America settles into what started as a tariff duel, then became a China boycott and now looks like a Cold War
 Despite the predictable dismissal from America's Trump-loathing media, the White House idea of buying Greenland was not as laughable or unprecedented as it was made to appear.
First, such a move is far from unprecedented and would be a great boon to trade and national security. Second, US presidents have paid for territory before. In 1803, Thomas Jefferson bought huge tracts of land from France for US$15 million in the Louisiana Purchase. In 1867, Andrew Johnson paid $7.2 million for Alaska from Russia. And the Danish West Indies became the US Virgin Islands in 1917 when Woodrow Wilson bought them for $25 million. So why not Greenland?
From a strategic point of view, hopes have faded that the US-China trade war will soon be over, especially given the stated ambitions of both sides, and the likelihood China's ambitious President Xi Jingping will change his ways have evaporated.
Last year, President Xi eliminated presidential term limits, and could well be in power for 20 years. The US wants reciprocity in trade, but China has no intention of accepting that. What's more China appears to want American influence expunged from the Pacific west of Guam, and have as much control over the South China Seas as the US has over the Caribbean.
Then there is the future role of the once-dormant post-Soviet Russia to consider, which has now roused itself from diplomatic hibernation and appears to want to re-acquire dominions lost in the 1991 dissolution of the USSR.
What was an increasingly friendly and open relationship between China and the West has now cooled with Europe, despite new and promising rail links carrying trade goods from many Chinese cities to Germany and as far as Spain. Relations with Canada, because of the arrest of a Huawei Technologies executive in Vancouver, are now ice-cold. As they are in both cases with the US, a situation likely to become a permanent state of affairs for the foreseeable future.
What was only a trade dispute with the US, has blossomed into something more. The destruction Hong Kong and the loss of its independent deal-making role was expected to come to an end with 2047 the expiration date of the Joint Declaration of "One Country, Two Systems" of 1984. Without the rule of law Hong Kong has no more to offer than the adjacent city of Shenzhen. Which in turn will have no more to offer than another Chinese city other than its location for shipping, which will likely become less relevant as fewer exports will flow down the Pearl River to the world.
The United States, that voracious nation of consumers, will no longer sustain China's once galloping double digit GDP growth. While half of America reviles President Donald Trump, even his fiercest critics do not disagree with him on China policy. Many domestic industries have been hurt by the trade war and freely blame Trump and want the pain to stop, But few, if any, think it wise to continue with China as before. Even critics believe the case against the China trade. saying that while it has brought Americans cheap goods it has hollowed out entire sectors and move production to China.
Low-end work has been moving out of China for some time to sources of more affordable labour in Asia. Much of it will not go back to the US as President Trump has urged. Though with the flood of low skilled workers flooding across the Mexican border, there are opportunities in "right-to-work" states with laws that ban labour unions from demanding agreements that require all members who benefit from union contracts be members of the union itself, or prevent non-union members from being employed. Texas and Arizona and all southern states have "right-to-work" laws in force.
Reshoring Chinese factories would also bring work to south of the border to Mexico itself. While paying newly arrived immigrants more making low-end products would be compensated with the elimination of transpacific shipping costs and higher trans-Mexican border shipping costs would be offset by even more affordable labour in Mexico itself.
More obviously, trade tensions with China had been pushing American companies to source from more from GSP (Generalised System of Preferences) countries such as India, Thailand, Cambodia, Indonesia and the Philippines, where US tariffs won't bite and labour is more affordable that in North America. This trend has been accelerated by US President Donald Trump's ordering American companies to quit China, which is painful because their depressed assets are hard if not impossible to sell and they cannot exit without incurring substantial loss. On the bright side, most of their competitors face similar supply chain disruption.
This disruption is accompanied by a renewed 1950s' hatred of communism not experienced since the Korean War. Communism is now viewed with growing dread - expressed in the streets of Hong Kong by millions. This was a political movement that was gaining the yards on the global football field until the collapse of the Soviet Union in the 1990s. Today, China (pop 1.4 billion - per capita GDP, US$10,153) finds itself as the last serious Communist bastion, ahead of North Korea (pop 25.4 million - per capita GDP, US$1,800), Cuba (pop 11.2 million - per capita GDP, US$7,602) and Venezeula (pop 31.5 million - per capita GDP, US$2,724).
Under earlier Chinese leaders, notably Deng Xiaoping, who fostered the opening up of China, the Communist government was forgiven its sins because it appeared to be moving towards free-markets and enjoying the fruits of unfettered capitalism, which it called, "Chinese characteristics". Many hoped it would even reach rule of law one day through the good works of commercial arbitration.
One can liken the Chinese Communist Party in the 1990s to the gradual fading away of the Anglican Church in the UK in the 18th century from the 16th century when it was the all-powerful thought police. Today, despite its great real estate holdings, the Church of England is widely disregarded, its ideologues are trotted out on feast days and shown respect by respectable citizens, but otherwise ignored except to officiate at births, deaths and marriages and conduct charities. Yet it is still the state religion with the Queen at its head, but possessed nothing of its enormous power of yesteryear.
But if one imagines the Anglican Church reassuming the moral supervisory power it once had, empowered to police in detail the social behaviour of citizens, punishing heresies and indoctrinating of children, one can imagine the growing omnipotence of the Chinese Communist Party and its operation of a "social credit" system, one can understand why the West would feel compelled to fear such a regime gaining even regional hegemonic power and do what it can to thwart it. |
