The Trump administration continued its mischief-making as the president slinks out the back door by blacklisting China's Xiaomi, a global competitor to Apple, known for its sleek mobile phones and smart home devices, CGTN writes in the article Trump loses trade war, wants Biden to pay for it. Xiaomi surpassed Apple in global mobile phone sales in the third quarter, making it a tempting target for trade vandalism. The blacklisting of Xiaomi and eight other companies, ostensibly due to their ties with China's military, is another effort to force the incoming Biden administration into decoupling the Chinese and American economies.
The Xiaomi blacklisting aims to provoke Chinese retaliation against tech giants like Apple and Telsa that are heavily reliant on China for both its manufacturing capacity and its huge market. This would force the Biden administration into a vicious cycle, destroying trade ties.
Trump's goal all along has been to decouple the two economies — leaving the U.S. unfettered to use military force or other harsh measures in its stated mission to stop China's rise. Decoupling would come at a tremendous cost.
The U.S.-China Business Council this month released a report concluding, "The trade war with China hurt the US economy and failed to achieve major policy goals outlined by the Trump administration." The council estimated that 245,000 jobs have already been lost, and if decoupling continues, there would be 732,000 fewer jobs in 2022.
The council also predicts that if decoupling continues, by the end of 2025, "U.S. households will have lost an estimated 6,400 U.S. dollars in real income. Decoupling clearly costs Americans jobs and money. But would this sacrifice help stop China's rise?
From the start, Trump has conducted his trade war like a chess player who only looks one move ahead.
China is not a sickly weakling that can be bullied by U.S. tariffs and policy moves, but a fully capable adversary that can counter any punch.
The stated purpose of blacklisting Chinese tech companies is to prevent U.S. technology from being transferred to the Chinese military.
But China has counterpunched. A Bloomberg report this week noted, "The impact of U.S. actions has been to accelerate Beijing's drive for technological self-sufficiency." U.S. technology bans may slow China's development in the short term, but will accelerate it overall.
Decoupling also aims to hurt China's economy. Trade with the U.S. only accounts for a small fraction of China's economy. Less than a fifth of China's GDP comes from exports, and less than a fifth of its exports go to the U.S.
Even so, in response to trade tensions, China has introduced a new policy that focuses on economic development on domestic consumption, which will make it even less vulnerable to trade shocks.
China neutralizes every U.S. move blow for blow. Decoupling will make U.S. firms less competitive globally. It will raise prices for U.S. consumers. It will cost Americans jobs. And despite these great costs, it will not stop China from modernizing.
Trump famously tweeted that trade wars are "good and easy to win," but according to the Bloomberg report, the president was wrong on both counts and the policy has been a failure. Trump wrote the book The Art of the Deal and claims he is a great negotiator. But he would have been better off reading The Art of War, which notes, "There is no instance of a nation benefiting from prolonged warfare."
Hopefully, incoming President Joe Biden will have learned from Trump's bad moves and try a new strategy — one that lets both sides come out as winners.
