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Trump heads east

  • Published at 06:33 pm November 6th, 2017
  • Last updated at 06:44 pm November 6th, 2017
Trump heads east
President Trump heads towards Asia. It is not very clear what he expects to accomplish other than be there. He goes well-protected with three carrier groups deployed around Korea and Japan. The Japanese navy has also been deployed along with US Seventh Fleet’s submarines. What does President Trump expect to accomplish? These trips are enormously expensive, particularly when a naval armada is assembled to travel with him. President Trump is very fond of people fawning over him, stroking his ego. Nothing is better than a lot of chiefs of state or heads of government boosting his confidence. Trump departs from Washington with his presidency under threat from the investigations of Russian ties to his political campaign. Actually these ties have been established; but it is uncertain if Trump knew what was going on and if he encouraged or condoned it. For sure he must be taking a lot of sleeping pills. Up in the air  President Trump’s top priority is his shouting match with President Kim Jong-un. North Koreans are terrified that South Korea and the US will attack and conquer them. Although they have a mutual defense treaty with China, they cannot really be sure what the Chinese government would do in the event of war. What really protects North Korea is its possession of nuclear weapons. North Korea may not be able to deliver nuclear weapons to the mainland of the US but for sure Tokyo, Seoul, and Beijing are in their range. The US seems worried about the possibility of North Korea attacking the homeland of the US. It seems obvious what is going to happen: In response to North Korea having nuclear weapons, South Korea and then Japan will become nuclear weapon states joining the nine nations that are so armed today. Both countries have the engineering skills, knowledge of physics, and fissile material to fabricate and test nuclear weapons within 18 months. For South Korea and Japan, the Trump presidency signals that reliance on the US for protection is increasingly uncertain. Everyone smiles politely but President Trump insinuates distrust and Japan and South Korea will draw their own conclusions.
The Cold War with the Soviet Union was, in a way, easy -- the Soviet Union built a wall around itself and did not want anyone in. But China is a different story
We can expect continuing strong statements by President Trump threatening dire consequences to North Korea; the North Korean government will respond with equally shrill language. But the Trump expedition to Asia is not going to make any significant change in the current dynamics. Trump will meet with the Chinese president, again. Discussion of North Korea will wrap up with good words but no real progress. The Chinese are content with the current situation. It is only when Japan decides to have nuclear weapons that the Chinese will get a wake-up call regarding North Korea. A nuclear armed Japan is something that the Chinese do not want. The times they are a-changin’ The most important question of all is the evolving relations between China and the US. For the past 70 years, the US has been dominant in economic and military power. Even at the peak of the Cold War, the Soviet Union was never anywhere close to being an equal. The per capita income in the Soviet Union was never greater than 45% of the US, and that is probably an overestimate. But now things are changing. China is emerging as a potential equal to the American hegemony. The Chinese economy measured in per capita terms is only about 25% of the US but the two economies are growing at much different rates, assuming the “Mao dynasty” does not become another era of “warring states” -- reasonable projections of future performance suggest that equality in per capita terms will take about 50 years. For the Chinese this is but a moment. The two economies are now about equal in size, but of course, in 50 years the Chinese economy will be four or five times larger and able to support a military that will dwarf that of the US. At present the US military is vastly superior to the Chinese. Both have the capacity to destroy the other but that is of little significance. A non-nuclear war between the two countries will mean the Chinese economy collapsing from the closure of their international trade with the rest of the world. On the other hand, Americans have understood the folly of trying to fight in Asia with soldiers on the ground. Trump will not grapple with the key problem facing the US: What is the objective of the US with respect to China? Some believe that China will become more open and democratic as it becomes more wealthy. Others believe one has to fight China on the fronts of scientific research, propaganda and culture, finance, trade, human rights, freedom; a kind of second Cold War. The Cold War with the Soviet Union was, in a way, easy -- the Soviet Union built a wall around itself and did not want anyone in. But China is a different story, in the sense it wants to exchange knowledge, experience, and culture with the rest of the world. A new Cold War would mean the West would try to limit interactions with China. Not an easy thing to accomplish. There is certainly some notion in the US that war with China -- not nuclear, but economic -- is necessary to prevent China from simply becoming so large that it overwhelms every other country. President Trump and his team do not have the intelligence or political leadership to undertake such a war. Trade and business The next issue is international trade. China indeed runs a tremendous trade surplus with the US, more than $300 billion per year (compared to about $5bn for Bangladesh). The total trade deficit (including services) of a nation is determined by the difference between its investment and saving. If you want to reduce the total deficit, it is necessary to either increase saving or reduce investment. These actions have little to do with trade policy with China or Mexico. If you do not change saving or investment, then the worldwide deficit does not change. Hence, if Trump reduces the deficit with China, the deficit with other countries must increase. Trump will seek and may obtain some token mutual concessions on trade and investment with China that will reduce the trade deficit. But that will be to the benefit of other countries. The final act in President Trump’s trip will be in Southeast Asia where he will try to build friendly ties with Vietnam, the Philippines, and Indonesia. Ironically, Southeast Asia, once the centre of the American international engagement during 1955-1975, is now increasingly irrelevant. These three countries desperately want the US to side with them against the growing influence and dominance of China. Trump will disappoint them. End results  President Trump will come home with a small shift in view supporting the “live with China” strategy, rejecting the “new cold war” approach. He will negotiate some trade and investment deals with China, say something nice about the South China Sea, and make no significant progress with North Korea dispute. But one can read his mind: “If I was not president, I would have all of these beautiful exotic Asian women to warm my bed. What a mistake to get involved in this thankless job.” Forrest Cookson is an American economist.
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