Chinese Communist dynasty emperor Xi knows they’ve blown the biggest bubble in the history of humankind. All measures being taken by Communists are to ensure the survival of the party when this bubble eventually pops. Dynastic succession in China usually involves the losers’ entrails being paraded around Tiananmen square (or other significant public gathering place), so this is about survival. Politics, economics and ideology are secondary.
The Communist dynasty knows that the bubble will pop and they will lose the mandate of heaven (economic prosperity). The only way they can stay in power is if the blame can be diverted. Trump is heaven’s gift to the Communist dynasty. EVERYTHING can be blamed on Trump. The Communist dynasty will play the nationalism card – having been attacked by Trump. The Chinese will rally around this. Trade was forced on China (Most Favored Nation was a punitive trade measure against China by the western powers) and now Trump is going back against trade treaties designed to humiliate China since the Boxer Rebellion.
Most Favored Nation trade also saw the unlimited importation of opium into China (resulting in the Opium War). These racial/cultural issues run deep and the Communists will play them hard against Trump. As an aside, the export of fentanyl opiates from China to the USA is another interesting related issue. China sees the west enforcing humiliating trade policies and dumping drugs in China as fine as long as the west profits. But as soon as the west no longer benefits from these policies, it wants to change the rules the west originally enforced on China. When the Communists spin this, IT WILL SAVE THE COMMUNIST PARTY no matter what happens to the economy.
The Communists know how to beat Trump. All of Asia watched Trump get played by North Korea’s Kim. All you have to do is give Trump some face and you can do whatever you want. Trump just needs a kernel of spin and he’ll give away every advantage and strength to save face. Decent western men are motivated by honor and shame. Chinese men are motivated by face. Trump is face-seeking, playing against a culture that practices saving-face as an art form. Trump, an amateur face-saver is going to get into a duel with Xi, a man who has practiced the maneuvering of “face” his entire life. Face in the Communist Chinese and Korean systems is literally life-and-death. Trump does not have the experience to play “face” with Xi.
China’s actions have been very simple. They have refused to negotiate. This is not a sign of desperation. Trump is the one constantly jibber-jabbering on Twitter about trade-deal-this and trade-deal-that. Trump is desperate for a deal that will allow him to save face. The Chinese will play Trump like Kim played Trump. In Chinese business negotiations, there should be an unending exchange of lower level delegations that build in importance. The lower level delegates will eventually serve as interested 3rd parties in the final negotiation when the big bosses finally meet. It’s a huge, laborious process designed to ensure “guanxi” at all levels of the relationship.
Laws/contracts are meaningless. Enforcement and obligations are carried out through “guanxi”. Current Chinese negotiations, to me, seem more like a polite effort to rebuff the opposing party. If I saw this in a Chinese/American business negotiation, I’d tell the American side to stop wasting money – the deal isn’t going to work because the Chinese side doesn’t want it to work. Passive-aggressiveness is the epitome of Chinese business etiquette.
The Communists know that the economic conflagration is coming (please reference 1991 Japan, I don’t have time to write it out in full). They know they must survive because the dynastic cycle is not like losing an election. You don’t go and work in the private sector after being defeated. You get tortured and killed, your family gets tortured and killed and the winners wipe out your gene-line in every direction for generations.
The trade situation is very simple. My back of the napkin calculations are that Americans will suffer a 12.5% cost-of-living increase if the tariffs are all passed. Trump is finally beginning to realize this. He is desperate to get a deal or anything he can spin as a victory. The problem is that Trump’s trade policies are simple-minded and ineffective. All of industrial China is enacting “Plan B” right now, which is basically finding/building factories outside of China where they can launder/wash the country-of-origin on Chinese made goods for final export to the USA.
I’m based in Taiwan and the Chinese are desperately seeking “manufacturing” capacity here. My guess is that these are going to be “strawman” facilities. They will be stocked with enough production equipment to satisfy any inspection, but their main purpose will be to remove the “Made in China” stickers on goods and replace them with “Made in Taiwan” stickers. This is going on in Vietnam, Thailand, Korea, Singapore and all of SE Asia.
China will continue to be the industrial manufactory of the world. The goods will just all go to an intermediate country to be “washed” clean before final export to America. Trump isn’t smart enough to tariff ALL incoming goods. He’s targeting individual countries. It just won’t work in a global economy.
So, back to the trade talks.
The Chinese are actually in a better position if they refuse to bargain. Any bargain made with Trump will weaken the Communist party’s ability to focus blame on Trump when the Chinese economy implodes. If the Chinese people blame the Communists, then the Mandate-of-Heaven is lost and the Communist party becomes another failed dynasty in the dynastic-cycle. However, if the Communists can deflect blame to Trump, then any economic disaster in China is survivable.
Chinese Communist goals:
- Delay as long as possible, blaming everything on Trump.
- Set up manufacturing “laundering” facilities can be quietly and quickly set up to continue trade. Business as usual.
- Give Trump some meaningless ego-bauble he can spin to his base while completely ignoring him. This gives more time to set up “laundering” facilities in the rest of the world.
Basically, the goal is to stall for time so that the “strawman” laundering facilities and logistic networks can be set up. What the Communists cannot be seen doing: Giving into Trump in a continuation of 150+ years of western exploitation.
This is suicide. Dynastic-cycle and liver-on-a-stick.
