August 7, 2019

Conflict in China

“China warned Tuesday that it will be ‘only a matter of time’ before it punishes those behind two months of pro-democracy protests in Hong Kong.” AP News

Last Thursday, President Donald Trump told reporters “Hong Kong is a part of China, they’ll have to deal with that themselves.” Reuters

On Monday, “The U.S. Treasury Department labeled China a currency manipulator… [after] China had allowed its currency to weaken to an 11-year low… The U.S. had not put China on the currency blacklist since 1994.”AP News

See past issues

From the Left

The left is critical of both Trump’s comments about Hong Kong and the decision to label China a currency manipulator.

President Trump has essentially given China’s rulers a green light to crush the pro-democracy protests. His flippant remarks could have grave consequences…

“What the Chinese Communist Party does, of course, is its responsibility, and it is the Party that will bear the responsibility if Hong Kong’s crisis ends in bloodshed. But the rest of the world, and particularly the United States, has a duty to warn against the slaughter of innocents, and to stand up for the values of free societies. Trump had the opportunity to warn China against a heavy-handed response. He could have summoned up a joint effort with America’s allies to urge Chinese restraint. He could have warned Beijing, even if mildly. Instead, he gave the Chinese government a free pass.”
Frida Ghitis, Washington Post

The struggle over Hong Kong’s future has far-reaching international ramifications – symbolic, political and practical. The crushing of its freedoms would be a grim triumph for the advancing forces of global authoritarianism… [but] it seems clear Xi will not resort to force, and de facto direct rule from Beijing, unless he feels he has no choice. He knows the outcome of such action would definitively give the lie to the favourite Communist party conceit of China’s ‘peaceful rise’. Xi knows the overseas repercussions could be immensely damaging, dwarfing in intensity the criticism of the abuses endured by Xinjiang’s Muslim Uighurs.”
Simon Tisdall, The Guardian

Regarding the decision to label China a currency manipulator, “this is an idea that American politicians have talked about for ages, but no U.S. president has ever been willing to move forward on. At one time, it might have marked the beginning of a dramatic confrontation between the world’s two top economic powers. But the timing now is a bit silly, as it’s been years since China actually fit the typical definition of a currency manipulator, and calling it one today probably won’t change much about the trade battle that’s already underway. More than anything, it’s a fairly low-stakes rhetorical move in a high-stakes economic showdown…

“These days, Beijing mostly uses its resources to prop the renminbi up, not push it down. If officials let the country’s currency float on the open market, the way the U.S. dollar does, it would almost certainly crash immediately, which would be terrible for American manufacturers. In other words, China has actually been doing U.S. companies a favor by putting a floor under the renminbi.”
Jordan Weissmann, Slate

The new focus on currency manipulation is particularly misguided. China is engaged in a wide range of unfair trade practices, including subsidizing domestic manufacturing, impeding the sale of foreign goods and stealing intellectual property. But experts generally agree that China is not manipulating its currency… Mr. Trump is frustrated that the dollar’s exchange value has climbed on his watch, making it harder for American companies to win foreign buyers. The primary cause, however, is simply that the American economy has outperformed the rest of the developed world. Secondarily, Mr. Trump himself has pumped up the dollar by backing a combination of tax cuts and spending increases that have expanded government borrowing, increasing demand for dollars to buy federal debt.”
Editorial Board, New York Times

“If Chinese policies do not change, we will have only demonstrated our impotence to China and the world… Further, the president’s flailing bluster, in which the treasury secretary is now a full participant, risks real economic damage as businesses and consumers become fearful and hold off on spending. There is a growing concern that exchange-market developments will be an excuse for yet more tariffs…

“There is a final problem with the Treasury Department’s manipulation claims. The United States has an enormous agenda with China — North Korea, Taiwan, Hong Kong, aggressiveness in the Pacific region, unfair trade practices and much more. We have only limited capacity to shape Chinese behavior. Should we not focus on areas where our position is clearly right and the stakes are high rather than areas where our claims are dubious and prosecuting them damages our economy?”
Lawrence H. Summers, Washington Post

Regarding the Cadillac tax, “high-premium employer-based plans raise the cost of health care for everyone by encouraging the overconsumption of expensive services. This means that even Medicare and Medicaid face higher prices. Quite aside from its benefits for the health-care market, the Cadillac tax would also have the effect of expanding the tax base and making the tax code more efficient. It would raise revenues by about $15 billion a year… Rather than killing or delaying the Cadillac tax, Democrats should be trying to make it operational. The tax would raise revenue, lower costs, increase the efficiency of the tax code and give the Obamacare individual market its best chance at success.”
Karl W. Smith, Bloomberg

“The two issues with which he is most often associated, support for a balanced budget and opposition to free trade, put him at odds with both of our major political parties. An old-fashioned, soft-spoken Southerner, he nevertheless held views on so-called ‘social issues’ that would be to the left of the mainstream of the Republican Party, both then and now. He was a fervent supporter of the Vietnam POW/MIA movement in the late '80s and early '90s, but he was not in any sense a hawk. Never mind 2003. Perot opposed the first war in Iraq in 1990… Perot's death should be mourned by all Americans who regret the fact that it is no longer possible to make reasoned, non-ideological arguments about questions of public import, and by the devolution of our political life into mindless partisan squabbling.”
Matthew Walther, The Week

From the Right

The right calls on Trump to support the protesters in Hong Kong, but is skeptical that China’s currency devaluation will harm the US.

From the Right

The right calls on Trump to support the protesters in Hong Kong, but is skeptical that China’s currency devaluation will harm the US.

“Chinese officials are sounding increasingly ominous notes in response to the continuing protests in Hong Kong calling for democratic reform to preserve the freedom China promised for 50 years after 1997… It’s a shame that President Trump last week gave Mr. Xi a pass on Hong Kong…

“The future of the territory is aninternational issue because China promised ‘one country, two systems’ in a treaty with Britain. That special status is the basis for a U.S. law that gives Hong Kong trade and visa privileges not provided to China… China has frustrated demands for democracy by ruling out many pro-democracy candidates and ensuring that its factotums run the Hong Kong government. Hong Kongers are protesting in the streets because they have no other way to defend their freedoms.”
Editorial Board, Wall Street Journal

Who will stand up for democracy and justice in this age of the strongman?People on the streets of Hong Kong, and people on the streets of Moscow, are providing stirring examples. They are sticking their necks out… I believe that the United States, starting with the president, should express support [for] these protesters. We have long stood for something in the world. If we can’t express support, how about mere, weak good wishes? If not that — at least avoid sympathy, or even the appearance of sympathy, with the dictators.”
Jay Nordlinger, National Review

“The Trump administration should first resort to that oldest but finest tool of democracy: Publicize injustice… Alongside China's imperial ambitions in the South China Sea and its detention of more than 1 million innocent Muslims in concentration camps, the events in Hong Kong are showing that Xi is the world's most powerful enemy of human freedom… international media attention will embarrass China and undercut Xi's credibility with the developing nations where he seeks to expand his influence. And if Xi's China is seen for the dystopia it is, major international investors will take heed… Yes, there are limits to what Trump can do here. But he can do better than he is doing now."
Editorial Board, Washington Examiner

In Hong Kong, revolution is in the air. What started out as an unexpectedly large demonstration in late April against a piece of legislation—an extradition bill—has become a call for democracy in the territory as well as independence from China and the end of communism on Chinese soil. Almost nobody thinks any of these things can happen, but they forget that Chinese rebellions and revolutions often start at the periphery and then work their way to the center… Hong Kong, perched on the edge of the Asian continent far from the center of communist power in Beijing, may be where the end of Chinese communism begins.”
Gordon G. Chang, The National Interest

Regarding the decision to label China a currency manipulator, “traders may fear the tiny devaluation signals trade conflict spreading to currency. [But] this is highly unlikely, because a steep devaluation would be destabilizing for China… If an extended depreciation is encouraged or permitted, RMB holders can only guess what level the government truly wants. Last time around — four years ago — they chose large-scale capital flight rather than trusting the People’s Bank. China’s economy is slower, older, and more indebted than back then. Most importantly, it no longer has the foreign exchange to afford a repeat of 2015–6. That’s why the People’s Bank is likely to continue to defend the RMB near 7 to the dollar.”
Derek M. Scissors, The National Interest

“Trump should be overjoyed. Tariffs are taxes paid by Americans on the things Americans buy. The only way China can be paying any of them is if something else, something extra, then happens — like the yuan dropping. This makes all imports into China more expensive for Chinese citizens. That's China paying for Trump's tariffs when the yuan falls. Without this happening, only Americans pay. With the yuan dropping, China pays as well. This is the claim Trump has been making all along, that China's really paying those trade taxes — now they are… Imposing significant export tariffs on a country should mean the value of that currency falls. This is what is happening. Why is Trump complaining about it?
Tim Worstall, Washington Examiner

“NBC and MSNBC embraced Sen. Elizabeth Warren of Massachusetts in the first debate of Democratic presidential candidates Wednesday night, treating her like the star of the show. The debate led off with Warren, who had a huge popularity advantage from the start… NBC anchor Savannah Guthrie started it off sounding more like Warren’s press secretary. ‘You have many plans – free college, free child care, government health care, cancelation of student debt, new taxes, new regulations, the breakup of major corporations,’ Guthrie said, before teeing up an economy question. Guthrie even used Warren’s plan to break up tech companies as the foundation for a question for Sen. Cory Booker of New Jersey… the round-robin final comments also ended with Warren, as Maddow asked her for the ‘final, final statement.’ That let NBC bookend the entire debate with Warren and Warren.”
Dan Gainor, Fox News

President Trump should be happy. As much as Warren is articulate, obviously intelligent, and energetically supported by Democrats, she would also be far easier to defeat than Joe Biden… Considering Trump's economy, the president is well placed to defeat Warren.”
Tom Rogan, Washington Examiner

A libertarian's take

Outside Hong Kong, the silence Is deafening… Some protesters in Hong Kong today are adopting the British Union Jack flag, the American flag and the ‘Star-Spangled Banner’ as symbols, yet that doesn’t seem to have stirred our collective imaginations… Americans are preoccupied with fighting each other over political correctness, gun violence, Trump and the Democratic candidates for president. To be sure, those issues deserve plenty of attention. But they are soaking up far too much emotional energy, distracting attention from the all-important struggles for liberty around the world…

“It’s 2019, and the land of the American Revolution, a country whose presidents gave stirring speeches about liberty and freedom in Berlin during the Cold War, remains in a complacent slumber. It really is time to Make America Great Again — if only we could remember what that means.”
Tyler Cowen, Bloomberg

On the bright side...

Get troll-free political news.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.