- ZTE, a Chinese technology firm, violated US sanctions against North Korea and Iran. So last month the US banned American manufacturers from sending parts to ZTE and levied a $900 million fine against the company.
- On Sunday, President Donald Trump backtracked and said the US needed to help China save ZTE.
- This about face is the most obvious of a bunch of signs that China and North Korea are playing Trump handily.
Donald Trump wants to win the Nobel Peace Prize, just like his predecessor, Barack Obama.
It seems that, for this, he’s willing to throw his entire trade agenda out the window and get played by China and North Korea.
The latest sign that Trump is the chump in his Korean Peninsula peace fantasy came on Sunday, when he tweeted that he had ordered Commerce Department to help ZTE, a Chinese technology firm the US just punished for violating US intellectual property rules and sanctions against North Korea and Iran.
“ZTE Corporation not only violated export controls that keep sensitive American technology out of the hands of hostile regimes like Iran’s, they lied … about their illegal acts,” US Attorney General Jeff Sessions said in a statement last month.
The company was fined $900 million and US companies were banned from selling parts to ZTE for 7 years. Trump said his reversal was an effort to help save 70,000 Chinese jobs.
This flies in the face of everything Trump has said about being tough on China in terms of trade, and analysts have been left baffled as to what his strategy could here.
But this didn’t come out of nowhere. China and North Korea have been playing the US for weeks and this is just the most obvious sign.
Pay attention, please
It seems that the art of the deal is simply not working in China.
When the President’s trade team – White House adviser Larry Kudlow, Treasury Secretary Steven Mnuchin, US Trade Representative Robert Lighthizer, and adviser Peter Navarro – went to China they came home completely empty handed. It makes sense. Trump didn’t sent them there with any room to negotiate. According to reports he simply sent them there to reiterated what he’d tweeted.
Afterward, Chinese Vice Premier Liu He said he’d come to the United States to talk trade. But over the weekend it looked like that visit could be up in the air. Until Trump started talking about helping ZTE, it seemed Liu may have preferred to stay at home, having sent a lower ranking Chinese official ahead of talks anyway.
Meanwhile, the Trump administration has also made national security overtures. Last week, Secretary of State Mike Pompeo met with leaders in Japan for the first trilateral talks between China, South Korea and Japan since 2015. There he secured the release of three Americans who were imprisoned in North Korea. That got a ton of attention here in the US.
What got far less attention was the fact that of the three Asian nations, only China did not send its head of state. Xi Jinping was meeting with North Korea’s Kim Jong Un instead – a subtle showing of where his priorities and interests lie.
It seems that the Trump administration can’t see any of this, though. North Korea has dangled peace and turned around before. China would like nothing more than to distract the Trump administration and turn its energy away from economic aggression. This all seems too convenient. But hey, as Trump tweeted, “But be cool, it will all work out!”
I have a question. Are we joining the Axis or something?
In his rabid desire to undo everything President Barack Obama did – and play the tough guy on trade – Trump is making enemies of our allies and frenemies of our enemies.
(Frenemies, please note, are not and will never be your actual friends.)
We’re angering the EU with talks about steel and aluminum that have reportedly veered off course – despite the fact that we’re supposed to have an agreement by June 1. National Security Adviser John Bolton has floated the idea of punishing Europe for violated sanctions since we’ve pulled out of the Iran deal (a deal that sounds a lot like the one Trump would like to do with North Korea).
We’re worrying Japan by ignoring its requests to be kept up to speed on what happens in Singapore when Trump meets with China and North Korea.
And we’re allowing China to play to Trump’s massive, fragile ego – dangling the promise of a prize he’ll never have in exchange for the cessation of US economic hostilities against the country.
No one has argued that China hasn’t taken advantage of the global trading system and its dual currency to grow. What economists and trade wonks argue about is how to best approach this problem. The Trump administration has so far decided to talk tough and go at it alone instead of working with the international community, as other experts suggest (remember the TPP? – that’s what that was).
But at least we’re talking about how important it is to get China to play by the rules.
No one has suggested we stop putting economic pressure on China for a few minor concessions, but reporting from Axios makes it sound like that might happen now. According to the report, Treasury Secretary Steve Mnuchin is trying to cut a deal in which China would buy hundreds of billions in US products in exchange for the US dropping tariffs for intellectual property violations.
This wouldn’t do anything to change the structural imbalances between the US and Chinese economies. It wouldn’t change the fact that their currency, the yuan, has an onshore and offshore version, which helps prop up its value. It wouldn’t change the way forced US corporate partnerships work in China. It wouldn’t slow China in its goal of being technologically self-sufficient by 2025. It wouldn’t do anything.
But that kind of sounds right for this administration.