Employees work on the North America project line of smartphone at a workshop of ZTE Corp.

美国与中国的碰撞之路

May 15, 2018 Kishore Mahbubani

新加坡—世界最重要的双边关系——中美关系也是世界最难以预测的关系之一。这一关系饱受矛盾、误解和不信任的困扰，已经成为巨大的不确定性和潜在的严重动荡的源头之一。不断发酵的双边贸易战就是最好的写照。

导致当前纠纷的关键是美国总统特朗普政府的主张，认为美国贸易赤字过于巨大——而这全是中国的错。美国财政部长史蒂夫·姆努钦（Steve Mnuchin）甚至要求中国到2020年单方面减少对美贸易盈余2,000亿美元。

但大部分明智的经济学家都同意，美国贸易赤字是拜国内结构性经济因素所赐，特别是低迷的家庭储蓄、顽固的政府赤字，以及美元作为世界主要储备货币的地位。据彼得森国际经济学研究所高级研究员约瑟夫·加格农（Joseph Gagnon）的观点，如果美国想要降低贸易赤字，首先应该降低巨大的财政赤字。

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0 Comments on this paragraph, 22 Comments on this article

Calvin Chua May 31, 2018

Watching through multiple commentary programs in China, I came to realize that Chinese equated this particular trade to the same as the Plaza Accord in 1989. In their eyes, it is a realpolitik with a trade cover, to counter China's rise.

On the side of the US, Thucydides trap was real . There was no economic rationality. The rise of China, would inevitably shadowed US, resulting to a military budget that was funded by debts to be unsustainable. The truth is, the world has not been free-riding the US superpower policing, they have been funded by the goods provided by the other states, in exchange for bonds (papers/printed dollars).

A weakened US in both economy and military, could result in a spiraling downfall as US already lost her real economy. Can u imagine if US has no more money to fund the military ? If US has to reach to IMF for Asian Infra Bank for loans ? That would be a bad news for the rest of the world.

US should start imposing controlled and limited interventions, which is how US swings from isolationism to exceptionalism, during the intervals of national strength. A multi polar world would then create a balance of power concept.
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nigel southway May 21, 2018

This article is so one sided and trapped in the free market paradigm that it’s hardly worth a review.

One point that was offensive is the belief that cheap goods helps the economy. If the citizens don’t earn the value of the product it has negative value as a debt to the economy, however low its price.

I agree it’s not all China’s fault. Its poor leadership of the past not setting up the trade environment correctly. Now we must undertake necessary but messy adjustments. Let’s hope Trump gets it done..
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Barry Rosenfeld May 21, 2018

It is difficult to believe that PS can consider itself a serious vehicle for the dissemination of informed opinion and still publish such palpable nonsense.

An economist might be expected to know the difference between correlation and causality. It should be clear that the US importation of saving from the rest of the world is subsequent to the offshoring of American jobs and the wage suppression experienced during the past quarter century. In effect, the American worker has been responsible for the dramatic decrease in poverty levels in the rest of the world by means of the income transfer enabled by "free trade." Consequently, they are forced to purchase merchandise produced in low -wage countries at labour exploiting Walmart to make ends meet. [It is only a matter of time before services are also exported to the point where Americans will have to move to Bangalore to get a job with a telemarketer.]

Alternative to the bizarre analysis presented by Mr. Mahbubani, economic theory would indicate that rich countries, i.e., the US, should be net savers and these savings should be used for investment in poor countries. The reality of the globalized warping of beneficial economic outcomes is that the rich country has become a net importer of saving from the rest of the world and used these savings to prop up consumption.

Of course, capital account transactions are ignored, although they dwarf current account transactions by several factors. One can argue with the notion that global saving is channeled into US consumption because it is clear that the US financial services sector in a major "exporter" on capital account, as well as the source of earnings in services on current account.

In effect, "globalization" is little else but the liberation of constraints on capital account transactions for the benefit of US and world financial services industries. The flow of goods is a minor aspect of globalization, but as it affects workers, it gets much of the attention. The effect of unrestricted capital flows on the abilities of national governments to implement polices for the benefit of their citizens is also clear, which his why the agreements to "liberate" capital also aim at constraining the operation of democracy in a nation-state.

Labour and democracy are out; oligarchy and oligopoly are in. Brave Old World.
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Andrew Tucker May 21, 2018

I think Kishore has missed the point. Chinas actions in the south china sea and the stated chinese government aims of being a great power while a dictatorship will only find us in a world war one situation again. Intercepting australian warships on the high seas is not ok. The chinese dictatorship has doomed us to another century of war and death.
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Janos Nagy May 20, 2018

Of course its the labor or job deficits is the problem what eliminated wage increases in the last 20 years.
Realy... 7.40 is the profits of foxconn not the price.
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Janos Nagy May 20, 2018

That is hilarious.
Really low households savings and government's deficits?
So how do you save if you spend more than your income?
And of course trade deficits 500 billion plus actually means that you as an economic jurisdiction spent more than your income.
Hello! if your family makes 100 thousand dollars and spend 110 thousand dollars please let me know how do you save .
Well the basics for savings that your income is more than your spendings.
And of course people cloud stop spending their incomes on Chinese products somehow selecting what they consume and save instead and than the Chinese economic would have a real recession like losing 30 million jobs what is the direct jobs numbers supported by the trade surplus.
Of course the U.S. economic would have trouble too.
And the government's deficits? Try to take out 1 trillion a year from the U.S. economic that directly support like 20 million jobs.
And you can see that the U.S. economic through trade deficit supports like 30 million jobs in China and the U.S. government's deficits needs to compensate for it.
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Muhammad Ali ali_paf2002@yahoo.com May 20, 2018

Its not only China but same has been the case with the Germany, but the common people and Trump supporters don,t understand economics, http://speri.dept.shef.ac.uk/2017/11/22/a-critique-of-proposed-solutions-to-the-german-trade-surplus/
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John Alexander May 20, 2018

Much of the article is highly interesting, and so are many of the comments. But what is now referred to as "the economy", i.e. in large measure consumerism, or the intense, ubiquitous, and frenetic generation of artificial demand, is by no means the most important thing confronting humanity. Climate change, along with the likelihood of runaway global warming, is of vastly more importance. How much importance will the media allow be ascribed to it?
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SALVADOR RIOS May 20, 2018

The current economic rationality of China will lead it, not only to avoid an escalation of the trade war with the US in the short term, but to a long-term policy of reducing its dependence on American technology, thereby strengthening internal leadership and its international position.
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B Wilds May 19, 2018

It could be said that people are naive if they do not recognize the distinct advantage a state-driven economy has over free enterprise, at least initially. China's system is a bit predatory in nature and geared to quickly exploit the weaknesses of its competitors. The article below looks at some of the ways China does this by subsidizing those companies working within its system.

http://brucewilds.blogspot.com/2017/12/china-state-driven-business-model.html
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j. von Hettlingen May 17, 2018

It’s outrageous that Trump makes “sound-bite-sized accusations — witch hunt, hoax, deep state, rigged system — that fan the flames of conspiracy.” In fact he should be grateful that the FBI did not disclose the facts they had gathered in mid-2016, which would have “devasted” his campaign. Besides Comey’s tactless moves against Hillary Clinton destroyed her prospects of winning, while refusing “repeated requests to discuss the Trump investigation” that would have made a difference. Instead of lashing out at Comey and his ilk, Trump should admit that he had been elected thanks to their inaction. Having had a taste of his presidency he should now contemplate resigning, before being forced out of office. The public has enough of his disastrous policies, which have done more harm than good to the country and the wider world. “Just as the F.B.I. has been criticized for its handling of the Trump investigation, so too has The Times” for an article on Oct. 31, 2016, that might have “pre-emptively exonerated Mr. Trump, dousing chances to raise questions about the campaign’s Russian ties before Election Day.” As fluid as the nascent phase of the investigations can be, people should brace for surprises. Now we know more than we did in 2016.
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Paul Daley May 15, 2018

Short-sighted analysis. The measure of whether an imbalance is sustainable is not whether it is financeable in the short term, but whether it is distortionary. The current account surplus which produced the huge decline of poverty in China was the obverse of a capital account surplus which contributed to a huge increase in inequality in the United States. Rising earned incomes in China were reflected in rising asset prices, capital gains and unearned incomes in the United States. The result was economic imbalances and political strains that may not be tolerable within a democracy.

What to do? You can either punish earned income in China and elsewhere with protectionist measures, or burden unearned income in the United States with new taxes. You can also adjust FED policy to supplement incomes rather than support asset prices during downturns.

The point is that the alternative to protectionism is not the status quo ante as Mahbubani suggests, but a better balance in both China and the United States between the treatment of earned and unearned incomes. So long as each favors one or the other, their respective surpluses and deficits will continue.
- Ashvin Thambyah May 19, 2018
  
  "Rising earned incomes in China were reflected in rising asset prices, capital gains and unearned incomes in the United States." Do we assume that by writing this, you are saying that 'were reflected' is to be taken to say 'resulted in'?
  If not, do clarify what you mean by the statement, else I'm not sure how you made this equation Paul.
  Just trying to understand clearly the rationale of your statement - no offence intended.
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stephan Edwards May 15, 2018

So everything is the US's fault, None of it is China's ? forcing Companies to give up intellectual property, forcing them to give local partners 51% of businesses is perfectly normal. Stealing intellectual property perfectly normal. Against WTO rules subsidies to local champions perfectly fine. Locking countries out of the market after stolen, oops i mean acquired their intellectual property knowledge perfectly fair. I may not think Trump's policy is a good one and I don't. I also really don't believe China has been playing by the same rules have the rest of us. China's behavior might have been rational, It was in China's interests, but it was however: Not within the rules has understood one. Two it was not in the US's interests to hand over intellectual property for NOTHING because it was STOLEN. China is hardly the innocent honest put upon victim you portray here.
- Andrew Tucker May 21, 2018
  
  China has made the mistake of linking its economic advances to the desire of its communist government to remain in power. Like germany pre world war 1 it can only lead to China coming into military conflict with its neighbours.
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- edgyinchina May 20, 2018
  
  Nobody held a gun to the heads of US corporations and said: 'You have to do business here'... If a company doesn't want to give up its technology, it can cease to operate there.... Nobody forces it to operate there... They choose to, THEY made the decision...
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Godfree Roberts May 15, 2018

"Within the next decade, China will overtake the US economically, despite not being a democracy."

Not so. The USA is not and has never been a democracy. Its founding fathers hated democracy and mentioned the term nowhere in the constitutional documents. The USA is a republic, as every school child can tell you, since it is to the republic and the flag for which it stands that they pledge their allegiance each day. In China, at least, their elected representatives get to vote on presidential appointments. In America, voting on presidential appointments is done by non-elected people–as we saw with President Trump.

It's lazy to deny that China is a democracy just because her application of democracy is different from ours and we can't be bothered looking into it. China is far more democratic than, say, the USA, in both form and substance. Not only do more Chinese vote but voter turnout is 20% higher than America's and voter trust and satisfaction with their government is many times higher.

No matter how you slice it–constitutionally, electively, popularly, procedurally, operationally, substantively or financially–China comes out ahead. In survey after survey, it's the most trusted government in the world and its policies enjoy the highest support. Don't believe me? Read 'Selling Democracy to the Chinese' https://www.unz.com/article/selling-democracy-to-china/.

In elections overseen by the Carter Center, Chinese voters elect 3,000 Congresspeople, who elect a permanent subcommittee that participates in personnel selection.

China, with her thousands of years experience of governance theory and practice, considers it inappropriate to choose leaders by public vote. Neither corporations nor the military allow their shareholders or members to publicly vote on their choice of senior executives. Why should anyone choose government leaders that way? Instead, they publish the top 1000 candidates' track records in excruciating detail but leave the final recommendations to experts. If you study the candidates' records yourself, you will quickly understand why the top guys are where they are. They earned it the hard way.

Choosing heads of State requires much closer scrutiny, so HR experts and previous heads of state and a Congressional subcommittee carry on many face-to-face interviews before choosing the Final Seven and the Big Two. Once everyone is on the same page, the top positions are put before Congress for their seal of approval. Their customary, almost-unanimous votes here are not a reflection of their alleged 'rubber stamp' function, but of near-consensus in a consensus-driven culture.

As we now see, this system produces both highly competent leaders, excellent policy outcomes and very happy voters: 96% of Chinese have confidence in their government and 83% say their country is run for everyone’s benefit rather than for a few big interest groups (36% of Americans think the same). http://www.wvsevsdb.com/wvs/WVSData.jsp?Idioma=I+(http://www.wvsevsdb.com/wvs/WVSData.jsp?Idioma=I)

80–90% of Chinese trust their government, the highest trust level of any national government, according to the Edelman 2016 Report, . https://www.slideshare.net/EdelmanAPAC/2016-edelman-trust-barometer-china-english?qid=c13f229d-8a8f-4a93-bce8-aeb779e8cc70&v=&b=&from_search=1 .

And "Nine in ten Chinese are happy with the direction of their country (87%), feel good about the current state of their economy (91%) and are optimistic about China’s economic future (87%)." According to the Pew Charitable Trusts http://www.pewglobal.org/database/indicator/3/.
- Barry Rosenfeld May 21, 2018
  
  Thanks, Godfree, for a very interesting take on American history and US-China relations. I would make the argument, however, that the originators of the US Constitution did not hate democracy, they just didn't trust it. That is why the US has an Electoral College to choose the POTUS. However, that isb't the last word either because in the third election (1800) the Congress had to make the decision as to who won the election, and again in 1824 no candidate received the majority of electors and a backroom deal was made to block Andrew Jackson, who had a plurality of the electors, from the presidency.
  
  If you really believe the pro forma process you indicate is how elections are conducted in China and how decisions are made, you might also believe that the Soviet Constitution really described how the USSR operated and that Stalin was a figment of one's imagination.
  
  As for the point-in-time survey results, Chinese respondents are viewing the world from where they were 25 yeas ago - but so are the Americans. That is why Trump is POTUS: Clinton, Obama and the Bushes crushed American workers for the benefit of Wall Street and Multinational Corporations, both of whom earn their profits globally, not nationally, and both hide income from taxation using foreign branches. Trump is the tip of the iceberg.
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- Andrew Tucker May 21, 2018
  
  China has never developed politically. It invented in 200 BC an emperor system got rid of it in 1910? Replaced it with a communist government. The lack of political innovation in China has landed us in a pre World War 1situation all of China’s neighbours are faced with a Dictatorship who seeks to be the worlds greatest power.
  
  The failure of the china to see the incompatibility if a “peaceful rise” with a one party state that imposes birth control and political reeducation camps for muslims and oppression of tibetans. All of its neighbours are faced with a choice Chinese control, like china or USA control like the US.
  
  The shift in global views of china has happened on Xi’s watch. The failure to stop him ruling beyond 10 years has flicked the switch. The globe is set on the highway to hell as a result.
  
  We are in the Thucydides trap and unless the Chinese dictatorship collaspes which is highly unlikely we are going straight into world war 1 again.
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