Thursday, April 21, 2016

"A Trump Presidency Would Make China Great Again"

 U.S. Republican presidential candidate Donald Trump speaks at a campaign event at the Indiana State Fairgrounds in Indianapolis Wednesday. | REUTERS
Japan Inc. believes Trump presidency would hurt ties, tarnish U.S. as investment target: poll

The Japan Times  by Tetsushi Kajimoto  Reuters  Apr 21, 2016 

Most Japanese firms think a Donald Trump presidency would harm the Japan-U.S. security alliance and make the United States a less attractive place to invest, a Reuters poll showed, in a further sign of international angst about his candidacy.

The Republican front-runner, known for his unpredictable style and fiery rhetoric, would also cause bilateral trade to shrink if he became president, a majority of respondents said.

Portraying Japan as a free-rider on security, Trump has suggested that the U.S. ally might need nuclear weapons to ease the U.S. financial commitment to its defense — anathema to the only country ever attacked by atomic bombs.

Trump has also said he might withdraw U.S. service members from Japan unless it pays more to feed and house the 50,000 it hosts, and he has accused Japan of stealing U.S. jobs.

His comments have only fueled simmering worries amongst some Japanese in recent years about whether Washington would defend Tokyo in a crisis under their alliance — the lynchpin of Japan’s security policy for decades.

The Reuters Corporate Survey, conducted April 1-15, found 78 percent of firms thought Japan’s security environment would deteriorate under Trump. The remainder said it would not change much. Not one firm thought it would improve.

The monthly poll surveyed 510 big and midsize firms. Around 230 answered questions on the U.S. presidential race.

In written comments, companies voiced concerns that uncertainty would grow over U.S. diplomacy and that protectionism would rise, with some saying a President Trump would embolden China as it struggles to exert its influence in the South China Sea and other parts of Asia.

“It is very easy to imagine China taking advantage of the power vacuum to step up military operations in the region,” wrote a manager at an electronics maker.

In particular, Tokyo and Beijing have long been at odds over tiny islands claimed by both in the East China Sea.

“We worry that geopolitical risk would heighten a lot and Sino-Japanese relations would be extremely strained, which could result in a very negative impact on the Japanese economy,” the manager added.
A Trump spokeswoman did not respond to requests for comment.

While the possibility of a President Trump has triggered alarm among some foreign diplomats, economists and business executives, he has moved closer to the Republican nomination after winning a commanding victory in New York state’s presidential nominating contests on Tuesday.

Some respondents to the survey said, however, that they see Trump’s comments as mere posturing and did not expect any real change in policy even if he won the Nov. 8 election. Managers answered on condition of anonymity in the survey, which was conducted for Reuters by Nikkei Research.

Around 55 percent of firms said that Trump would be bad for business in the United States, that Japanese corporate appetite for investing in the U.S. would wane, and that trade between the two countries would decline.

The amount of Japan-U.S. trade has grown by about a quarter in the past two decades to be worth around $215 billion, accounting for 15 percent of Japan’s overall trade. The United States is Japan’s No. 2 trading partner after China, while Japan is the United States’ fourth-largest trading partner.

In contrast to Trump, more than 80 percent of Japanese firms believe Democratic Party front-runner Hillary Clinton would keep a steady hand on economic relations and maintain the status quo on security. The White House has described Trump’s suggestions on Japan adopting nuclear arms as destabilizing.

Representatives for Clinton did not respond to requests for comment.

“She would adopt realistic policies. It would lack freshness and stage no surprise, which would be a relief to us,” wrote a manager at a construction firm.
A Trump presidency would make China great again

The Japan Times  by William Pesek  Barron's Asia  Apr 21, 2016 

Make China Great Again! OK, this isn’t Donald Trump’s official campaign slogan. But it has a nice ring to folks in Beijing quietly rooting for a Trump White House.

That’s not the official Chinese line, of course. Rather, The Donald is the “irrational type” and Washington “wouldn’t be entitled to world leadership” if Americans elected a trade-war-happy reality TV star so spectacularly unqualified for the presidency, Finance Minister Lou Jiwei told the Wall Street Journal.

In reality, that would suit Beijing’s global ambitions just fine. Four years of Trumpist lunacy wouldn’t be fun for President Xi Jinping. Trump’s threats to impose 45 percent tariffs, claw back manufacturing jobs from the mainland and pledge that “all trade and other agreements will be totally and completely renegotiated” would be a drag while he carries them out. But the longer-term payoffs will be even greater than the soft-power windfall the Communist Party enjoyed following America’s overreaction to 9/11.

China, it’s often forgotten, was the main beneficiary of the Bush administration’s Iraq invasion, torturing of prisoners and disastrous press over Guantanamo Bay. As the United States shot itself in the foot, China spread its tentacles. It became Africa’s biggest trading partner, poured untold billions into Latin America and bought friends around Asia with giant infrastructure projects. The 2008 Lehman shock allowed China to play a white knight role to stabilize Europe’s bond market and support other developing nations.

Xi is accelerating Chinese globalization with his “One Belt, One Road” push to recreate the Silk Road and the Asian Infrastructure Investment Bank. Xi’s China also is grabbing up real estate in the South China Sea at a rate neighbors like the Philippines and Vietnam find alarming. As Xi works to build an empire, it’s important to consider how a Trump presidency would play into his hands.

The China Press newspaper wasn’t being facetious last month when it called Trump “China’s secret agent in America.” With his own authoritarian tendencies, all indications are that Trump would go easy on human rights critiques, drag the U.S. back toward its pre-World War II isolation and wreck friendships with Japan and South Korea.

Officials here in Tokyo are in near panic mode. Trump wants to tear up U.S.-Japan postwar agreements. When he bashes China for “stealing” American jobs, Trump routinely tosses Japan into the mix. He talks of extorting Tokyo and Seoul for protection money and delights right-wingers by suggesting Japan and South Korea go nuclear. The glee with which Beijing is watching all this can’t be exaggerated. It dovetails brilliantly with China’s designs on hegemony.

China dismisses such suggestions. Beijing, as Foreign Minister Wang Yi rarely misses a chance to insist, “will never follow the track of Western colonists” and that its diplomatic outreach “will never come at the expense of the ecology, environment or long-term interests” of continents near and far. Yet, as Otto von Bismarck, a man who knew a thing or two about empire building, said, never believe anything in politics until it’s been officially denied. These days, it’s China doing the denying about its designs on world domination, and its disclaimers are even less believable than those of the German leader 150 years later.

While such negations are often aimed at Africa, the resource-rich South China Sea is the epicenter of today’s land grab. It has the Group of Seven nations taking swipes at Xi’s government and U.S. officials throwing down the gauntlet. Last Friday, Defense Secretary Ashton Carter enraged Beijing by visiting two aircraft carriers in disputed waters. Beijing called it a provocation.

“We have been here for decade upon decade,” Carter said. “The only reason that question even comes up is because of what has gone on over the last year, and that’s a question of Chinese behavior. What’s not new is an American carrier in this region. What’s new is the context and tension that exists, which we want to reduce.”

Good luck with that as China spreads its cash-rich tentacles at the same moment Americans are turning inward. The question is what China’s nascent empire means for the trajectory of the global economy?

The most immediate risk is tensions with Japan and the U.S. China’s rise prompted Prime Minister Shinzo Abe to boost military spending for four consecutive years to a record. Abe reinterpreted the pacifist Constitution to enable Japan to deploy troops abroad. Japanese and Chinese ships and aircraft are increasingly facing off in disputed waters in perilous ways. Any misstep, miscommunication or accident could quickly come to blows in ways that slam world markets.

Washington arguably has never faced a greater challenge to world domination than China. After all, China has been there before.

In his book “1421: The Year China Discovered the World,” Gavin Menzies chronicled Zheng He’s voyages to Antarctica, Australia, Greenland, Iceland, North and South America and West Africa long before Ferdinand Magellan and Christopher Columbus.

Far from curbing China’s ambitions, an isolated U.S. under President Trump would enable it to spread its wings ever wider. That raises troubling questions for the future of global capitalism. Inherent to China’s outreach efforts is a desire to remake the developing world in its image, what Sinologists call the “Beijing Consensus.”

Granted, the “Washington Consensus” of democracy, open markets, transparency and personal freedoms has done itself few favors. Since 2008, Western officials have broken every commandment they imposed on Asia and Latin America a decade earlier.  

U.S. President Barack Obama’s “pivot” to Asia has been more rhetorical than substantive. Also, extreme market volatility in recent years enabled Beijing to play a sugar-daddy role from Sudan to Moscow to Cambodia. But is Beijing’s alternative — autocratic state capitalism, support for rogue regimes, press blackouts and complete disregard for labor and environmental standards — really an improvement?

China’s AIIB is emblematic of these concerns. Why borrow from the World Bank or Asian Development Bank with their pesky audits, ecological studies and conditions when China will toss you a few billion with no strings attached? All Beijing wants in return in loyalty. Sadly, it reduces incentives to build the strong institutions needed in developing nations to thrive and spread the benefits of growth.

India’s take on Xi’s One Belt, One Road initiative is worth heeding. New Delhi isn’t saying much about the enterprise; no one wants to risk Beijing’s wrath. As Tanvi Madan wrote in a recent Brookings Institution article, though, “there’s clearly concern about the way China is pursuing OBOR, the motivations behind it, and particularly the kind of influence that Beijing might be seeking through it.”

Odds are that influence will only grow as China exploits a distracted America. Even worse is the isolationist turn should Trump prevail in November. That void in U.S. engagement couldn’t come at a better time for China’s most powerful and ambitious leader in many decades. Trump would shelve Obama’s Trans-Pacific Partnership, a pact meant to contain China. China, after all, prefers checkbook diplomacy to military force, seeking to achieve with investment and trade what colonizers of the past did only by force. “Just as globalization has limited the utility of the old methods of empire building, China is emerging with a new model,” The Globalist’s Behzad Yaghmaian observed.

As Xi hones that model, a White House occupied by a man who neither does nuance nor heeds the lessons of history would be a nice thing to have. Trump, for example, is surely the first U.S. presidential contender on the record as applauding Beijing’s 1989 Tiananmen Square crackdown (it was a “riot” in his simplistic world view). Also, a leader who fans racism and violence at home would trump America’s human rights rebukes. The Republican front-runner’s calls for massive tariffs would hurt the U.S. most as Xi dumps Beijing’s $1 trillion of Treasuries and prices at Wal-Mart double.

Make America great again? More like make China’s empire ambitions a reality faster than Xi’s wildest dreams.

William Pesek, executive editor of Barron’s Asia, is based in Tokyo and writes on Asian economics.

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