China Trumped

By Adam Hurwitz

Wikimedia Commons/Michael Valdon
Creative Commons License

Presumptive Republican presidential nominee Donald Trump has had a lot to say about America’s relationship with China during this election season. He has repeatedly stressed the importance of leadership and strength at the negotiating table, but what are his actual policy goals and what effect will they have on America’s relationship with China?

Trump plans to brand China as a currency manipulator, something the Treasury Department under President Obama has refused to do. According to Trump’s website, economists estimate that the Chinese Yuan is undervalued by 15% to 40%, giving China an unfair advantage in international trade. Trump has vowed to declare China a currency manipulator on his very first day of office, forcing China to the negotiating table. Trump’s formal plan also points to Chinese theft of American intellectual property through the use of contractual covenants that require the divulging of commercial secrets in order to enter the Chinese market. Trump has promised a zero tolerance policy on these thefts and forced technology transfers. Finally, Trump points to illegal Chinese export subsidies that distort international trade by giving Chinese exports an unfair advantage. Trump plans to effect these changes by lowering the corporate tax rate to 15% in the hopes that would cut costs for corporations in the United States and bring jobs back from China. In addition, he would reduce spending and lower the debt so that China has less leverage in potential negotiations, strengthen the U.S. military in the East and South China Seas to show China the strength of America in “the global leadership business,” and impose a 45% tariff on Chinese imports.

These radical policy proposals would have huge effects on the relationship between America and China as well as on the international trade market. Some economists are not convinced by the efficacy of such hard-nosed proposals. The China Business Review finds particular fault with the 45% import tariff because it would likely cause financial market turmoil due to retaliation from China hindering the export of critical items to the United States,, as well as an adverse effect on other East Asian markets that rely on China’s exports to the United States. Additionally, the China Business Review claims that Trump’s assertions that China has been stealing American jobs for decades is unfounded. According to the Review, China has not been stealing jobs from America, but from other East Asian countries. In 1990, 47% of the value of US manufactured imports came from East Asia. In 2013, this figure had fallen to 46%. Over this same period, the share of total US manufactured imports from China increased from 3.6% to 26%. Due to these figures, economists think the Trump proposals would do nothing to increase jobs in America and would only create further animosity between China and the United States.

Trump’s tough rhetoric against China has led to some backlash from the Chinese people, who have likened him to a Chinese folklore figure known for sowing chaos. The Global Times, a Chinese newspaper, proclaimed Trump an “American disease.” Surprisingly, Trump is not painted n the same light throughout all of China.  Although the government has denounced Trump’s economic plans, many Chinese observers are rooting for a Trump presidency over a Clinton one. They see Trump’s business background as positive for China because he will be more focused on the economic aspects of China instead of human rights and political freedom issues that a Clinton presidency would draw more attention to.

Regardless of the outcome of the presidential election, Trump’s stance on Chinese trade has brought the issue to light for many Americans and should have a profound effect on the Chinese-American relationship going forward.