During Donald Trump’s successful campaign to become President of the United States, both Trump and his then adviser Steve Bannon spoke a great deal about the following:
–Increasing the sales of US made products domestically
–Increasing the wages of the domestic workforce
–Seeing trade in economic rather than ideological terms
Now, Steve Bannon has criticised China for effectively implementing each of the items listed above.
In a recent interview with the New York Times, the once and future king of the US media outlet Breitbart has delivered a morose, provocative and at times absurd assessment of modern China, all the while ignoring the elephant in the room. The elephant of course is the fact that ‘making America great again’, in many ways meant ‘making America more like China’.
Since the 1978 reforms of Deng Xiaoping, China has become an economic powerhouse. While much of China’s initial post-78 growth was based on exports, China is increasingly cultivating its affluent domestic consumer base, just as the United States did in the 1920s and even more so in the economic boom which hit the American domestic markets after 1945.
China’s immense industrial capacity has seen Chinese exports dominate world markets both because of their generally competitive prices as well as because of their increased quality. Whereas in 1990, ‘Made in China’ was often derided as a moniker which meant ‘not as good as German or Japanese made goods’. Increasingly, ‘Made in China’ is the world’s latest mark of excellence.
In terms of quality alone, many American electronics and car manufacturers had lost the race to Europe and East Asia dating back to the 1970s, when Toyotas and Volkswagens started becoming known as affordable cars that were durable while Mercedes-Benz and high quality German electronic brands such as Revox, outpaced their US rivals in terms of both quality and reliability.
As China was still a mostly agrarian economic for much of the 1970s and into the 1980s, one can hardly blame China for having outpaced not only the America of the 1950s and 1960s, but also the West Germany and Japan of the 1970s and 1980s.
One might even recall a time when the pro-US entity of Chinese Taipei (commonly referred to as Taiwan) was selling more to the US than China. Those days are gone. China may have started the race last, but it is finishing first.
These simple realities of global trade however, seem to imply something different to Steve Bannon. Bannon said the following about modern China,
“A hundred years from now, this is what they’ll remember — what we [it is not clear who ‘we’ is, in this context] did to confront China on its rise to world domination.
China right now is Germany in 1930. It’s on the cusp. It could go one way or the other. The younger generation is so patriotic, almost ultranationalistic”.
Bannon’s rant continued,
“China’s model for the past 25 years, it’s based on investment and exports. Who financed that? The American working class and middle class. You can’t understand Brexit or the 2016 events unless you understand that China exported their deflation, they exported their excess capacity.
“It’s not sustainable. Bannon declared. The reordering of the economic relationship is the central issue that has to be addressed, and only the U.S. can address it”.
There are several points of speculation on Bannon’s part which defy commonly understood fact. First of all, far from not being sustainable, China is developing cheap and highly effective green energy products, including solar technology, which is set to make China increasingly energy self-sufficient. China is also looking to set a date for the elimination of all cars which run on fossil fuels from its expanding roadways.
Even before one realises that China’s green technology is among the most export friendly sustainable energy product line in modern history, by cutting energy costs, China is already ahead of the US which has generally shunned sustainable energy, something which is increasingly apparent under Donald Trump.
The old argument that green technology is a money loser has been challenged by China and in this respect, China has defied the odds and made green energy both efficient and cost effective.
Secondly, China’s One Belt–One Road seeks to build on China’s export strengths by modernising and harmonising the mechanisms of world trade across both growing and flourishing economies. China has poured investment into parts of South Asia and Africa while the Middle East and South East Asia look to similarly benefit from injections of Chinese cash.
One Belt–One Road is a project that seeks to pool the strengths of all participating economies in order for each member state to attain unique benefits based on the specific needs of individual economies.
Crucially, unlike western backed trade initiatives, One Belt–One Road does not require participating states to change their internal socio-economic traditions, nor are there any demands to alter the nature of domestic governance. One Belt–One Road therefore derives its strength from its flexibility and anti-ideological nature.
While China does depend on the US as a major export market, the expanding nature of new trading markets means that in many ways, the US relies on China more than China relies on the US. In respect of the US, entire industries in both the manufacturing and service sectors depend on a reliable influx of Chinese goods. China likewise has purchased substantial amounts of US sovereign debt. It was the US which sold this to China, no one’s hand was forced in respect of such an arrangement.
Far from being un-sustainable, the prospect of China’s further growth seems to frighten individuals like Bannon who seek the markets of South East Asia, South Asia and Africa for themselves even though at this point the US has increasingly little to offer such markets.
Thirdly, the fact that China’s workforce is becoming increasingly wealthy and patriotic frightens Bannon which is ironic as Bannon has been accused of being an ‘ultranationalist’ himself. That being said, calling Bannon and the youth of China ‘ultra-nationalist’ is equally inaccurate. Bannon is something of a patriotic American and many Chinese are patriotic about their own country. There’s nothing extraordinary nor dangerous about this fact.
In respect of the South China Sea, it is clearly not an America issue to settle. It is between the states of South East Asia and their Chinese neighbour to the north. Already Philippines has made great strides on reaching an amicable settlement with China under the leadership of Rodrigo Duterte. This has led China to hail a ‘golden period’ of good relations between Beijing and Manila.
The major obstacle towards settling lingering territorial issues in the South China Sea is Vietnam, but even Vietnam’s number one trading partner is China. Ultimately, it ought to be up to a country that has good relations with both China and Vietnam to settle lingering issues and the natural choice for such a mediator is Russia, certainly not the United States.
The truth is that Deng Xiaoping along with his successors did in fact make one of the world’s oldest civilisations ‘great again’. The task of turning a 20th century China ravaged by multiple political changes, Japanese aggression and a difficult post-war period, into the economic powerhouse it is today, was a monumental endeavour.
By contrast, ‘making American great again’, while challenging, cannot be compared to Deng’s economic revolution which has catapulted China to the forefront of 21st century economic growth.
When all is said and done, perhaps the real reason that Steve Bannon seeks to undermine China is due to jealousy and little more.