Manufacture This

The blog of the Alliance for American Manufacturing

Beijing and Washington hit each other with new tariffs.

An interesting story appeared in today’s Washington Post, about China’s shifting reaction to the burgeoning trade war with the United States. Reporter Anna Fifield spoke to Paul Haenle, a former Bush and Obama administration China policy adviser, who had this to say:

“Early on, the Chinese had a very simple narrative that all this trade stuff was about Trump's short-term political objectives, about getting a tweetable victory. … Now, they’re at the other end of the spectrum. Now it’s all about the U.S. trying to block China’s rise.”

Huh. The article lists the other evidence the Chinese state media has pointed to. The revival of the “Quad” dialogue. The possibility of U.S. sanctions over human rights abuses against Muslim Uighurs in China’s west. The suspicious date of the latest U.S. tariffs, which happened to line up with the anniversary of the 1931 Japanese invasion of Manchuria! It’s beginning to look downright conspiratorial, and it’s all right in front of their noses: The United States is out to get China.  

But we should cut them some slack. Though it may be easy to roll your eyes at such commentary coming from state organs in China, a lot of people have a hard time wrapping their heads around President Trump.

He seems to govern with what could be charitably called a sense of theatrical whimsy. The White House, to put it bluntly, appears chaotic at times. It's hard to get a bead on this guy.

But when it comes to trade – particularly trade policy with China – he’s remarkably consistent (despite a notable hiccup or two). But remember the campaign? He’s been very aggressive ever since. And his more eloquent trade advisers have been quite clear about what they consider their overarching goal: An economic reset with what will soon be the largest economy in the world. 

Such a reset isn't the containment conspiracy some in China see forming. Maybe they've just been misreading the landscape. 

The New York Times published an article observing the newly icy relations between Washington and Beijing, and observed as much. It notes how Chinese policymakers have been caught flat-footed by this. They didn’t see it coming:

Though Beijing devotes tremendous resources to studying the United States, there seems to be little understanding that the hostility against China in Washington is bipartisan and extends beyond trade, and that many frustrated business leaders, once defenders of good ties with China, now favor tougher measures against it as well.

This didn’t appear out of thin air. Whether acknowledged or not, there has been bad blood boiling about our bilateral economic relationship for years. 

The Times article’s gist is that although many influential Chinese are confident their country will outlast the United States in a trade war, there is significant internal debate about that. Funny; that’s basically the same conclusion the conventional wisdom in DC has reached … and it’s debatable in the U.S., too. In fact, a poll conducted for the Alliance for American Manufacturing by The Mellman Group, Inc., and Public Opinion Strategies found that more Americans are concerned about unfair Chinese trade practices than the potential fallout from a trade war.

Time will ultimately tell, but I wouldn’t wait up for trade policy to make a huge splash on the upcoming midterm elections. President Trump, on this issue at least, appears to have a laser-like focus. The trade fight with China is likely to continue for a while.