Trump Lies. China Thrives.
Thomas L. Friedman JUNE 7, 2017
One of the many dangers posed to our society by having a president who’s a serial liar — and who doesn’t behave like an adult, let alone a president — is that we more easily ignore him even if he happens to say something true.
Yes, some things are true even if Donald Trump believes them. I explored one of them in China last week — Trump’s charge that China is playing unfair on trade.
My visit to Beijing left me with two very strong responses. The first is that we underestimate China — and attribute all of its surge in growth to unfair trade practices — at our peril. The country has been fast and smart at adopting new technologies, particularly the mobile internet. For instance, China has moved so fast into a cashless society, where everyone pays for everything with a mobile phone, that Chinese newspapers report beggars in major cities have started to place a printout of a QR code in their begging bowls so any passer-by can scan it and use mobile payment apps like Alibaba’s Alipay or Tencent’s WeChat Wallet to contribute to the beggar’s mobile payment account.
Chinese men and women friends tell me they don’t carry purses or wallets anymore, only a mobile phone, which they use for everything — including for buying vegetables from street vendors.
“America has been dreaming of becoming a cashless society,” Ya-Qin Zhang, president of Baidu, China’s main search engine, remarked to me, “but China is already there.” It has “leapfrogged the rest of world” and is now going mobile-first in everything.
Construction is going strong in Beijing.
CreditGreg Baker/Agence France-Presse — Getty Images
Wang Xing, the founder of Meituan.com — a Chinese mobile website that is a combination of Fandango, Yelp, OpenTable, Grubhub, TripAdvisor, Booking.com and Angie’s List — told me that he has around 300,000 people on electric bicycles who deliver takeout food and groceries to 10 million Chinese mobile internet users daily. “We are the largest food delivery company in the world,” said Xing.
And in an age when raw data from the internet of people and the internet of things is the new oil, the fact that China has 700 million people doing so many transactions daily on the mobile internet means it’s piling up massive amounts of information that can be harvested to identify trends and spur new artificial intelligence applications.
Moreover, while Trump is pulling out of the Paris climate deal, China is steadily pulling out of coal. Xin Guo, C.E.O. of Career International, told me two of his hottest job openings in China are in “software and new energy” — everyone is looking for engineers for electric cars, solar and wind. Walter Fang, a top executive at iSoftStone, which helps design China’s smart, sustainable cities, told me that “just two weeks ago I brought in about a dozen green energy start-up companies from Massachusetts” to show them opportunities in China.
And yet, as smart as China has been in adopting new technologies, Trump’s broad complaint that China is not playing fair on trade and has grown in some areas at the expense of U.S. and European workers has merit and needs to be addressed — now. Before going to Beijing I emailed the smartest person I know inside China on trade (who will have to go nameless) and asked if Trump had a point.
He answered: “Your note has arrived as I slide across the Chinese countryside at 300 kilometers per hour from Beijing to Shanghai. There are nearly 60 trains going from Beijing to Shanghai every day, typically with 16 cars able to carry nearly 1,300 people. … We glide past endless brand-new factories and immaculate apartment buildings in practically every city along the way, with many more still under construction. As you suspect, I have been sympathetic to many of Trump’s trade and industrial policy ideas. But if anything, Trump may be too late.”
The core problem, U.S. and European business leaders based in China explained, is that when the U.S. allowed China to join the World Trade Organization in 2001 and gain much less restricted access to our markets, we gave China the right to keep protecting parts of its market — because it was a “developing economy.” The assumption was that as China reformed and become more of our equal, its trade barriers and government aid to Chinese companies would melt away.
They did not. China grew in strength, became America’s equal in many fields and continued to protect its own companies from foreign competition, either by limiting access or demanding that foreign companies take on a Chinese partner and transfer their intellectual property to China as the price of access, or by funneling Chinese firms low-interest loans to grow and buy foreign competitors.
Once those companies got big enough, they were unleashed on the world. China plans to use this strategy to implement its new plan — “Made in China 2025” — to make itself the world leader in electric vehicles, new materials, artificial intelligence, semiconductors, bio-pharmacy, 5G mobile communications and other industries.
The latest annual survey of the American Chamber of Commerce in China, released in January, found that 81 percent of its members felt
“less welcome” in China than in the past and had little confidence any longer that China would carry through on promises to open its markets. APCO Worldwide’s James McGregor, one of the keenest observers of China trade, recently noted that China tells the world that its policy is “reform and opening,” but on the ground its policy “more resembles reform and closing.”
Today, Alibaba can set up its own cloud server in America, but Amazon or Microsoft can’t do the same in China. China just agreed to allow U.S. credit card giants, like Visa and MasterCard, access to its huge market — something it was required to do under W.T.O. rules but just dragged its feet on for years — but now domestic Chinese financial services companies, like UnionPay, so dominate the Chinese market that U.S. companies will be left to fight over the scraps. The world leader in industrial robots, the German company Kuka Robotics, was just bought by the Chinese company Midea; Beijing would never allow the U.S. to buy one of China’s industrial gems like that.
This is not fair. China needs to know that some people who disagree with everything else Trump stands for — and who value a strong U.S.-China relationship — might just support Trump’s idea for a border-adjustment tax on imports to level the playing field. Because our economic relationship with China is out of whack — and not just because China makes great products, but because we do, too, and it’s high time they are all allowed through China’s front door.
China is bent on world domination — but not in the way you think
A worker assembles an aluminum platform outside a construction site at the Central Business District of Beijing on April 16.
(Andy Wong/Associated Press)
By Fred Hiatt Editorial Page Editor May 7
China is bent on world domination — not with its missiles and aircraft carriers, but by controlling solar energy, cloud computing and other industries of the future.
That is an only slightly exaggerated version of a warning coming from the American chamber of commerce in China. It sent a delegation to Washington last week to warn that “China’s aggressive mercantilist policies are one of the most serious threats facing the future of U.S. advanced technology sectors,” as their policy paper says — and that the U.S. government isn’t doing enough to counter the threat.
The warning is especially startling coming from AmCham China, as it calls itself, which for years flexed its advocacy muscle persuading the United States to let China into the world trading system and rebutting Americans who it felt were too hard on China.
“Now we’re saying that things are really lopsided, and the government needs to wake up and take action,” James McGregor, chairman of APCO Worldwide in China and part of last week’s delegation, told me during a visit to The Post. “This is aimed at domination of the industries of the future. We’re talking about artificial intelligence and all the things that are important to the American economy.”
Given President Trump’s anti-China rhetoric during the campaign, you might expect U.S. executives in Beijing and Shanghai to feel optimistic about the prospects for a U.S. response. They are hopeful — but they are also nervous, for reasons I’ll get to in a minute, that the administration may miss this opportunity to course-correct.
First, though: Why has AmCham changed its tune so dramatically since the upbeat days of China’s entry into the World Trade Organization?
The chamber’s answer:
China has changed, not us. Its policy has shifted, McGregor said, from “reform and opening” to “reform and closing.” The Communist regime still wants economic growth and market mechanisms, in other words, but without subjecting its economy to open competition from outside. In fact, a recent survey showed that more than 80 percent of the chamber’s members “feel less welcome than before,” another delegation member, Lester Ross of the WilmerHale law firm, told me.
China has a well-developed, long-term industrial strategy, the chamber says. It limits U.S. firms’ access to its market; demands that American companies share their advanced technology to get even that limited access; buys foreign companies that possess technology it needs while preventing U.S. firms from investing in China; shovels resources to Chinese companies as they ramp up; and then, once those Chinese firms have fattened on the vast and protected Chinese market, sends them out to compete in the world.
“The economic relationship is critical to both the United States and China,” said William M. Zarit, a former U.S. diplomat and now senior counselor at the Cohen Group and chairman of AmCham China. “But as strong as it might be, we have an investment and trade relationship that is out of whack. . . . We need to address this.”
During the campaign, Trump maintained that China was “ripping us left and right.”
“There are people who wish I wouldn’t refer to China as our enemy,” he wrote in 2015. “But that’s exactly what they are.”
But will his earlier skepticism translate into smart policy?
Since meeting Chinese President Xi Jinping, Trump has seemed very taken with the Communist leader and the budding U.S.-China relationship, which he described as “something very special, something very different than we’ve ever had.”
This could be a prelude, U.S. executives worry, to economic concessions designed to win cooperation on North Korea. They also worry that, to the extent the administration remains focused on the economy, it is on iron, steel and other heavy manufacturing sectors rather than technologies that will be crucial in the future.
Most of all they worry, though, because it wouldn’t be easy for anyone to come up with an intelligent response to the uneven relationship.
“Our systems are fundamentally different,” explained Timothy P. Stratford, a delegation member who worked in the U.S. trade representative’s office from 2005 to 2010. “We follow process. . . . China is focused on outcomes.”
If U.S. law allows a Chinese company to buy an American one, in other words, the U.S. government isn’t going to interfere — even if U.S. firms are being blocked in China and the overall situation seems unfair.
The delegation did not come with detailed policy proposals, though several members called for new levels of review for proposed Chinese investments. Mostly they want a recognition that the Chinese economy is not operating as Americans hoped it would during the push to open the global trading system — and that waiting for it to “evolve” is no longer a viable option.
“The solution has to be some combination of offense and defense,” said Randal L. Phillips, Asia managing partner for the Mintz Group. “China has to face some consequence.”