An Urban's Rural View

You Can't Ask Us to Buy Your Stuff While Beating Up on Us

Urban C Lehner
By  Urban C Lehner , Editor Emeritus
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There's a curious ambivalence in the U.S.-China relationship these days. It seems to combine two incompatible elements.

Watching the U.S. and China's geopolitical thrusts and counterthrusts, you'd have to assume the two countries were serious rivals, if not enemies. China cracks down harshly on Hong Kong; Congress reacts with sanctions on Chinese officials. China holds war games to intimidate Taiwan; the U.S. sends aircraft carriers to intimidate China.

Watching the economic interplay between the U.S. and China, you'd have to assume the two countries were big-time trading partners. Trade with China in 2019 was nearly 14% of the U.S. total, making China our third-largest trading partner, even though Washington and Beijing were fighting a trade war. The U.S. imported more from China than any other country last year and exported more to China than to any country other than Canada and Mexico. (https://www.census.gov/…) Despite the trade war, China remains the biggest foreign buyer of American soybeans.

Can the U.S. and China be both serious rivals and big-time trade partners? The Chinese raised this question in a recent diplomatic exchange. Without formally threatening anything, they suggested the phase-one trade deal might be at risk if the U.S. continued to bash China, especially on issues China regards as none of our business -- "red lines" like Hong Kong, that China doesn't want us to cross.

According to the Wall Street Journal, a Chinese analyst with affiliations to the government explained it this way: "You can't keep asking us to buy your stuff and at the same time keep beating up on us. That's not how it works." (https://www.wsj.com/…)

In the phase one agreement signed earlier this year, China promised big increases in purchases of U.S. ag products. The promise was so big few analysts believed it even then. And that was before the coronavirus overturned normal business everywhere.

It's no surprise, then, that China's purchases of U.S. soybeans to date are way below the pace needed to meet its promise. And while it's practically certain they will fall short for the year as a whole, there is, as DTN's Katie Dehlinger has reported, reason to hope they will pick up in the fourth quarter. (https://www.dtnpf.com/…) DTN Senior Analyst Todd Hultman has confessed to "bullish suspicions" about China's soybean-buying later this year. (https://www.dtnpf.com/…)

So we ask again: Can the U.S. and China be both serious geopolitical rivals and large-scale trading partners? For soybean growers, that's hardly an academic question. That the Chinese are hinting they might jettison the phase-one deal is concerning.

Of course, the Chinese hints could be a form of bluffing -- negotiating talk, aimed at getting Washington to back off without having to go to the mat. Naturally, the Chinese would like to have their geopolitical cake and their soybeans, too.

We must hope the answer remains "both" because the geopolitical tensions in the relationship show no signs of easing. Indeed, what China just did in Hong Kong has raised fears that the U.S.-China geopolitical relationship could become more hostile. As extreme as it sounds, many American experts on China worry an attack on Taiwan could be next.

That was my first reaction to China's crackdown on Hong Kong. I am not a China expert, but I did spend nine years as a newspaper editor and publisher in Hong Kong. Even during the three years I was there following the 1997 handover from Britain to China, I never worried about whether what we printed would offend China. Under "one country, two systems," the press continued to be free.

To me, China's decision to heavy-handedly clamp down on free speech in Hong Kong suggests the Chinese Communist Party has given up on acquiring Taiwan through peaceful persuasion. Up until now, China's best hope of successfully wooing Taiwan was to point to how it had respected Hong Kong's special status under "one country, two systems." With that status gone, China's only way of winning back Taiwan, which it dearly wants to do, is by force.

Commentaries from China hands have supported my view. John Pomfret, who has spent most of his journalistic career covering China, wrote, "In fact, with the passage of the national security law on Hong Kong, China has arguably moved a step closer to preparing for war with the island democracy that sits 90 miles off its coast." (https://www.washingtonpost.com/…)

Pomfret quoted a Chinese hardliner, Li Su, as saying the new Hong Kong security law will serve as a "test case" for how China will deal with Taiwan when it takes it over. Yes, takes it over. Said Li: "We are going to fight a war to reunite with Taiwan."

Would the U.S., Taiwan's principal protector, go to war to stop a Chinese takeover? China's leaders may well calculate that we would not. Worse, they may calculate that even if we did, they'd win.

China's military, while far smaller and less potent than ours, has been cleverly built with one aim in mind: to fend off the U.S. in China's home waters. When our military planners run war games against China, the U.S. almost invariably loses.

(https://www.washingtonpost.com/…)

For now, at least, the U.S.-China relationship remains ambivalent. Were China to attack Taiwan, it would undermine if not undo the economic relationship. That would certainly be the case if the U.S. intervened militarily; it might even happen if the U.S. stood by and allowed China to swallow Taiwan.

An attack on Taiwan would end the ambivalence, to the detriment of the economies of China, the U.S. and the world.

I hope my pessimism proves unwarranted. I don't know how many China experts share it. I know some do.

One question worrying the pessimists is timing. Pomfret noted that next July is the 100th anniversary of the Chinese Communist Party. He speculated Xi Xinping wants to "solve" the Taiwan question by then. Pomfret's source Li Su told him, "Sometime around 2021 we are definitely going to liberate Taiwan."

A China hand I met in Taiwan in the late 1980s, who has been both a U.S. diplomat and a CIA spy, said: "While no one, including me, believes a Chinese invasion of Taiwan is imminent, John Pomfret has given me reason to reevaluate this conclusion."

Urban Lehner can be reached at urbanize@gmail.com

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