Monthly Archives: March 2018

Notes on Trade War and the Price of Ginger

I Summary
This trade war is necessary and its purpose is to reconfigure the global supply chain so that the US is no longer dependent on other nations to produce important technology such as satellites, solar panels, drones, and so forth.  China is doing the same (Made in China 2025 initiative). And it’s going to happen because automation will make outsourcing of manufacturing work unnecessary. What’s happening is as much a Tech Race as a Trade War, to see who can start the Fourth Industrial Revolution first. Whoever gets there first will likely become the dominant, if not sole, superpower.

II Background
Sometime in the 1980s, US government gave US steel industry tax breaks to update their operations so that they’d remain competitive with steel industries in emerging economies in East Asia.  US steel fucked it up by investing that money in oil instead of new technology and workflow processes because they wanted to maximize short-term profits instead of protect long-term American national interests. By 2000, China, South Korea, and Japan had state backed state-of-the-art steel producing facilities, while US steel, like its travel infrastructure today, was stuck in the 1940s and no longer competitive against steel companies in Germany and the Asian Tigers.

III   Jobs
This trade war has little to do with bringing jobs back. It’s about building a more secure global supply chain for the US, especially one that doesn’t depend on China for materials and resources that they can withhold from the US. Assuming manufacturing returns to the US, most the jobs will be had by robots because they’re cheaper and better than human labor.

IV War or Friendly Race?
This race is a war, tripping your opponent is fair. The US was conceived as an anti-colonial imperialist nation set to remake the world into its own image, that “city upon a hill.”  Sure, it set itself apart from its colonial master Great Britain by claiming and trying (with some success) to be anti-colonial but its national purpose was and continues to be imperialistic — to spread Western democracy throughout the world because that’s what they believe is best for the everyone. A cultural expression of this attitude is found in a popular American life rule:

Treat others as you want to be treated

This life rule is popular in the US because most Americans are too narcissistic to realize that other people may be different from them and may not want to be treated as most Americans want to be treated.  Many such Americans fly into narcissistic rage when they learn that people reject their “benevolence,” (eg. Western democracy). This rage is dangerous and is hidden behind fake smiles and polite words.

China is comparably dangerous, but for different reasons. China has no interest in spreading its political, cultural, and social values and institutions, it only wants to do business with everyone. However, it calls itself the “Middle Kingdom,” where all other nation-states (“barbarians”) are vassals to China.  And for most of the past 3000 years, China really has been the “Middle-Kingdom.”  China’s share of the world GDP in 1000 AD was 50 percent.  In 1700, as Western Europe was rising fast economically, China still accounted for 35 percent of the world GDP. China (and economist Ander Gunder Frank in his 1998 book ReOrient) believes that Western ascendance and China’s decline is an aberration in history and that China will soon return to its rightful place in the world.

Put simply, the US wants China to become like the US.  China wants the US to recognize China as a world leader. US won’t do so until China becomes like the US. China refuses to do so, and the US refuses to risk becoming a vassal state to China. War is inevitable and already happening.

V Globalism versus Nationalism as Another Way to Frame This War

Democracy in China means government FOR Chinese people, NOT by the people.  Democracy in the US, in contrast, means government BY the people.  Which means globalism is more likely to take root in the US than in China because it’s easier for corporations to buy their way into US government — “corporatism” American nationalists call it — than into Chinese government, which acts to check the power of native and foreign corporations. That explains why US policy is often geared more toward expanding the global influence of corporations than improving the lives of ordinary American citizens. Globalism’s neglect of these citizens led to Trump’s 2016 victory, which was a revolt against globalism.

Here’s a way to think about globalism and nationalism in action: professional sports teams in economically nationalist nations such as China, South Korea, and Japan limit the number of foreigners on a team.  No such limits in American professional sports, American athletes compete against the world for a roster spot.

Similarly, Chinese, South Korean, and Japanese corporations are expected by their respective governments to protect their workers from foreign competition, and in return, these corporations expect their respective governments to protect them from foreign competition. American workers, on the other hand, can lose their jobs anytime to someone in another country who can do that job more efficiently and at a lower cost because American and foreign corporations aren’t obligated by the US government to protect American jobs and their primary goal is to maximize profits for the benefit of shareholders.

It’s not that China is against globalization, China has developed global Chinese brands such as Huawei and has extended its economic influence throughout the world, especially in Africa. But Chinese government exercises control over private Chinese corporations that’s not possible in the US, even as Trump administration tries to do so.

VI What China Thinks of US

Before Xi Jinping became president of China, he said this at a meeting in Mexico:

There are some well fed foreigners who have nothing better to do than point fingers at our affairs. China does not, first, export revolution; second, export poverty and hunger; third, cause troubles for you. What more does there need to be said?

More recently, a new Chinese word for White Liberals — “baizuo” — elucidates what political minded Chinese think of Sino-US relations.  From Urban Dictionary:

Baizuo (pronounced “bye-tswaw) is a Chinese epithet meaning naive western educated person who advocates for peace and equality only to satisfy their own feeling of moral superiority. A baizuo only cares about topics such as immigration, minorities, LGBT and the environment while being obsessed with political correctness to the extent that they import backwards Islamic values for the sake of multiculturalism.

The Chinese see the baizuo as ignorant and arrogant westerners who pity the rest of the world and think they are saviours.

Justin Trudeau’s worldview is a low-resolution caricature of an adult’s worldview.

“Oh yeah. He’s a total BAIZUO.”

Another definition from   Urban Dictionary:

Baizuo(白左,White Leftists)is a popular Mainland Chinese term coined for a specific subset of Westerners who are despised by most Chinese for their pretentiousness, hypocritical behavior and an overbearing sense of entitlement.

Baizuos are mostly characterized by their heavy use of political correctness and double standards to covertly advance their own material or emotional interests at the expense of others, while claiming otherwise from a self-assumed superior moral position. Some are truly non-malicious, but are too naive or lack the worldview to provide useful opinions or solutions to real societal problems.

Since most of these group is white (白)and left-(liberal) leaning(左), and thus the name.

Chinese guy: “Oh look, those Baizuos over at America are blaming us for not accepting their trash after our recent foreign garbage import ban. Don’t these fuckers ever understand they are responsible for cleaning their own shit instead of blame pushing all day long?

VII How US Views China

The same way European powers viewed the US during the latter half of the 19th century, as a huge nation that’ll be difficult to contain once it reaches maturation. When the American Civil War happened, European powers hoped that the Rebels would win because a divided US would less likely become the dominant super power it is today and forcing European states that have little culturally in common with each other to unify in order to compete. The US similarly would like to see China broken into smaller states, like what happened to the Soviet Union.

Every American political analyst I’ve listened to talk about the rise of China refers to Thucydides’s Trap. In the seminal historical work, The History of the Peloponnesian Wars, Thucycides writes:

It was the rise of Athens and the fear that this instilled in Sparta that made war inevitable.
And the US has a lot to be afraid of because China’s rise is motivated not only by their “100 years of humiliation” by Western powers, but also by more recent American acts of aggression and interference, including the following:
  • Spreading false rumors that People’s Liberation Army, at the behest of Chinese government, massacred thousands of students at Tiananmen Square in 1989
  • Bombing Chinese embassy in Belgrade, 1999, which resulted in deaths of three Chinese journalists and injuries to 27 others. (Embassy was protecting a wanted Serb leader)
  • Routinely sending reconnaissance aircraft to monitor China’s coastline, which resulted in an air accident that killed a Chinese pilot, 2001
  • Encouraging Uighur Muslim leaders to riot in Urumqi which resulted in 2009 the deadliest riot in China since the Beijing riots of 1989
  • Arrest of Huawei executive in Canada, 2019
Will China’s rise turn into revenge, as Germany’s did under Hitler?
To economic nationalists like Steve Bannon, who compares present China to 1930s Germany, China has clandestinely been at war with the US for the past 25 years.  Assuming Bannon is correct, what do we make of Chinese censors recently banning a nationalistic film that portrays Westerners as the really really bad guys, Wolf Warrior III. Reasons for the ban include:
The document is reportedly released by the country’s media regulator and includes the following rules:avoid discussing national affairs, such as China’s political system and the current state and future of the country; don’t brag about China’s armed forces and don’t portray western countries as opposing forces.
All of which Wolf Warrior II, the highest grossing film in China, ever, broke. In Wolf Warrior II, the bad guys are the Westerners, the victims are African, and the saviors are Chinese.  It’s the most jingoistic Chinese film I’ve ever seen — a call for Chinese imperialism really — and Americans and Chinese government have good reason to be concerned about its popularity with Chinese audience. Does the banning of Wolf Warrior III suggest that the Chinese government is willing to wage economic war but not military war, or are they simply hiding their cards — “nothing to see here US and NATO, nothing to see”” If Andrew Breitbart is right about politics floating downstream from culture (I think he is), then is China close to becoming a US style imperialist power, just as likely to drop bombs as debt-traps on foreign nations?
Bannon may be spot on about China because Xi Jinping is now, to my surprise, dictator for life with a growing cult of personality not seen since Mao. And James Fallow, once the most prominent pro-Beijing American journalist, has since 2016 been warning readers that China is no longer liberalizing, that it’s becoming a dangerous totalitarian state.

VIII How economic nationalism works in China
US companies doing business in China hire Chinese workers.  These workers work for five years, learning as much as they can about the technology and workflow processes.  They then, often with government funds, start their own companies to compete against US company they worked for.  Once the Chinese company produces a comparable or better product, the Chinese government begins to harass the US company until they leave.  The remaining Chinese versions then compete against each other until a few remain and are then launched globally.  This is also how economic nationalism works in South Korea and Japan and this is how Steve Bannon wants the US to run its economy.
IX Netflix’s Silicon Valley
Jin Yang and Erich Balchman hate each other but have to work together. How they treat each other is a comedic replica of Sino-US relations.


From Tech Evangelist episode
Richard: Look, taking existing companies and just calling them “new” isn’t sophisticated. That’s theft.
Jian-Yang: You make a new Internet.
Reorientation episode
Dinesh: Is that a dead pig?
Jian-Yang: Yes. It’s just like Errich. My corrupt uncle sent a death certificate from China but to send body is too expensive. So… I cremate a pig because a pig is most like a fat human.
Reorientation episode
Jian-Yang: Errich is gone. This is my incubator now.
Dinesh: What?
Jian-Yang: Your things are over there.
Richard: What the fuck?
Dinesh: You just took our shit and threw it on the lawn?
Jian-Yang: Gilfoyle, you are racist. And Richard… you are ugly. The Errich administration is over.
The Patent Troll episode
Fridge: Uh-oh! That yogurt is expired.
Jian-Yang: See? This could’ve killed me. Now I can give it to Erlich.
Teambuilding Exercise episode
(Jian-Yang pulls up in a yellow corvette)
Erlich: Jian-Yang, what in the good fuck is that?
Jian-Yang: It’s called business expense. You buy a hut. I… buy a car. You say, “Keep doing SeeFood until money is gone.” Now, the money is gone. Dick… is up.
Erlich: Where’d you get those sunglasses? Did they come with the car?
Jian-Yang: These are from your mom.
Fiduciary Duties episode
Jian-Yang: I eat the fish.
Erlich: I understand you eat the fish. But when you clean the fish you can’t leave the fish head and guts and shit in the sink. Because the whole house smells like a bait station. So you gotta put it in the trash and then take the trash out. Do you understand?
Jian-Yang: Yes. I eat the fish.
Erlich: Motherfuck!

X The Price of Ginger
Ginger isn’t on the tariff list. Yay!