Xi Jinping

German lock on the European economy hurts US exports

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Germany, as the largest European economy, accounts for almost one-quarter of EU’s production and consumption. In itself, it is a fact that should threaten anyone, but the breakdown of Germany’s economy leaves a lot to be desired.

The trade surplus with the United States alone is $64.2 billion in 2017. Compared with total American exports to European Union, which was $283.5 billion, the number is staggering. What is even worse is that the rest of the EU has a trade deficit with Germany amounting to $164.4 billion. This situation is unsustainable in the long run because large trade deficits are in essence a wealth transfer from Europe and America to Germany.

Berlin has been focusing on the export-driven economy for a while now. Its exports constitute almost 50% of the country’s GDP. For comparison sake, the United States’ exports account for just 14% of GDP.

Source:iheartberlin.de

The change to Germany’s economic policies is long overdue. Instead of insisting solely on export, it should focus on increasing domestic consumption, which would allow both its industry and its trade partners to sell more goods on Germany’s market. So far, nobody has challenged this situation, neither France (with a trade deficit between $36 and $41 billion each year, nor the rest of Europe.

Obama’s administration has tried to get Germany to give up its austerity policy, which only strangled already stretched thin European economies. The proposition was promptly rejected by Berlin. Current administrations have gone the other route, by threating to impose tariffs on all European goods, in order to curb the growing trade deficit. On top of that, Washington is also picking up the tab for NATO defense spending, something its European allies have been very reluctant to do. However, the tariffs are also a wrong method and won’t bring the desired results. Instead, an open dialogue must be started, with clear intentions of making Europeans aware that their large trade deficit is hurting U.S. economy and it must be reduced. With tariffs, Washington is on track to repeat the same mistake it made with China. Here, the trade deficit is even worse, amounting to $595.4 billion. The American administration decided to tackle the problem by slapping import tariffs on Chinese goods, leaving Beijing no choice but to respond in kind. Trump’s decision to invoke tariffs will only serve to alienate China even more, despite the praises he has been heaping on President Xi Jinping.

U.S. position on trade deficit is largely unassailable, yet the tactics employed by the American government are ineffective. The NATO summit next month will be an excellent opportunity to settle, or at least open a dialogue, about these grievances, yet there are slim chances of that happening. The last chance to negotiate a deal on the highest political level may very well be lost. After that, trans-Atlantic relations can easily slip into an open trade war.

Source: cnbc.com

Trump’s Presidency Benefits China

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During the presidential campaign, Donald Trump accused China of damaging American workers by stealing what should have been their jobs. Even though he had some recurring promises in the campaign, he has shown the unpredictability during his term. Thanks to this, China has a chance to become a superpower more quickly than expected.

So far, Trump has crushing Beijing in the trade war in one moment, and he was saying that deals should be signed in another. He has been going on about $375 billion US trade deficit with China which distracts him from the real goals. Moreover, Trump’s relationship with Chinese President Xi Jinping also puts him in the negative position. His exclusion of the United States from the global warming issues and global trade give Beijing additional leverage, on top of that, it opens up the opportunity for them to occupy the US’s current position.

Source:newyorker.com

Because Trump rejected the Trans-Pacific Partnership trade deal, China can easily persuade the US allies in Asia that the promises made by America are empty. And while the Americans are quarreling in the White House, China spreads its influence in Asia and the South China Sea. In the new National Security Strategy, Beijing is considered to be the competitor to “American power, influence and interests.”

Aaron Friedberg, who was in the office of Vice President Dick Cheney and now works at Princeton University as a professor said: “While the administration at the bureaucratic level is trying to think and talk about long-term issues, the President himself is very focused on the short term.” China is now led by their strongest President in generations, and they are thinking decades and centuries in advance instead of just a few years.

Based on the evidence, Beijing has the edge over Washington in their relations recently. Although POTUS threatened to win the trade war against China he gave up on it because he realized that winning such war would be much more challenging than he thought. Ryan Hass, a former State Department, and National Security Council staff member said that Trump wanted to withdraw from taking action. He declared: “Whereas six weeks ago, the administration was running headlong at the trade issue, now it appears to be, at the most charitable interpretation, putting the pause button on things.”

The reception that the US reached with China wasn’t the best, which only showed that America was losing ground. Beijing was not forced to fold on some of the most bitter disputes with Washington even though it agreed to lower tariffs on auto imports. It only convinced Trump to pull back a threat to levy $150 billion in tariffs on Chinese products, but only after offering the purchase of US agricultural products.

Trade expert William Reinsch said: “We have been taken again. Last summer they played us. They played us again.” We are not familiar with the details of the deal at this point, but Commerce Secretary Wilbur Ross will be sent to Beijing to sort things out. Meanwhile, Trump tweeted: “Our Trade Deal with China is moving along nicely, but in the end, we will probably have to use a different structure in that this will be too hard to get done and to verify results after completion.”

This even outraged some of the Republicans and Marco Rubio tweeted: “I have urged @potus to follow his initial instincts on China & listen to those in his administration who understand that a short-term trade deal that sounds good but poses long-term danger is a #BadDeal.”

Even though Trump is being criticized at the moment, he is right when he says that the presidents before him could work out the deal between the two countries. POTUS has also been criticized for calling Chinese president his friend, and on Wednesday, he said: “I have a great relationship with President Xi. He’s a friend of mine. He likes me. I like him. That was two of the great days of my life, being in China. I don’t think anybody has ever been treated better in China — ever in their history.”

Meanwhile, the White House negates the fact that Trump has gone soft on Beijing. “We finally have a President who is actually calling out China on their unfair trade practices — and not just calling them out, but actually doing something about it, and aggressively pushing forward in negotiations, something that we haven’t seen in decades,” White House press secretary Sarah Sanders said Wednesday.

Source: edition.cnn.com

Did President Trump just save ZTE?

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As we all know, Samsung and Apple are still two biggest companies when it comes to modern phones. Whether you are an android fan or a fan of the iOS, there is no doubt that you have seen how both of them look. These are the giants of this market.

Well, the one company that is trying their best to match up with the giants is ZTE. But, it’s kind of hard for them to do that when they have a huge ban in the US.

ZTE is actually the fourth-largest smartphone maker in the States and has been in trouble lately as the US Commerce Department issued a denial order which is preventing US businesses from providing services or even selling hardware to Chinese tech giant. We are talking about a seven-year ban here that actually forced ZTE to say goodbye to some of their “major operating activities.”

Source:automobilnews.eu

But don’t you worry, here comes President Trump, ZTE’s newest ally! He has tweeted out that he is working with the President of China, Xi Jinping, on getting back into business this massive Chinese phone company. He wants to find a way to make everything work and he wants to do it fast.

He even stated that the Commerce Department has been instructed to get things done quick, fast and in a hurry.

ZTE has been working hard on getting that denial order overturned. Their biggest hopes were the bilateral trade talks between US and China. Now, it seems that they have President Trump on their side, which is a huge plus for the Chinese company.

It is a bit of a surprise that Trump of all people has stated that he is concerned about Chinese people losing jobs since he was the one to say that protecting the jobs of the American people is something that he wants to focus on.

Anyway, this is a strange situation. We’ll have to wait and see the results of Trump’s and ZTE’s efforts.

Source: cnet.com

US Foreign Policy is About Trump, according to Macron

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Even though France and the US are allies, it appears that French President Emmanuel Macron has no sympathy for the US President Donald Trump. According to Macron, Trump’s narcissistic personality guides him in his decision-making whereas he has no understanding of how the world functions. Macron also noted that Trump’s ideology is not clear enough.

Source:foreignpolicy.com

With that in mind, the French president has two options. One is to lecture Trump on how the world works and how to be the president of a great nation. The other is to manipulate him, and for better or worse, he chooses the second option. Hopefully, this will be a great choice for everyone because it is up to Macron to navigate and shape the relations between the United States and Europe in the upcoming months.

The Washington Post writes: “The special bond that seems to have developed between the 71-year-old American president and Macron, a 40-year-old political novice elected just a year ago, is no accident. While [German Chancellor] Angela Merkel is clearly turned off by Trump, and British Prime Minister Theresa May’s Parliament and population have indicated they don’t even want him to visit, Macron has gone far out of his way to cultivate him.”

This is also backed up by the statement of one of the officials close to France leader “Macron is doing this because he knows that he has to be close to our closest ally, the president of the most powerful country in the world. It’s in our interest to have a good relationship. He doesn’t go as a friend.”

Source:ici.radio-canada.ca

Could the two presidents be close friends? For Donald Trump, it is all about how he is treated by the foreign countries. When Chinese President Xi Jinping welcomed Trump on a high level, he was foolish enough to believe that China was America’s friend. The same happens with Saudi Arabia. He never considered that the American Presidents have been welcomed and appreciated across the world and that this was standard fare for the US leaders. Trump has taken this personally, and that has a huge effect on both the United States and the allies as well.

We need to make a point that authoritarian leaders know how to manipulate everyone, and they are cunning. Otherwise, they wouldn’t be in the position they are. Some people worry that North Korean’s Kim Jong-Un would deceive Trump and they are partially right. Flattery is insincere, and the US President needs to realize that as soon as possible. He may make a wrong decision, instead.

Sometimes, differences arise between the United States and its allies, which is a natural thing in politics. Instead of facing reality and solving the differences all the leaders of the allied countries need to do is to praise Trump and everything would turn up for the best. And this is what Macron has done. Instead of showing Trump the effects of getting out of the Iran deal he decided to praise his strategy. He is aware that there is a possibility that Trump wouldn’t listen to the arguments or that he might be bored by his speech, and their relationship would only deter. And The Washington Post confirms it:

“According to officials involved in the U.S.-European talks, significant progress has been made on addressing concerns about the deal’s sunset clauses, its verification rules, and the absence of restrictions on Iranian ballistic missile testing and development, as well as new measures to counter Iran’s “malign” activities in Syria and beyond in the Middle East. Four documents have been drafted that they believe are responsive to Trump’s criticisms.

“An overall declaration and three sub-texts are to outline their joint understanding that other international conventions will prohibit Iran from developing nuclear weapons beyond restrictions that expire in the next decade; push the International Atomic Energy Agency to expand its monitoring; and promise strict sanctions if Iran moves forward with intercontinental ballistic missile development.”

If Trump reimposes sanctions on Iran, they are going to continue with the nuclear weapons program while the European countries remain in the deal. Just the fact that Macron has any influence on Trump’s decisions says a lot about his skills as a politician. He is doing what is best for France, but we all hope that works because this is what’s best for the States as well.

Source: washingtonpost.com

How Will China Respond to Trump’s Tariff War?

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Some of the White House’s advocates of “America First” ideology believe that trade instruments which prevented Japan’s rise in the 1980s would do the same thing for China. However, the two countries are widely different and same measures cannot be applied in this trade war. On Tuesday, China confirmed that anti-dumping duties on sorghum that arrives from the United States would be imposed. China is the largest buyer of sorghum from the US, spending around $1 billion per year, but this may soon become a thing of the past.

Source:bbc.com

If this trade is disrupted, Trump will not receive the same support as he did in the 2016 election. A majority of the sorghum is produced in the US south, and these states are mostly republican. Here is how Trump managed to undermine trade in just a few weeks.

In March, a global tariff of 24 percent was introduced on steel imports as well as 10 percent on aluminum imports. Later that month, his administration made a case against Chinese technology which is licensed in the WTO and slates of tariffs were introduced, at $50 billion on Chinese products. Did you expect China to remain silent? They imposed tariffs on $3 billion worth of US goods. At the beginning of April, China also increased the taxes of up to 25 percent on 128 products from the United States, because of the USA-imposed steel and aluminum tariffs. Furthermore, China launched $50 billion in tariffs on a bunch of products from the United States such as cars, chemicals and soybeans and Trump threatened to introduce $100 billion in tariffs against China. Is this an endless and pointless trade war?

While the US is applying the familiar tactics – divide and rule – they might get a slap in the face from the country which economy is in a severe jump. China will not sit quietly as the US is imposing tariffs and they will return with same measures. What are some of the options for China to defend its economy against this nonsensical trade war?

Source:theguardian.com

First of all, they could defer trade and investment agreements which Trump signed when he visited China. Furthermore, banning the import of genetically modified products to China would raise the stakes and it could possibly start a wave of other countries taking the same measures. Genetically modified products are banned by many countries, and while the GMO products are stuck in the approval process in China, they will develop their GMO sector.

As we have already mentioned, disrupting the trade with China will hit blue-collar workers and farmers across the country. And they are the ones who brought Trump into power. Obstructing Chinese investment would be severe for the United States because China has other options. Hitting the US service could be beneficial because more than half of the $39 billion US surplus comes from Chinese people who are traveling and studying in the United States. Washington has already blocked visas to Bejing, so why should the Chinese government allow their tourists and people to visit the United States?

Source:qz.com

China is the largest foreign holder of the US Treasuries with $1.2 trillion of US debt. Some other foreign holders of the US debt are Japan, Hong Kong, Korea, Russia, and Brazil. With everything that has been going on, China might decide to sell the debt which would force Washington to take a different approach to cover the sustained deficits. The prolonged trade war will also undermine the US relationship with the NAFTA partners as well as the EU allies.

This trade war looks endless, and according to a growing number of reports, Trump’s administration plans to ratchet up the pressure against China. This could only backfire, and President Xi Jinping said that in a trade war “no one will emerge as a winner.” And he is right!

Source: foreignpolicyjournal.com