/lose.
And now the world is on the edge of an abyss.
It's difficult to conceive of how things could have gone any worse, especially since those hundreds of millions of people lifted out of poverty by globalization may be at risk of falling back into it if this isn't resolved. (It's a pity none of them were Americans.)
This is indeed a dangerous moment that will determine the course of history for the rest of the 21st century.
China’s right. It simply outperformed us, in every way, by acting in the best interest of its citizens. As a result, America has been in decline for the entire 21st century.
But China's confidence that it can outlast us in enduring the pain of a trade war is dangerously naïve, and underestimates the depth of the anger in this country that will only grow exponentially in the coming years as people begin to come to terms with our precipitous decline. This could very easily escalate to conflict.
As noted in the text, this crisis has been decades in the making. It’s a shame nobody noticed that we all weren't "playing by the same rules", and took action to avoid a potential cataclysm, because it may be too late.
43
Agreed. Globalization actually weakens nations. While globalist leaders and bodies pursue the greater good, hard core competitors are free to pursue dominance.
2
"That is what this moment is about — that’s why it’s a fight worth having. Don’t let the fact that Trump is leading the charge distract from the vital importance of the U.S., Europe and China all agreeing on the same rules for 2025 — before it really is too late."
A remarkable line to read from a NY Times writer, and very fair indeed. Trump has a lot of flaws and might not know where he's headed on this exactly, but he's doing something, which is half the battle.
Like him or loathe him, if you're for free markets and free people, you better hope he keeps this singular campaign promise. The Communist Party of China is not a friend of the West.
24
"Doing something is half the battle"??
Doing something is just the first move in a long and complicated chess game. One that should be entered with a carefully drafted strategy.
The White House has no such thing.
Instead we're starting the chess game without any bishops and knights because we've alienated our allies.
5
Finally a somewhat balanced article on trade with China and Trumps attempts to push America's interests there. Instead of the usual "down with Trump, long live president Xi" nonsense.
15
Finally, finally, the conversation moves away from Trump's antics and to the potential "disaster" (his favorite word about his predecessor) of a know-nothing nincompoop. Never, never in the debates was trade covered. Why? Because it was simply just too "fascinating" to watch this neophyte capture the Republican nomination and then the presidency. America prefers fun and dumb over educated and experienced.
The country's obsession with the horse race, combined with a complicit press which saw its job to present it as a jaw-dropping exercise in the possibilities of an unorthodox election, caused the situation of electing someone with little or no knowledge of trade other than the basics: "China is unfair." Thanks, Comey, and thanks, press, for your wondrous contribution to the values and future of our country!
11
Trump is the spark, that finally lights the Chinese Century. America is done, as the Worlds Leader, economically. And our Military will soon be diminished, without adequate funds. Sure, we can continue to fund the Military at the same levels, if we cut everything else to the bone. All social programs, gone. Social Security and Medicare, greatly diminished, until gone. A true dog eat dog society, perfect for the one percent.
Thanks, GOP. November.
100
The Democrats are no better. They had two of the last three presidents. We are where we are now also because of them.
6
That's because the last 2 democratic presidents were actually "Republican Lite". Corporate America owns both parties, but at least the Democratic party will distribute more crumbs and distribute them directly to those in need as opposed to the massive fraud that is "trickle down", or rather "piddle on" the 99%.
You should learn a little history, Phyllis. Bill Clinton and team are responsible for China's accession to the WTO. But keep up the hate, it's just what the communists want.
2
Until 1800, China had the world's largest economy. After a two century hiatus--brief from the perspective of Chinese history--they are back. Very few observers, least of all Mr Friedman, seem to grasp that the return of China, and the demise of Western global dominance, is irreversible. Instead of pretending that we can continue to enjoy our hegemony of the past century, we should adapt to new realities.
After all, who will likely do better in the future (especially in the face of climate change), a country ruled by Marxist engineers who take a long, historical perspective (China), or a country ruled by Evangelical lawyers, who fixate on the news cycle (the United States)?
57
This is misleading because China just had a lot of people under its rule. If you aggregated all European countries together their aggregate GDP would sound impressive too.
In per capita terms, China was last on par with Great Britain between 1200 and 1300.
Once the industrial revolution started and 1800 rolled around as you mentinoed, China's GDP per capita was 29% of Great Britain.
http://www.businessinsider.com/history-of-chinese-economy-1200-2017-2017-1
12
I do not seem to grasp that anything is irreversible.
2
Good points. Except that crediting Trump with any recognition of the situation is like crediting a knee-jerk reaction for a good field goal kick: the resemblance is only superficial.
Successful trade agreements require thoughtful, reasonable, diligent negotiators working to optimize their futures (win-win). Simple-minded, nationalist ("me-first, me-only") approaches, the only sort this so-called administration is capable of, are destined to failure as other, smarter negotiators take advantage of short-sitedness and blindness.
We need to rejoin the TPP, collaborate with, not fight with, our natural partners in Europe, America, and Asia, and work within, not in contravention of, the rules of the WTO. Sadly, there is no evidence our 'administration' is capable of such thoughtful, concerted action.
11
You should check out this paper called the NY Times. It is very informative and "thoughtful".
Trump Proposes Rejoining Trans-Pacific Partnership
https://www.nytimes.com/2018/04/12/us/politics/trump-trans-pacific-partn...
Xi's crackdown may be high risk--but that's precisely the model that Trump would love to follow: One-man, top-down, all-in-line rule.
The difference may be an ironic one: Xi may use his tighter control of the Chinese economy to reduce and eliminate those inefficiencies (especially corruption) that will otherwise counter a forward direction that he decides is best. And Trump may narrow and reduce the efficiency of a diverse and, heretofore, responsive American market--and, as he has already shown, sponsor crony capitalism and phony deregulation of a sort that is itself crippling.
It's clear that the U.S. is going to face this latest bend in the road with a guy in "command" who doesn't have command of the intricacies of international finance, other than how to build doomed hotels in the outback of Russia.
5
This is definitely a Thucydides moment in the world's geopolitical economy. Has China risen (and the US fallen) sufficiently to merit a trade war? Yes. Will it result in a shooting war? Not by itself, but all bets are off if it comes in conjunction with potential flashpoint issues like the South China Sea and Diaoyu/Senkaku territorial disputes as well as Taiwan or North Korea.
4
"The assumption was that as China grew, and the W.T.O. moved to a new regime, China would quickly cut its tariffs — like its 25 percent tax on car imports, compared with the 2.5 percent tariff imposed by the U.S."
I've read about this assumption many times and never have I seen what made the assumption reasonable. What were the facts on which someone could ground an opinion that China would just suddenly cut its tariffs?
6
Friedman makes an excellent argument for having this confrontation now. However, for a confrontation of this magnitude, I have no confidence in the intellect of Trump or those around him to be successful. Who in his circle brings the experience and knowledge needed? Film producer Mnuchin? TV personality Kudlow? Dozing Wilbur Ross?
Trump, with his disdain of facts, lack of knowledge and inability to formulate a policy or strategy, is out of his league on this. Exacerbating this is an already strained relationship with European allies. I fear we are in that environment best described as "the lights are on but nobody is home."
34
That win-win is only achievable with allies, this is a sad perspective to contemplate with Trump at the helm.
I agree with Mr. Friedman that China has been taking unfair advantage of WTO rules, in addition to stealing our intellectual property. I don't agree with the second part of Mr. Friedman's perspective that there is a need to support Mr. Trump's strategy of dealing with China. My issue is exactly the opposite that the strategy of Trump administration is going to create long-term problems in dealing with China by weakening our own position. If we have to deal with China, then we need to enhance NAFTA and improve trade relations with Mexico, Canada and South American continent. If we have to deal with China, then we needed TPP. If we have to deal with China, then we need better trade relations with EU. Tariffs wouldn't help. Current trade strategy lacks vision and cohesiveness. Just depending on personal chemistry, flattery and personal deal-making prowess, for whatever that is worth, is not going to help us.
7
Leaving the TPP is self-defeating. How much better off we would be in this contest if the policy of Trump and the Republican leadership did not have as it's bedrock principle and policy, "Undo whatever Obama did."
5
China employs state run capitalism. The US employs market capitalism. China views government as an asset. The US views government as an enemy. China pays to have its brightest students educated in the worlds greatest universities. In the US, we question why we even have universities, let alone want to pay for them. China follows decade long economic plans. The US is ruled by quarterly profits. China cheats. We don't tax the billionaire class. In China, civil rights are forfeit. In the US, money has more rights than people. China is destroying the environment for quick growth. In the US, we want to destroy the environment for feeble growth. China pursues multi-national trade and investment policies. In the US, we used to and now want to pursue only unilateral policies.
So who wins? China will win. Trump did have the right idea about China getting away with murder. Many of our largest corporations made a fortune off of cheap Chinese goods, so we went along with it for years.
Until and unless we straighten out our twisted and self defeating ways, we cannot out compete China. The first step is to stop demonizing the government and allow government to participate in business. The ExIm bank is a good example. Big business in the rest of the industrialized world has government involvement. It's about time we joined the club. We call it redistribution. They call it public investment.
361
The US does not employ market capitalism, it employs crony capitalism.
24
Well said.
2
Mr. Rozenblit.....I would claim that you are still locked into a very 20th Century world view....perhaps a little bit out of sync with the 21st Century. You start off with references to Capitalism, which hasnt been an accurate economic model since 1930. Since the Great Depression, virtually all national economies have been running off a Socialist model....Nazi Germany, Socialist Britain, Soviet Russia, New Deal America, the United Nations and CHINA. The radical change to the Keynsian Socialist model only became appearant once the "internet" became popular about 1990-2000. The Internet DESTROYED the old Central Planning, Industrial Socialist State. the USA, being the most successful of these Socialist States is the last to change.....the harder they come....the harder they fall......ask Russia.
2
The author writes "In large part this was due to the work ethic of the Chinese people, the long-term thinking of China’s leaders and the government’s massive investments in infrastructure and education. " And, I must add, to the outsourcing of labor by American companies, a problem which will be very hard to solve because the USA's economy has become too dependent on outsourcing labor. Mr. Trump is a symptom of this problem.
32
Paul Krugman, I believe, recently stated that Economists are not always right in their forecasts, brilliant as they might be; and reflecting once again on The World in 2020: Power, Culture and Prosperity: A Vision of The Future by Hamish McRae, published in 1994, where a chapter in the above, leads to the timing of when The U.S. and China might duke it out. All to say, if the date is here sooner than expected, would Trump, as our President, play a role is one question.
During the Presidency of Barack Obama and The Recession, one could hear bristling on the Web about essential products not being 'Made in America'. Earlier, I had a simple dinner out of a can with a fork made in Korea. This utensil has well served its purpose and rather than toss out the pots and pans, there is reason to feel or sense, without the gift of second sight, that America would not be in transit so roughly to a Trade War with China, if we had a reliable and steady Leader.
Not for all the tea in China, have plans been made on this American's part to move to Beijing, fascinating as it might be; but if the Leader of this Oldest Superpower is looking fairly optimistic these days, and in the times we are living, it brings to mind the importance of public relations, finesse, civility and polish in these sensitive business exchanges.
India, the Superpower of The Third World, perhaps will lean towards the Imperial Dragon, while we recycle plastic items, having missed a window of opportunity.
3
'Economics is not like war — they can win and we can win. On one condition — we all play by the same rules: hard work and innovation, not hard work and stealing intellectual property, massive government interventions, ignoring W.T.O. rules, lack of reciprocity and forcing Western companies to pay to play inside China.'
But if we did adopt the Chinese way, i.e., stealing intellectual property, massive government interventions, etc., would/could we get ahead of the Chinese?
Or is it that we would never do such horrendous things because we are morally so much superior to the Chinese?
3
Stealing intellectual property was how the US got ahead of Great Britain and Europe. The Chinese is only guilty of being a good student. You bet the day when we need to steal from the Chinese, we will. As Hamilton best put it, intellectual property is a sovereign right, at his time, meaning British intellectual property rights need not apply in the new continent.
11
There's a strange dichotomy here. Trump supporters want to get tough on China and no doubt regard it as a repressive regime yet, another article in today's Times shows that Republicans are much more comfortable with being tracked, scored and labeled by algorithms than Democrats and Independents. I would have always assumed that people who are against background checks for guns and want government out of their lives would be less comfortable having their lives an open book than liberals.
https://www.nytimes.com/2018/04/30/technology/privacy-concerns-politics....
China has already instituted its "social credit score", an ominous Orwellian creation algorithmically derived from someone's entire online activity and other data including advanced facial recognition software, detailing with whom they associate and where. A low score has severe consequences such as limited travel within the country, limited employment and business opportunities and even the choice of a possible mate. We are fast approaching that realm in the US but if you were to describe the Chinese model to a Trump supporter they would be absolutely horrified. I just cannot reconcile the cognitive dissonance here.
16
"Trump tore up the Trans-Pacific Partnership, which would have brought together the most powerful economies on the Pacific Rim around a set of trade rules perfectly aligned with U.S. interests and focused on all those things, like intellectual property, that we want China to embrace as it moves to 2025."
This is ALL that matters in this article really.
151
I agree with everything in this article.
China took advantage of the WTO. They have been cunning. At least they are now being more transparent about their intentions. That was actually a strategic mistake because it helps makes Chinese trade policy a bipartisan issue here at home (rather than just a Trump rant).
Western companies are run by CEOs in place for 5-10 years. Quarterly results dictate short term thinking. The solution has to be national and transnational policy that constrains (and yes, regulates) the behavior of private firms so we present a unified front when dealing with Chinese manipulation.
And I totally agree with what you said about Trump--his instincts about China happen to be right here, but we need him to come to his senses and join forces with the EU, Russia, Brazil, India, etc. to pressure China to comply with fair trade rules.
23
"...creating a regime of one-man rule; controlling the internet, free speech...cannot be the best way to stimulate and attract the most creative and innovative minds that [a country] needs to propel a start-up economy...
Observing current practice and spectacular recent historical success, several Internet titans - in both places - might be inclined to disagree...
As far as real GDP - China passing us right now...
By any real measure or correlator - including scale of global trade, and material consumption and production - they're winning...
In our Potemkin economy, we sell ourselves about a half-trillion dollars of pharmaceuticals each year...
Europe - with twice the population - does half as much dollar volume...
https://www.bloomberg.com/news/articles/2016-09-29/epipen-s-69-cost-in-b......
India and China - each with twice the population of Europe - half the sales...
And - anyone wanting to nay-say China's industrial chemical acumen (including designer psychoactive compounds)...
https://cen.acs.org/articles/95/i42/Made-Chinaextends-chemical-process-t...
"...About a year ago, China allowed researchers to be shareholders in the companies licensing their processes to others...Referring to younger colleagues, he says, “It’s a golden time for them to be developing processes in this country...
Heard all about the efficiency of GE Diesel-electric locomotives and and predominance of Boeing/Airbus...
Imitation the sincerest form of hardball competition...
4
"..there is a trade imbalance today because we’ve been investing in our future and you Americans have been eating yours."
Spot on. Wake up call, America.
Our choice is self indulgent consumerism, cheap political theatrics, empty celebrity worship, and self absorbed rants, or redirecting ourselves and doubling down on basic research, education, infrastructure, well paid work, investment in the well being of our children and grandchildren and upholding the rule of law.
489
Yes. Consumerism, theatrics, Hollywood, and rants have dizzied the US and weakened it.
As have Republican politicians who channel huge tax breaks to the rich and to corporations while letting our roads, bridges, and schools collapse.
However ...
The US network of colleges, universities and research institutions that foster innovation remain strong here. Even Trump, Pence, hosts of Fox and Friends, and Pruitt can’t entirely suffocate them. And I do have an odd faith that democracies (even flawed ones) are ultimately stronger and more inventive than immense dictatorships.
16
Deborah, let me turn that logic on its head. How different is it for an Average American without access to good healthcare, education and infrastructure even if they live in a nominally democratic country? Just because they have a vote doesn't make them any better as they are also under the dictatorship of the wealthy(oligarchy). Democracy by itself doesn't do squat to creativity unless the distribution of wealth is fair and equal.
There is no inherent advantage of just being a democracy or inherent disadvantage as a capitalist dictatorship. How long will our advantage last if the mass doesn't get the benefits of those schools and facilities and only the elites get to benefit from it?
Ripping up the TPP is a terrible idea; China is big enough to try to go it alone and has been investing in infrastructure and education; since they have not been wasting money on nukes and military conflicts they can afford to pay good wages to R&D workers hired both from within and outside China. China's main problem will be staying the course and not making big mistakes; but the country under Xi Jinping seems firmly headed in the right direction. China will be a force to be reckoned with in the future.
7
So everything you wrote is pertinent, Friedman. What you fail to mention is that China did not engage in expeditions in search of missions, including the Iraq war which you enthusiastically supported, thus saving untold trillions of yuan which they used to do much of what you mention regarding enhancing their position.
273
China's domestic economic policies are not so good. Big countries can make more mistakes before they start to hurt than little countries, and ditto dictatorships than democracies. They have made, and are still making, some bad mistakes, but the bottom line is that they are doing pretty well.
But China's policies and practices vis a vis foreign investment, international trade, savings, and development of technology have been very good -- more or less as Tom Friedman says here. Here is where they are, more and more, going to eat our lunch.
And here we both are, at this turning point that Friedman describes. The Chinese have dozens of smart, knowledgeable men and women studying, forming, and executing their strategy since Deng. We Americans have Donald Trump, Wilbur Ross, John Bolton, no Secretary of State, and their buddies -- all screened for ideological purity and/or friendships with the narcissistic juvenile sociopath.
All we can hope for is that not too much more damage is done by these clowns with weapons, before 2020 when I'm convinced they will be gone, most of them forever.
It's the twilight's last gleaming. Let's work to make something better appear at dawn.
104
It is not possible to compete with China on any scale, because they are using a system of ''capitalism'' within the shell of a totalitarian state.
China has 4 times the population of the U.S. and still uses a large chunk of that human effort in the form of slave labor. They might actually be in a jail or have bonds on their person, but to think they enjoy a sliver of the freedoms and human rights that western citizens do, is well, folly.
China can, and does manipulate its currency to roughly 30% less on any occasion for any industry it deems it wants to supplant the west from.
China can, and does 'invest'' ( taking money from the state ) in many areas of the globe ( mainly Africa at the moment ) while the west is going bankrupt cutting taxes for its ultra wealthy, managing its debt ( which China owns a massive chunk of ) and imploding under political corruption.
China still works by a system of who you know ( higher up on the food chain ) and how much you can grease their palms. The corruption is off the scale, so much that great ideas are often lost in a byzantine government that awards advancement only to a select few,
The West in turn ( led by this republican administration/President ) is looking for ''deals'' for the sake thereof, and only wants soundbites, so they can say how much they are winning. If there is a deal to be made, then it is to advance only a select few as well.
Maybe we are more alike than we think.
59
I'll have to disagree with you on your "slave labor" comment. I've met many Chinese owners or small businesses and they lament how wages have risen 15-20% a year for the last 10 years. Most informed estimates have between 400 to 600 million Chinese lifted out of abject poverty into the middle class since 1978.
Your comment on a manipulated currency is something Trump campaigned on. He promised to label China a currency manipulator on day one but was unable to do so because there was no case for it. The facts don't support it.
6
We don’t call it corruption but our system, thanks to things like Citizens United, has made our Congress utterly subservient to business forces. And the needs of capitalism without regulation or with minimal regs (what the Republicans want) inevitably leads to its own demise through over expansion and inevitable collapse. We’ve seen this clash of old capitalism with up and coming capitalism at the end of the 19th century when the US overtook the UK. Fortunately for the UK we were allies and not enemies. We shall not be so fortunate in our competition with China. And we are not helped by the empty headed guy we refer to as the President.
12
@Emkay
Absolutely. Many hundreds of millions have been ''lifted out'' of the poor class and into the middle class, but at what cost ?
You are allowed to frequent only certain websites, leaving the country is an iffy proposition and you are watched at all times. speak out of turn or on a critical basis ( where it might get traction ) and you can still disappear.
There are slave labor camps, prisons and many a business still that have forced or indentured labor. ( mainly from the state )
I guess we can agree to disagree.