CHINA POLICY - ZAKARIA


CREDITS TO FAREED ZAKARIA FOR HIS
TREMENDOUS INSIGHT INTO CHINA


DONALD DUCK
Vs. PEKING DUCK

Donald Trump has perhaps attacked no country as consistently as China. During his campaign, he thundered that China was “raping” the United States, “killing” us on trade and artificially depressing its currency to make its goods cheap. Since being elected, he has spoken to the leader of Taiwan and continued the bellicosity toward Beijing. 

So it was a surprise to me, to find Chinese elites relatively sanguine about Trump. It says something about their view of Trump, but perhaps more about how they see their own country.

“Trump is a negotiator, and the rhetoric is all part of his opening bid,” said a Chinese scholar,  “He likes to make deals,” the scholar continued, “and we are good dealmakers as well. There are several agreements we could make on trade.” 

As one official noted to me, Beijing could simply agree with Trump that it is indeed a “currency manipulator” — although it has actually been trying to prop up the yuan over the past two years.  After such an admission, market forces would likely make the currency drop in value, lowering the price of Chinese goods.   Or we can simply hang him in the cooler for twenty days and ignore him.  Unfortunately he might contaminate the other dead ducks.


SHIFT OF POWER
THE TRUMP DUMP
We do not yet have the official agenda for next month’s meeting in Florida between President Trump and Chinese President Xi Jinping. But after 75 years of U.S. leadership on the world stage, the Mar-a-Lago summit might mark the beginning of a handover of power from the United States to China. Trump has embraced a policy of retreat from the world, opening a space that will be eagerly filled by the Communist Party of China.

Trump railed against China on the campaign trail, bellowing that it was “raping” the United States. He vowed to label it a currency manipulator on his first day in office. But in his first interaction with Beijing, he caved. Weeks after his election, Trump speculated that he might upgrade relations with Taiwan. In response, Xi froze all contacts between Beijing and Washington on all issues, demanding that Trump reverse himself — which is exactly what happened. (Perhaps just coincidentally, a few weeks later, the Chinese government granted the Trump Organization dozens of trademark rights in China, with a speed and on a scale that surprised many experts.)

The Trump administration’s vision for disengagement from the world is a godsend for China. Look at Trump’s proposed budget, which would cut spending on “soft power” — diplomacy, foreign aid, international organizations — by 28 percent. Beijing, by contrast, has tripled the budget of its foreign ministry in the past decade. And that doesn’t include its massive spending on aid and development across Asia and Africa. Just tallying some of Beijing’s key development commitments, George Washington University’s David Shambaugh estimates the total at $1.4 trillion, compared with the Marshall Plan, which in today’s dollars would cost about $100 billion.

China’s growing diplomatic strength matters. An Asian head of government recently told me that at every regional conference, “Washington sends a couple of diplomats, whereas Beijing sends dozens. The Chinese are there at every committee meeting, and you are not.” The result, he said, is that Beijing is increasingly setting the Asian agenda.

The Trump administration wants to skimp on U.S. funding for the United Nations. This is music to Chinese ears. Beijing has been trying to gain influence in the global body for years. It has increased its funding for the U.N. across the board and would likely be delighted to pick up the slack as the United States withdraws. As Foreign Policy magazine’s Colum Lynch observes, China has already become the second-largest funder of U.N. peacekeeping and has more peacekeepers than the other four permanent Security Council members combined. Of course, in return for this, China will gain increased influence, from key appointments to shifts in policy throughout the U.N. system.

The first major act of the Trump administration was to pull the United States out of the Trans-Pacific Partnership, a treaty that would have opened up long-closed economies such as Japan and Vietnam, but also would have created a bloc that could stand up to China’s increasing domination of trade in Asia. The TPP was, in Singaporean Prime Minister Lee Hsien Loong’s words, “a litmus test” of U.S. credibility in Asia. With Washington’s withdrawal, even staunchly pro-American allies such as Australia are hedging their bets. Australian Prime Minister Malcolm Turnbull has raised the possibility of China joining the TPP, essentially turning a group that was meant to be a deterrent against China into one more arm of Chinese influence.

The United States’ global role has always meant being at the cutting edge in science, education and culture. Here again, Washington is scaling back while Beijing is ramping up. In Trump’s proposed budget, the National Institutes of Health, NASA and the national laboratories face crippling cuts, as do many exchange programs that have brought generations of young leaders to be trained in the United States and exposed to American values. Beijing, meanwhile, has continued to expand “Confucius Institutes” around the world and now offers 20,000 scholarships for foreign students to go to China. Its funding for big science rises every year. The world’s largest telescope is in China, not the United States.

The Trump administration does want a bigger military. But that has never been how China has sought to compete with U.S. power. Chinese leaders have pointed out to me that this was the Soviet strategy during the Cold War, one that failed miserably. The implication was: Let Washington waste resources on the Pentagon, while Beijing would focus on economics, technology and soft power.

Trump’s new national security adviser, H.R. McMaster, once remarked that trying to fight the United States symmetrically — tank for tank — was “stupid.” The smart strategy would be an asymmetrical one. The Chinese seem to understand this.

(c) 2017, Washington Post Writers Group


CAREFUL WHO YOU TAUNT
CHINA COULD BE THE SLEEPING GIANT
Chinese officials point out that they have economic weapons as well. China is a huge market for U.S. goods, and last year the country invested $46 billion in the U.S. economy (according to the Rhodium Group).  But the officials’ calm derives from the reality that China is becoming far less dependent on foreign markets for its growth.  Ten years ago, exports made up a staggering 37 percent of China’s gross domestic product. Today they make up just 22 percent and are falling.

China has changed. Western brands there are rare, and the country’s own companies now dominate almost every aspect of the huge and growing domestic economy. Few businesses take their cues from U.S. firms anymore. Technology companies are innovating, and many young Chinese boasted to me that their local versions of Google, Amazon and Facebook were better, faster and more sophisticated than the originals. The country has become its own, internally focused universe.

This situation is partly the product of government policy. Jeffrey Immelt, the chief executive of General Electric, noted in 2010 that China was becoming hostile to foreign firms. U.S. tech giants have struggled in China because of formal or informal rules against them.

The next stage in China’s strategy is apparently to exploit the leadership vacuum being created by the United States’ retreat on trade. As Trump was promising protectionism and threatening literally to wall off the United States from its southern neighbor, Chinese President Xi Jinping made a trip through Latin America in November, his third in four years. He signed more than 40 deals, Bloomberg reported, and committed billions of dollars of investments in the region.

The centerpiece of China’s strategy takes advantage of Trump’s declaration that the Trans-Pacific Partnership is dead. The trade deal, negotiated between the United States and 11 other countries, lowered barriers to trade and investment, pushing large Asian economies such as Japan and Vietnam in a more open and rule-based direction. Now China has offered up its own version of the pact, one that excludes the United States and favors China’s more mercantilist approach.

Australia, once a key backer of the TPP, has announced that it supports China’s alternative. Other Asian countries will follow suit soon.


IDIOTIC POPULARISM WILL BURY US
TRUMPS FUBAR APPROACH
At the Asia-Pacific Economic Cooperation summit in Peru in November, John Key, who was then New Zealand’s prime minister, put it simply: “The TPP was all about the United States showing leadership in the Asia region. . . . We really like the U.S. being in the region. . . . But in the end if the US is not there, that void has to be filled.  And it will be filled by China.”

Xi’s speech at the summit was remarkable, sounding more like an address traditionally made by an American president. It praised trade, integration and openness and promised to help ensure that countries don’t close themselves off to global commerce and cooperation.

Next week, Xi will become the first Chinese president to attend the World Economic Forum at Davos, surely aiming to reinforce the message of Chinese global leadership on trade. Meanwhile, Western leaders are forfeiting their traditional roles. Angela Merkel and Justin Trudeau announced last-minute cancellations of their plans to speak at the Swiss summit. Trump has only made sneering references to globalism and globalization, and no senior member of his team currently plans to attend.

Looking beyond Trump’s tweets, Beijing seems to have concluded that his presidency might well prove to be the best thing that’s happened to China in a long time.


WE SCREWED UP ON GLOBALIZATION
AND IT’S GETTING SCREWIER
The World Economic Forum this year feels like an exercise in ritual self-flagellation, which — as with the old Christian practice of fasting and whipping one’s own body — is supposed to purify the sinful nature of man. The sin, of course, is globalization, which everyone now seems to agree has been lopsided, inequitable and dangerous. In fact, most of the flaws attributed to globalization are actually mistakes in national policy that can be corrected.

It took a Chinese billionaire to speak frankly on this topic. Jack Ma, the founder of the e-commerce giant Alibaba, estimated that over the past three decades the U.S. government spent $14.2 trillion fighting 13 wars. That money could have been invested in America, building infrastructure and creating jobs. “You’re supposed to spend money on your own people,” he said. 

He pointed out that globalization produced massive profits for the U.S. economy but much of that money ended up on Wall Street. “And what happened? Year 2008. The financial crisis wiped out $19.2 trillion in the U.S.A. alone. . . . What if the money had been spent on the Midwest of the United States developing the industry there?” he asked. “It’s not that the other countries steal jobs from you guys — it is your strategy,” he concluded.  I simply refer to this a schmuckism leadership.

You don’t have to accept Ma’s specifics and statistics to recognize the validity of his general point. Globalization created huge opportunities for growth, many of which were taken by U.S. companies. The global economy is still dominated by large American firms; 134 of Fortune’s Global 500 are American. 

And if you look at those in cutting-edge industries, the vast majority are American. These companies have benefited enormously by having global supply chains that can source goods and services around the world, either to lower labor costs or to be close to the markets in which they sell.  Since 95 percent of the world’s potential consumers live outside the United States, finding ways to sell to them will have to be a core strategy for growth, even for a country with a large domestic economy such as the United States.

Obviously globalization has large effects on national economies and societies, and it produces some significant problems. What complex phenomenon does not? But it also generates opportunities, innovation and wealth for nations that they can then use to address these problems through good national strategies. The solutions are easy to state in theory — education, skills-based training and retraining, infrastructure. But they are extremely expensive and hard to execute well.

It is much easier to rail against foreigners and promise to fight them with tariffs and fines. But the cost of addressing these problems at the global level is massive. The Economist reports, in a survey on globalization, that in 2009 the Obama administration punished China with a tariff on its tires. Two years later, the cost to U.S. consumers was $1.1 billion, or $900,000 for every job “saved.” The impact of such tariffs is usually felt disproportionately by the poor and middle class because they spend a larger share of their income on imported goods, such as food and clothing. 

That same Economist survey points to a study that calculated that, across 40 countries, if transnational trade ended, the wealthiest consumers would lose 28 percent of their purchasing power, but the poorest tenth would lose a staggering 63 percent.

Perhaps most important, the key driver depressing wages and eliminating jobs in the industrialized world is technology, not globalization. For example, between 1990 and 2014, U.S. automotive production increased by 19 percent , but with 240,000 fewer workers.

Even when manufacturing comes back to the United States, it is high-end manufacturing. It’s not just new Intel plants that have few workers anymore. Adidas has set up a new shoe factory in Germany that is run almost entirely by robots. It will open a similar one near Atlanta later this year. And the few workers in these factories tend to be highly skilled technicians and software engineers.

You can’t turn off technological revolutions. Nor is there a quick fix to stop business from going to other countries. Tariffs on China will simply mean that production will come from some other developing country.

The best approach to the world we are living in is not denial but empowerment. Countries should recognize that the global economy and the technological revolution require large, sustained national efforts to equip workers with the skills, capital and infrastructure they need to succeed. Nations should embrace an open world, but only as long as they are properly armed to compete in it. And that requires smart, effective — and very expensive — national policies, not some grand reversal of globalization.


Fareed Zakaria
Thursday, Mar. 2, 2017

The first time I met Gen. David Petraeus, he said something that surprised me. It was the early days of the Iraq War and, although things were not going well, he had directed his region in the north skillfully and effectively. I asked him whether he wished he had more troops. Petraeus was too politically savvy to criticize the Donald Rumsfeld “light footprint” strategy, so he deflected the question, answering it a different way.

“I wish we had more Foreign Service officers, aid professionals and other kinds of non-military specialists,” he said. The heart of the problem the United States was facing in Iraq, he noted presciently, was a deep sectarian divide between Shiite and Sunni, Arab and Kurd. “We need help on those issues. Otherwise, we’re relying on 22-year-old sergeants to handle them. Now, they are great kids, but they really don’t know the history, the language, the politics.”

NOTE:  I too have met with Gen. Petraeus and have the same opinion of him.  He is a brilliant warrior, knowledge savvy, battle experienced first hand, and successful in his challenges. He also knows war wins little and the rebuilding is more important.

He was also smart enough to avoid working for TRUMP.  Few can withstand the micromanagement and interference from one who might be the President but knows little and is subject to bigly bouts of awesome rampart exceptional hip-shooting stupidity.

I thought of that exchange when reading reports that President Trump is proposing a $54 billion increase for the Defense Department, which would be offset by large cuts in the State Department, foreign aid and other civilian agencies. Trump says he wants to do this so that “nobody will dare question our military might again.” But no one does. The U.S. military remains in a league of its own. The U.S. defense budget in 2015 was nine times the size of Russia’s and three times that of China’s.

None of the difficulties the United States has faced over the past 25 years has been in any way because its military was too small or weak. As then-Secretary of Defense Robert Gates noted in a 2007 lecture, “One of the most important lessons of the wars in Iraq and Afghanistan is that military success is not sufficient to win.” To achieve “long-term success,” he explained, requires “economic development, institution-building . . . [and] good governance.” Therefore, he called for “a dramatic increase in spending on the civilian instruments of national security,” including “diplomacy” and “foreign assistance.”

Consider the strategy that brought Iran to the negotiating table in 2013. It required intense diplomatic work to get Russia and China to agree to U.N. measures and to isolate Iran from neighbors such as Turkey. It took clever and tough sanctions devised by the Treasury Department that leveraged U.S. financial power. This is how power works in the modern world.

“We must do a lot more with less,” Trump said recently, adding that government needs to reform its ways. But the obvious target for this effort should be the Pentagon, which is the poster child for waste in government. The Pentagon is now the world’s largest bureaucracy, running a cradle-to-grave quasi-socialist system of employment, housing, health care and pensions for its 3 million employees.

A recent report from its Defense Business Board concluded that it could easily save $125 billion over five years by removing operational inefficiencies. (Senior officials quickly buried the report.) Those savings would fund the entire State Department plus all foreign aid programs for two and a half years. Gates used to quip, “We have more people in military bands than we have Foreign Service officers.” The total numbers are worth noting. There are only 13,000 employees in the whole Foreign Service, compared with 742,000 civilians in the Defense Department.

Trump railed in his address to Congress, as he has in the past, about the $6 trillion that the United States has spent in the Middle East. That figure is exaggerated, but he’s right that when the Pentagon goes to war, costs go through the stratosphere. In just one example, ProPublica tallied up the audits of the special inspector general for Afghanistan and found that the military had wasted at least $17 billion on a variety of projects.

Rosa Brooks, who served as a civilian adviser at the Pentagon under President Barack Obama, has written a fascinating book, “How Everything Became War and the Military Became Everything,” that describes how U.S. policy has been contorted by a military that keeps expanding while all other agencies wither. One of the blurbs on the back of the book says, “One of the most thought-provoking books I’ve ever read. It’s as if we have been sleepwalking into this new world and Rosa has turned on a flashlight.” The commendation comes from Jim Mattis, now the secretary of defense. Perhaps he should give the book to his boss.

HEALTH ISSUES IN THE US
CRISIS IN COMMON SENSE AND FACT

By Fareed Zakaria
Thursday, Mar. 30, 2017
The recent Republican debacle on health care could prove to be an opportunity. It highlighted, yet again, the complexity of the U.S. system, which continues to be by far the most expensive and inefficient in the advanced world. But President Trump could actually use the legislative collapse to fix health care if he went back to basics and to his core convictions on the topic, which are surprisingly intelligent and consistent.

There is an understandable impulse on the right to assume that health care would work more efficiently if it were a free market, or a freer market. This is true for most goods and services. But in 1963, economist Kenneth Arrow, who later won a Nobel Prize, offered an explanation as to why markets would not work well in this area. He argued that there was a huge mismatch of power and information between the buyer and the seller. If a salesman tells you to buy a particular television, you can easily choose another or just walk away. If a doctor insists that you need a medication or a procedure, you are far less likely to reject the advice. And, Arrow pointed out, people think they don’t need health care until they get sick, and then they need lots of it.

Every advanced economy in the world has implicitly acknowledged his argument because they have all adopted some version of a state-directed system for health care. Consider the 16 countries that rank higher than the United States on the conservative Heritage Foundation’s Index of Economic Freedom. All except Singapore (which has a unique state-driven approach) have universal health-care systems that can be described as single-payer (Medicare for all), government-run (the British model) or Obamacare-plus (private insurance with a real mandate that everyone opt in). Hong Kong, often considered the most unregulated market in the world, has a British-style government-run system. Switzerland, one of the most business-friendly countries, had a private insurance system just like the United States’ but found that, to make it work, it had to introduce a mandate.

While producing a CNN documentary on health-care systems around the globe, I was particularly struck by the experience of Taiwan, another free-market haven. In 1995, 41 percent of its population was uninsured and the country had very poor health outcomes. The government decided to canvass the world for the best ideas before instituting a new framework. It chose Medicare for all, a single government payer, with multiple private providers. The results are astonishing. Taiwan has achieved some of the best outcomes in the world while paying only 7 percent of its gross domestic product on health care (compared with 18 percent in the United States). I asked William Hsiao, an economist who helped devise the country’s model, what lessons they took, if any, from the United States. “You can learn what not to do from the United States rather than learn what to do,” he replied.

Americans often assume that despite its costs, American health care provides better services than others. We often hear about the waiting time for care in other countries. But according to the Commonwealth Fund, among industrialized countries the United States is in the middle of the pack for wait times, behind even Britain. Moreover, one of the world’s leading experts, Uwe Reinhardt of Princeton, has found that Americans use less care than the average for developed countries when it comes to things such as seeing a doctor and spending time in the hospital. The problem with the free market is that there is little profit in prevention and lots in crisis care.

Trump has now taken up the call to repeal Obamacare. But until recently, health care was actually one of the rare issues on which he had spoken out, before his campaign, with remarkable consistency. In his 2000 book “The America We Deserve,” he wrote:

“I’m a conservative on most issues but a liberal on this one. We should not hear so many stories of families ruined by healthcare expenses. . . . We must have universal healthcare. . . . The Canadian plan . . . helps Canadians live longer and healthier than Americans. There are fewer medical lawsuits, less loss of labor to sickness, and lower costs to companies paying for the medical care of their employees. . . . We need, as a nation, to reexamine the single-payer plan, as many individual states are doing.”

Trump was right on this issue for much of his life. He has now caved to special interests and an ideology unmoored by facts. He could simply return to his convictions, reach out to Democrats and help the United States solve its health-care crisis.

(c) 2017, Washington Post Writers Group


One missile strike is not a strategy

Friday, Apr. 7, 2017

There is much to applaud in President Trump’s decision to attack the Bashar al-Assad regime this week. It punished a regime that has engaged in war crimes against its own people. It upheld an international norm against chemical weapons. It ended Trump’s strange flirtation with Vladimir Putin on the Middle East. And, most significantly, it seems to reflect a belated recognition from Trump that he cannot simply put America first — that the president of the United States must act on behalf of broader interests and ideals. Trump, as candidate and as president, had avoided the language of global norms and international order. Yet in explaining his actions Thursday night, he invoked both and ended his remarks with a prayer that President Barack Obama would never have dared to make: “God bless America — and the entire world.”

But as former defense secretary William Cohen pointed out Friday, “One strike doesn’t make a strategy.” U.S. policy on Syria remains unclear. The Trump administration had repeatedly announced that it had shifted away from the Obama administration’s calls for regime change in Syria. In fact, Trump had indicated that he was happy to leave the country to Assad as long as this would help defeat the Islamic State. Last week, Secretary of State Rex Tillerson basically affirmed that approach. On Tuesday, the day of the chemical attack on Idlib, White House press secretary Sean Spicer reiterated it. The missile strike appears to have reversed that policy.

If so, it is a major shift and raises important questions: Is the United States now engaged in the Syrian civil war? Will it use military force to help oust Assad? Do these actions help the Islamic State and al-Qaeda — which are fighting against the regime? And what happens next in the overall war against the Islamic State?

Many of our allies have expressed support for the strike. But in an increasingly complicated global system, countries look to the United States for a consistent strategy that can be relied upon over time. Trump’s foreign policy seems to change with every meeting, event or crisis. Having bashed Japan during his campaign, he invited its prime minister, Shinzo Abe, to his first Mar-a-Lago summit and extolled him as a true friend and ally. Having threatened to upend the one-China policy, Trump wound up meekly affirming it in a phone call with President Xi Jinping.

Trump does not deny his changes of mind. In fact, he embraces them as a virtue, describing himself as — flexible. “I’m proud of that flexibility,” Trump said this week, adding that he also likes to be unpredictable. But there is a difference between unpredictability and incoherence. This week’s strike does leave one with the impression that foreign policy in the Trump administration is not being made by carefully evaluating a situation, assessing various options, weighing costs and benefits, and choosing a path. Instead, it is a collection of reflexes responding instinctively to the crisis at hand.

Trump’s military advisers provided him with a tactically brilliant option — a small air base, whose destruction would produce fairly little physical or diplomatic fallout. But the strike will have minimal impact on the balance of power. Assad will remain in place, as will his opposition. If anything, the strike might embolden some opposition forces to fight on rather than surrender, and the bloodshed will intensify. The long-term prospects for peace in Syria remain gloomy.

No matter the complications, in the short term the president struck a blow against evil, for which I congratulate him. And if he was moved to this action because he saw heart-rending pictures of children, that’s fine. I would only ask that he look again at those images. Perhaps they would move him not simply to drop bombs, but also to provide more aid to those war-torn people. Perhaps they would even move him to let some of those people escape their misery and find a home in the United States.


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