Companies such as Google, Nintendo, and GoPro are moving “parts of their supply chains out of China” in response to “trade friction” between the U.S. and China as a result of President Donald Trump’s application of tariffs to Chinese exports, explained Gordon Chang, Daily Beast columnist, expert on China, and author of The Coming Collapse of China.
Chang examined the latest developments in U.S.-China trade relations in a Friday interview on SiriusXM’s Breitbart News Tonight with host Rebecca Mansour and special guest host Rick Manning.
Trump’s use of tariffs on Chinese exports is a measure to curb China’s theft of intellectual property owned by U.S. companies, explained Chang.
“The reason why President Trump has imposed these tariffs — and it’s under section 301 of the Trade Act of 1974 — is because this is a remedy for the theft of U.S. intellectual property,” Chang said. “Depending on how you look at it, it’s somewhere between $150 and $600 billion a year of theft. That’s criminality, and previous presidents have allowed that to continue.”
Chang continued, “As Trump says, he’s not … you’ve had two presidents — one named Bush and the other Obama — who just looked past this issue, and whenever they did anything about it — which was pretty rare — they did things which were designed to be ineffective. Well, Trump said, ‘No. I’m going to do things which are ineffective.'”
Trump breaks ranks with his presidential predecessors in his assessment of China, observed Chang.
“Previous administrations, and we’ve had four decades of [thinking that] it was important to integrate China into the international system, and so they’ve been pretty indulgent,” stated Chang. “They overlooked a lot of the really bad Chinese behavior, and because of that, what the Chinese learned is not to respond to American generosity in kind. What they did was say, ‘Oh, okay, we can take advantage of these suckers,’ and that’s exactly what happened here. So, President Trump said, ‘Look, we are going to protect the American economy, American workers, American businesses,’ and that’s a really good thing.”
“They’re really worried,” said Chang of China’s political leadership, “and they should be, because President Trump today showed that he has as much political will — or maybe even more political will — than the Chinese do.”
Trump must be more “resolute” in challenging China’s conduct in Hong Kong, said Chang, reiterating appeals he made last week for the president to model his approach to China on Ronald Reagan’s approach to the Soviet Union.
Trump’s policies are facilitating a “decoupling” between the U.S. and China, assessed Chang.
“Certainly the decoupling is happening, and it’s happening for two reasons,” Chang remarked. “First of all … Xi Xinping has this notion of a state-dominated economy, so even apart from the Trump tariffs and before Trump was even elected, you had companies trying to diversify their supply chain out of China because they saw the problems there, but it was only a small trickle.”
Chang went on, “What’s also happened is, because of President Trump’s tariffs, companies have been looking at the uncertainty of what’s occurring, and companies can’t price in that uncertainty, so they’ve decided to diversify, and we’re [talking about] some pretty big companies.”
Chang continued, “Companies have already moved. You’ve seen Google, Nintendo, RH which used to be Restoration Hardware, GoPro, they have moved parts of their supply chain out of China, and they’re doing it because they can’t price in the uncertainty that tariffs cause. So you have both push and pull: Xi Xinping is pushing foreign companies out, President Trump is pulling them out.”
“A diversified supply chain weakens China,” noted Manning, forecasting the economic consequences of manufacturing operations leaving the one-party state.
Chang replied, “If they are shut out of the U.S., they are in a world of hurt,” describing China’s economic dependence on the U.S. as greater than American economic dependence on China.
“Countries have seen President Trump’s lead, and therefore they are standing up to China, where they didn’t do that in the past,” Chang said. “So this is a really important sign of leadership on the part of Washington, that what we’re doing is now being replicated around the world, as people say, ‘Beijing has gone too far. They’re out of control. They’re lawless. We can’t stand this anymore.’ That’s a really important development around the world.”
Chang concluded, “President Obama — like President Bush before him — went missing on trade, and they just allowed the Chinese, pretty much, to do whatever they want. … He just ignored all sorts of bad behavior … It’s more important, I think, ultimately, to stop what China’s been doing to our economy, stealing the innovation. We have an innovation-based economy. If we can’t commercialize our innovation, we don’t have an economy of the 21st century.”
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