07-18-2018, 09:58 PM
*** 19-Jul-18 World View -- Trump administration signals that trade war with China will escalate sharply
This morning's key headlines from GenerationalDynamics.com
****
**** Trump administration signals that trade war with China will escalate sharply
****
![[Image: g180718b.jpg]](http://Media.GenerationalDynamics.com/ww2010/g180718b.jpg)
Larry Kudlow, during Wednesday morning interview (CNBC)
Many people see the imposition of tariffs as temporary, and likely to
end before any serious problems arise. However, Larry Kudlow, Trump's
chief economic adviser, was interviewed on CNBC for half an hour on
Wednesday morning, and made it clear that the trade war with China is
likely to become a lot more serious.
Kudlow said that deals with Germany and Mexico are coming. He said
that "I can report without specifics that we're making good progress
[with trade negotiations] in Mexico." However, negotiations with
China are not progressing at all.
Kudlow listed the problems in trade with China (my transcription):
<QUOTE>"A. The world trading system is broken. The World
Trade Organization [WTO] is broken. We just had this discussion
at the G7.
B. The biggest culprit is China. And particularly since it
entered the WTO, which was about the year 2000 as I recall. China
has - they're still labeled an undeveloped third world country -
but at WTO that's nonsense. Therefore they're trying to use Most
Favored Nation status to have high tariffs, high non-tariff
barriers. ...
They do in fact steal our intellectual property left and right.
They do in fact have a forced transfer of technology, from the
American companies that operate there. It comes from the joint
ventures. They do not allow full American ownership.
You open a company on a joint venture basis, in a Chinese
province. And because you only own 49%, they own 51% or more, the
local party leaders, these are like Mafioso Dons, I'm told -- you
have to lay your entire blueprint on the table, including the
technology, and they will have their experts take it over. That's
wrong."<END QUOTE>
In the past few weeks, I've seen several businessmen interviewed about
opening up a business office in China, being forced to give copies of
all their software and intellectual property to the Chinese
government, and then having to go out of business because a Chinese
business opened up right an office right across the street using the
same intellectual property. The American company was simply swindled.
And this happens all the time to American countries, as well as
European and Canadian countries.
Kudlow said that the situation with China is so bad that he's been
forced to change his own position on trade. He was in government as
far back as the Reagan administration, and he's always been on record
as opposing tariffs, but "I've come to this position, because the
problem [with China] is getting worse."
The shocking part of the interview is the description of how
intransient the Chinese are during the negotiations that have been
going on for months. The interviewer (Jim Kramer) said that he had
been assuming all along that there had been progress in the
negotiations with China, with give and take on both sides, but Kudlow
referred to the "so-called talks" as if they had been nothing more
than a charade to the Chinese:
<QUOTE>"I went to Beijing with our team, and then when China
came to the US, I was involved in those discussions and a dinner,
I sat next to Liu He [Xi Jinping's top economic adviser], and his
young assistants, And I think they're sincere, so there's hope.
On the other hand, I do not think president Xi [Jinping] at the
moment has any intention of following through on the discussions
we've made, and I think the president [Trump] is so dissatisfied
with China on these so-called talks, that he is keeping the
pressure on, and I support that. ...
That stuff has to be fixed. We can't let China steal our
technology. Those are our family jewels. What is it that makes
America the greatest economy in the world? It is our innovative
and inventive use of technology advances. This is Schumpeter's
idea of creative destruction writ large. We can't let them do
that.
They haven't responded at all. Not one basis point to our request
to do something about the theft of intellectual property, and the
forced divestiture of our intellectual property."<END QUOTE>
Kudlow said, "By the way, the whole world agrees with us. I mean
Europe agrees with us, Canada, everyone knows this is true." He added
that he has many sources in China, and even they agree.
Kudlow concluded by saying that Trump will not back down on
this issue:
<QUOTE>"Now, for POTUS -- I'm going to defend him here, lock,
stock and barrel. We've had Republican and Democratic presidents
in the past, make these complaints to China, even take these
complaints to the World Trade Organization. But they never follow
through. They say it, nothing happens, life goes on, the
situation gets worse. This guy, President Trump, has the
biggest backbone -- and this something I've admired for him in
other places -- he will not let go of this point. Nor, should he,
in my opinion."<END QUOTE>
After the interview, the interviewer Jim Kramer said that he found the
interview shocking, because the Chinese are refusing to make any
compromises at all. He pointed to the recent case of the Chinese
company ZTE where President Trump had gone to a great deal of trouble
to keep the company from going bankrupt, based on a personal request
by President Xi. Kramer said that Trump must be really furious to
have gone to great lengths to do that, and got nothing in return from
Xi. CNBC and Reuters
****
**** The growing conflict with China
****
Larry Kudlow's interview on Wednesday was well-planned and well
thought out, and laid out major policy objectives of the Trump
administration. During the interview, there were often long pauses
between sentences as he chose his words carefully. Kudlow could have
simply made a general statement that the negotiations with China were
on track and "we hope something will come out of them soon."
Instead, in coordination with the White House, he made a careful
condemnation of China's trade practices and negotiating attitudes.
This was done on purpose, and it's a shot across the bow by the Trump
administration at President Xi and the Chinese Communist Party.
We live at a time in history where there's never been more hysterical
nonsense in the media, and there's never been more total, abject
ignorance about what's going on in the world.
One comment I've heard probably hundreds of times is: "How could Trump
give Kim Jong-un prestige by meeting with him in Singapore, without
getting a firm commitment in advance to denuclearize?" The question
doesn't even make sense. Demanding denuclearization in advance would
have been refused. Trump is a master negotiator and deal-maker, and
his assessment was that the only way to convince Kim to denuclearize
in the future is to build up his prestige in the present, and convince
him that the US is not an enemy.
It's worth noting here that, as I've been saying for many, many
months, there is no possibility whatsoever that North Korea will
denuclearize, now or in the future. But I'm not going to criticize
Trump for taking steps to try to prevent World War III, even if
preventing World War III is impossible.
A web site reader recently asked me:
<QUOTE>"I have to wonder whether you're serious or just
pulling my leg. What possible benefit is the ad hoc Trumpist
foreign policy to the US or the world at large? We need leverage
with the DPRK [North Korea], and the only leverage available is
China. Trump's solution: start at a trade war with them, and make
it bitter."<END QUOTE>
Once again, this question makes no sense. The leverage we have
against North Korea is the very harsh sanctions that Trump imposed on
North Korea, with China's cooperation. China's cooperation was a huge
foreign policy decision by China, requiring buy-in from many agencies
in the Chinese Communist Party (CCP), based on deeply entrenched
objectives that won't change because of this trade dispute. In
addition, master negotiator Trump gained leverage over Xi by agreeing
to his request to save ZTE.
What I've seen repeatedly since Trump has been in office is that his
foreign policy is completely consistent with the Generational Dynamics
analyses that I've been posting for years -- that we're headed for a
world war with China, and Russia will be our ally and China's enemy.
Trump understands these analyses through Steve Bannon, who is an
expert on both military history and Generational Dynamics. People who
become hysterical because of a tweet or a press conference really have
no clue what's going on in the world, but what I've seen is that Trump
does -- based on actions, not words.
As I said above, Trump is well aware that we're headed for a world
war with China, and he's trying to prevent him. Preventing it
is impossible, but I'm not going to criticize Trump for trying.
In writing this article, I've described many bottom lines and many red
lines. North Korea will not denuclearize. China will not back down
from stealing America's intellectual property. And Trump will not
back down from the trade dispute. From the point of view of
Generational Dynamics, we're a typical tit for tat escalation sequence
that leads to a generational crisis war. The only other choice is
appeasement, and that will lead to war as well, possibly even more
quickly. Trump is aware of all this, and he's trying to prevent it,
but it's the world that's upside down and out of control. Bloomberg
Related Articles:
KEYS: Generational Dynamics, Donald Trump, Larry Kudlow,
China, Xi Jinping, World Trade Organization, WTO,
Jim Kramer, North Korea, Kim Jong-un
Permanent web link to this article
Receive daily World View columns by e-mail
Contribute to Generational Dynamics via PayPal
John J. Xenakis
100 Memorial Drive Apt 8-13A
Cambridge, MA 02142
Phone: 617-864-0010
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com
Forum: http://www.gdxforum.com/forum
Subscribe to World View: http://generationaldynamics.com/subscribe
This morning's key headlines from GenerationalDynamics.com
- Trump administration signals that trade war with China will escalate sharply
- The growing conflict with China
****
**** Trump administration signals that trade war with China will escalate sharply
****
Larry Kudlow, during Wednesday morning interview (CNBC)
Many people see the imposition of tariffs as temporary, and likely to
end before any serious problems arise. However, Larry Kudlow, Trump's
chief economic adviser, was interviewed on CNBC for half an hour on
Wednesday morning, and made it clear that the trade war with China is
likely to become a lot more serious.
Kudlow said that deals with Germany and Mexico are coming. He said
that "I can report without specifics that we're making good progress
[with trade negotiations] in Mexico." However, negotiations with
China are not progressing at all.
Kudlow listed the problems in trade with China (my transcription):
<QUOTE>"A. The world trading system is broken. The World
Trade Organization [WTO] is broken. We just had this discussion
at the G7.
B. The biggest culprit is China. And particularly since it
entered the WTO, which was about the year 2000 as I recall. China
has - they're still labeled an undeveloped third world country -
but at WTO that's nonsense. Therefore they're trying to use Most
Favored Nation status to have high tariffs, high non-tariff
barriers. ...
They do in fact steal our intellectual property left and right.
They do in fact have a forced transfer of technology, from the
American companies that operate there. It comes from the joint
ventures. They do not allow full American ownership.
You open a company on a joint venture basis, in a Chinese
province. And because you only own 49%, they own 51% or more, the
local party leaders, these are like Mafioso Dons, I'm told -- you
have to lay your entire blueprint on the table, including the
technology, and they will have their experts take it over. That's
wrong."<END QUOTE>
In the past few weeks, I've seen several businessmen interviewed about
opening up a business office in China, being forced to give copies of
all their software and intellectual property to the Chinese
government, and then having to go out of business because a Chinese
business opened up right an office right across the street using the
same intellectual property. The American company was simply swindled.
And this happens all the time to American countries, as well as
European and Canadian countries.
Kudlow said that the situation with China is so bad that he's been
forced to change his own position on trade. He was in government as
far back as the Reagan administration, and he's always been on record
as opposing tariffs, but "I've come to this position, because the
problem [with China] is getting worse."
The shocking part of the interview is the description of how
intransient the Chinese are during the negotiations that have been
going on for months. The interviewer (Jim Kramer) said that he had
been assuming all along that there had been progress in the
negotiations with China, with give and take on both sides, but Kudlow
referred to the "so-called talks" as if they had been nothing more
than a charade to the Chinese:
<QUOTE>"I went to Beijing with our team, and then when China
came to the US, I was involved in those discussions and a dinner,
I sat next to Liu He [Xi Jinping's top economic adviser], and his
young assistants, And I think they're sincere, so there's hope.
On the other hand, I do not think president Xi [Jinping] at the
moment has any intention of following through on the discussions
we've made, and I think the president [Trump] is so dissatisfied
with China on these so-called talks, that he is keeping the
pressure on, and I support that. ...
That stuff has to be fixed. We can't let China steal our
technology. Those are our family jewels. What is it that makes
America the greatest economy in the world? It is our innovative
and inventive use of technology advances. This is Schumpeter's
idea of creative destruction writ large. We can't let them do
that.
They haven't responded at all. Not one basis point to our request
to do something about the theft of intellectual property, and the
forced divestiture of our intellectual property."<END QUOTE>
Kudlow said, "By the way, the whole world agrees with us. I mean
Europe agrees with us, Canada, everyone knows this is true." He added
that he has many sources in China, and even they agree.
Kudlow concluded by saying that Trump will not back down on
this issue:
<QUOTE>"Now, for POTUS -- I'm going to defend him here, lock,
stock and barrel. We've had Republican and Democratic presidents
in the past, make these complaints to China, even take these
complaints to the World Trade Organization. But they never follow
through. They say it, nothing happens, life goes on, the
situation gets worse. This guy, President Trump, has the
biggest backbone -- and this something I've admired for him in
other places -- he will not let go of this point. Nor, should he,
in my opinion."<END QUOTE>
After the interview, the interviewer Jim Kramer said that he found the
interview shocking, because the Chinese are refusing to make any
compromises at all. He pointed to the recent case of the Chinese
company ZTE where President Trump had gone to a great deal of trouble
to keep the company from going bankrupt, based on a personal request
by President Xi. Kramer said that Trump must be really furious to
have gone to great lengths to do that, and got nothing in return from
Xi. CNBC and Reuters
****
**** The growing conflict with China
****
Larry Kudlow's interview on Wednesday was well-planned and well
thought out, and laid out major policy objectives of the Trump
administration. During the interview, there were often long pauses
between sentences as he chose his words carefully. Kudlow could have
simply made a general statement that the negotiations with China were
on track and "we hope something will come out of them soon."
Instead, in coordination with the White House, he made a careful
condemnation of China's trade practices and negotiating attitudes.
This was done on purpose, and it's a shot across the bow by the Trump
administration at President Xi and the Chinese Communist Party.
We live at a time in history where there's never been more hysterical
nonsense in the media, and there's never been more total, abject
ignorance about what's going on in the world.
One comment I've heard probably hundreds of times is: "How could Trump
give Kim Jong-un prestige by meeting with him in Singapore, without
getting a firm commitment in advance to denuclearize?" The question
doesn't even make sense. Demanding denuclearization in advance would
have been refused. Trump is a master negotiator and deal-maker, and
his assessment was that the only way to convince Kim to denuclearize
in the future is to build up his prestige in the present, and convince
him that the US is not an enemy.
It's worth noting here that, as I've been saying for many, many
months, there is no possibility whatsoever that North Korea will
denuclearize, now or in the future. But I'm not going to criticize
Trump for taking steps to try to prevent World War III, even if
preventing World War III is impossible.
A web site reader recently asked me:
<QUOTE>"I have to wonder whether you're serious or just
pulling my leg. What possible benefit is the ad hoc Trumpist
foreign policy to the US or the world at large? We need leverage
with the DPRK [North Korea], and the only leverage available is
China. Trump's solution: start at a trade war with them, and make
it bitter."<END QUOTE>
Once again, this question makes no sense. The leverage we have
against North Korea is the very harsh sanctions that Trump imposed on
North Korea, with China's cooperation. China's cooperation was a huge
foreign policy decision by China, requiring buy-in from many agencies
in the Chinese Communist Party (CCP), based on deeply entrenched
objectives that won't change because of this trade dispute. In
addition, master negotiator Trump gained leverage over Xi by agreeing
to his request to save ZTE.
What I've seen repeatedly since Trump has been in office is that his
foreign policy is completely consistent with the Generational Dynamics
analyses that I've been posting for years -- that we're headed for a
world war with China, and Russia will be our ally and China's enemy.
Trump understands these analyses through Steve Bannon, who is an
expert on both military history and Generational Dynamics. People who
become hysterical because of a tweet or a press conference really have
no clue what's going on in the world, but what I've seen is that Trump
does -- based on actions, not words.
As I said above, Trump is well aware that we're headed for a world
war with China, and he's trying to prevent him. Preventing it
is impossible, but I'm not going to criticize Trump for trying.
In writing this article, I've described many bottom lines and many red
lines. North Korea will not denuclearize. China will not back down
from stealing America's intellectual property. And Trump will not
back down from the trade dispute. From the point of view of
Generational Dynamics, we're a typical tit for tat escalation sequence
that leads to a generational crisis war. The only other choice is
appeasement, and that will lead to war as well, possibly even more
quickly. Trump is aware of all this, and he's trying to prevent it,
but it's the world that's upside down and out of control. Bloomberg
Related Articles:
- China escalates militarization of South China Sea, preparing for war (20-May-2018)
- North Korea issues vitriolic anti-US rant, collapsing denuclearization talks (08-Jul-2018)
- After the Kim-Trump summit, US and N. Korea plan denuclearization details (14-Jun-2018)
- What was Kim Yo-jong thinking as she returned to North Korea from the Olympics? (12-Feb-2018)
- NY Times publishes a generational analysis of South Korea (30-Jan-2018)
- Donald Trump, Steve Bannon and Generational Dynamics (07-Jul-2017)
KEYS: Generational Dynamics, Donald Trump, Larry Kudlow,
China, Xi Jinping, World Trade Organization, WTO,
Jim Kramer, North Korea, Kim Jong-un
Permanent web link to this article
Receive daily World View columns by e-mail
Contribute to Generational Dynamics via PayPal
John J. Xenakis
100 Memorial Drive Apt 8-13A
Cambridge, MA 02142
Phone: 617-864-0010
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com
Forum: http://www.gdxforum.com/forum
Subscribe to World View: http://generationaldynamics.com/subscribe
