China’s Triangulation Of Russia And The West

The Daily Escape:

Joshua tree in bloom, Joshua Tree National Landmark SW, UT – March 2023 photo by Lisa Simer

We’re back at the Mansion of Wrong after a few lovely days in St. Helena, CA. Surprisingly, it seems that lots of things happened while we were away. From Heather Cox Richardson:

“So, for all the chop in the water about the former president facing indictments, the story that really seems uppermost to me today is the visit China’s president Xi Jinping made today to Moscow for a meeting with Russia’s president Vladimir Putin.”

In 2015, shortly after Russia intervened in the Syrian Civil War, Wrongo asked a visiting Russian author who spoke at our local library whether Putin wanted to move Russia closer to the west or to the east. He said unequivocally that Putin was a product of the west and would keep Russia in the west’s orbit.

It’s clear that he was wrong. Russia has moved away from the west, possibly permanently. Earlier in March, Wrongo said the following:

“The US is attempting to isolate both China and Russia. With Russia, we’re using ever-tightening economic sanctions. With China, we’re building a geographic containment strategy among our allies in Asia.”

And on Monday, Chinese President Xi met with Russian President Putin in Moscow. Here’s a meeting summary from the blog Institute for the Study of War:

“… [the meeting]…on March 20…offered a more reserved vision for Russian-Chinese relations than what Putin was likely seeking. Xi and Putin touted the strength of Chinese-Russian relations in their meeting…but offered differing interpretations of the scale of future relations….on March 19 Putin published an article in Chinese state media in which he argued that Russia and China are building a partnership for the formation of a multipolar world order in the face of the collective West’s seeking of domination and the United States pursuing a policy of dual containment against China and Russia.”

….Xi offered a less aggressive overarching goal for Russian-Chinese relations in his article published in Russian state media….in which he noted that Russia and China are generally pursuing a multipolar world order but not specifically against an adversarial West. Xi instead focused…on presenting China as a viable third-party mediator to the war in Ukraine….

David Ignatius concluded in the WaPo that the meeting was about:

“A strong China…bolstering a weak Russia….The Chinese aren’t providing weapons (yet), but Xi certainly offered moral and psychological support in what might be described as a get-well visit to an ailing relative….The paradox of the Ukraine war is that Putin’s bid for greater power in Europe has made him weaker. This diminished Russia will fall increasingly under China’s sway….Maybe that’s the biggest reason for Xi’s…visit: He is bolstering a flank against America and the West.”

China’s dominance over Russia will grow if Russia cannot find a way to end the war in Ukraine. Russia has lost its energy markets in Europe because of the invasion, so it must depend heavily on demand from China. China’s growing economic power in Asia coupled with its capabilities in space, cyber, and artificial intelligence will increasingly dwarf Russia’s.

Russia’s economy is concentrated on exports of energy. It also has a major population problem. The Economist reports: (emphasis by Wrongo)

“Over the past three years the country has lost around 2million more people than it would ordinarily have done, as a result of war, disease and exodus. The life expectancy of Russian males aged 15 fell by almost five years, to the same level as in Haiti. The number of Russians born in April 2022 was no higher than it had been in the months of Hitler’s occupation.”

More:

“…the life expectancy at birth of Russian males plummeted from 68.8 in 2019 to 64.2 in 2021, partly because of Covid…Russian men now die six years earlier than men in Bangladesh and 18 years earlier than men in Japan.”

And the Economist says the exodus of well-educated young people at the start of the Ukraine War also hurts Russia’s future. According to its communications ministry, 10% of IT workers left the country in 2022. Many were young men, further skewing Russia’s unbalanced sex ratio. In 2021 there were 121 females over 18 for every 100 males. More:

“Demographics is rapidly making Russia a smaller, worse-educated and poorer country, from which young people flee and where men die in their 60s.”

As Wrongo said, separating China from Russia used to be a central goal of US foreign policy. The Biden administration tried that strategy in reverse: Warming relations with Moscow at the June 2021 summit in Geneva in part to concentrate on the challenge China presented.

How did that work out?

Now it’s China trying the role of triangulator. Xi’s playing off the split between the US and Russia, helping Putin, but also keeping some distance while building China’s bona fides with the third world.

Xi’s also used China’s close relations with Iran to make a diplomatic breakthrough between the Saudis and the Iranians, something that the US could never achieve.

We seem powerless to blunt what’s happening before our eyes.

And all the while, the Republican Party of the world’s greatest superpower argues about drag queens and wokeness.

Wake up America! Check out what China, Russia, Iran and Saudi Arabia are building for us. You’re not going to like it.

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Saturday Soother, Taiwan Edition – August 6, 2022

The Daily Escape:

El Morro National Monument, NM – monsoon rains have turned the brown landscape green – July 2022 photo by Kirk Shoemaker

We need to talk about Taiwan. China said that they wouldn’t tolerate a visit to Taiwan by House Speaker Nancy Pelosi (D-CA), and that there would be severe consequences if she failed to heed China’s warning. But she ignored China, and went anyway.

China then launched a comprehensive set of war games, showing clearly how they might invade and take over Taiwan militarily at some point in the future. China then announced it sanctioned Pelosi and her family. Now, according to the BBC, China has said all dialogue between US and Chinese defense officials would be cancelled, while co-operation on returning illegal immigrants, climate change, and on investigating international crime would be suspended.

You know the broad outline of the issues: China viewed Pelosi’s visit as a challenge to its claims of sovereignty over Taiwan, even though Taiwan is self-ruled, and sees itself as distinct from the mainland.

As China has become a global leader, their abilities and ambitions have shifted. A 1997 trip to Taiwan by then US House Speaker Newt Gingrich, was met with little opposition, while the Speaker Pelosi visit has been met with missiles. This is a complicated issue. China doesn’t control Taiwan; it doesn’t issue travel visas for it, either. In April, a group of US Senators visited Taiwan. At the time, China’s Foreign Ministry condemned the visit in a series of tweets and press statements, but nothing more.

The US has wanted to keep Taiwan in its orbit at least since the 1950’s when General Douglas MacArthur, then the Supreme Commander of allied powers in Japan, sent a top secret “Memorandum on Formosa” to President Truman (Back then, Formosa was the name of Taiwan). To contain communism, MacArthur insisted that Truman consider the strategically located Formosa (Taiwan) as a counterbalance to the Soviet and Chinese regional expansion:

“Formosa in the hands of the Communists can be compared to an unsinkable aircraft carrier….”

He argued that Taiwan should instead be an unsinkable US aircraft carrier, projecting American power in the Pacific. As China grew in power and importance, the US adopted a policy of strategic ambiguity with respect to the two countries, wanting good relations with both and wanting to finesse the question of political control of Taiwan.

But lately, the US has been slowly walking away from the doctrine of strategic ambiguity, increasingly signaling to China that it considers Taiwan a core US interest in North Asia. That’s why the Chinese reacted so strongly to a high level politician like Pelosi visiting Taiwan.

It’s also true that the South China Sea and the Taiwan Straits are among the world’s busiest seaways, and that’s where China’s military exercises are now taking place:

Source: Bloomberg. The dots are vessels, the polygons are China’s military drill areas

The NYT’s Tom Friedman connected Pelosi’s trip to the Biden administration’s previous efforts to keep China from getting involved in Ukraine on Russia’s side:

“There are moments in international relations when you need to keep your eyes on the prize. Today that prize is crystal clear: We must ensure that Ukraine is able, at a minimum, to blunt — and, at a maximum, reverse — Vladimir Putin’s unprovoked invasion…”

Biden had held a series of tough meetings with Xi, trying to keep Beijing out of the Ukraine conflict. Friedman says that Biden told President Xi that if China entered the war in Ukraine on Russia’s side, Beijing would be risking access to its two most important export markets — the US and the EU. More from Friedman:

“By all indications…China has responded by not providing military aid to Putin — at a time when the US and NATO have been giving Ukraine intelligence support and a significant number of advanced weapons that have done serious damage to the military of Russia, China’s ostensible ally.”

So why mess with Biden’s Ukraine power play, Nancy? That’s Friedman’s question. OTOH, everyone knows that the minute we bend a knee to China is when we lose our ability to defend Taiwan and hold on to the unsinkable aircraft carrier.

China hasn’t proven itself capable of dealing with Taiwan except through threats since Chiang Kai-Shek left the mainland and took over in Taiwan in 1950. If China wants to control Taiwan without a fight, it has to stop threatening to rape her if she doesn’t want to date. Every Chinese threat increases Taiwan’s separate national identity, and decreases the chance of a peaceful Chinese takeover.

Time to leave geopolitics behind, it’s time for our Saturday Soother, where we focus on clearing our minds for the week to come. Here on the fields of Wrong, we have a crew rebuilding a stone wall by the road that was hit by a large truck a few years ago.

Let’s start by finding that one last can of nitro cold brew in the back of the refrigerator and grab a seat by a large window. Now put on your wireless headphones and listen to “Danse Bacchanale” by Camille Saint-Saëns from his opera “Samson et Dalila”, played here by the Orquesta Sinfónica Juvenil de Caracas, Venezuela in 2010:

This is played at a very quick tempo, and with passion!

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Senate Authorizes New Industrial Policy

The Daily Escape:

Oro Valley, AZ – 2021 photo by PoohBear512

On June 8, the Senate passed a major industrial policy bill that would direct government investment toward critical technological sectors. The bill is intended to reinvigorate the manufacturing segment of the US technology sector, providing alternatives to supply chains dependent on Chinese microchips. Some argue that it also lays the foundation for long-term economic and technological competition with China. The bill passed with a filibuster-proof 68 votes.

The debate over industrial policy is politically charged because it goes to the heart of a deeper, long-standing controversy over the role of free markets and the role of the government in the economy.

Proponents of a state-directed and funded industrial policy argue that the government has the duty to structure the economy in the national interest, since the free market may fail to do so. We know that manufacturing provides stable, well-paid employment, but that isn’t factored into an individual firm’s decision-making. We can look at American firm’s offshoring of production even though it has cost jobs domestically while also offshoring manufacturing know-how.

As we discovered with Covid, it is very important to produce critical goods domestically. Industrial policy can help a country determine what critical goods it needs to produce domestically, such as medical supplies, or military equipment, for national security reasons. We learned about the automotive chip shortage, which is part of the greater issue of foreign control of global computer chip production.

There is also an argument that the government should fund R&D because the societal benefits go far beyond what companies will ever invest in.

Industrial policy fell out of favor in the US during the 1980s and 1990s with the development of the Washington Consensus, that defined economic development as the result of free-market policies such as the privatization of state enterprises and promotion of free trade.

But because of our competition with China, there’s a renewed interest among DC politicians across the aisle with again doing what Republicans have castigated Democrats for doing: “Betting on winners and losers”.

The bill authorizes the lion’s share of the money, totaling $190 billion, for a major rethinking of federal science, technology and research spending. It creates a new technology division within the National Science Foundation to focus on emerging areas including artificial intelligence. It also gives $10 billion for the Commerce Department to invest in new technology hubs so that other regions and cities across the country can attract the same sort of economic opportunities as Silicon Valley.

If some version of the bill eventually passes both Houses and is signed into law by Biden, it represents a major shift in how the US government manages its relations with the tech sector.

Both Republican and Democrats now suddenly seem interested in government intervention in domestic markets. It turns out that bipartisanship is on the menu whenever the issue is socialism for corporations. We can easily pass legislation that sends $ billions to corporations, but money for voting rights, people’s domestic lives, and infrastructure? Not now, maybe not ever.

China has invested in R&D while the lion’s share of American firms have squandered their money on share buybacks. Shame on us for supporting tax cuts for corporations! If only we had the foresight to know how stupid those things were. Here’s a chart:

Source: Council on Foreign Relations

Oh wait. Many of us had that foresight.

We did this with Japan back in the late 1970s. Earlier, we outspent the Russians in the space race.

This time we will probably give $ billions to the some of the same companies that decided to move their factories to China in the first place. Oversight will be crucially important.

Nothing we do will prevent China from educating its people, building new infrastructure, and focusing on STEM. But we can keep our edge over the Chinese by focusing on education, basic research, infrastructure upgrades, and STEM.

And the Chinese won’t be an easy target.

While we debate whether intelligent design and Critical Race Theory should be taught in our schools, the Chinese will be colonizing the Moon. While we fight about the 2nd Amendment, the Chinese are moving to dominate the global economy.

Most of the bill funds domestic investments to remain technologically competitive and reduce dependence on our economic adversaries. This seems like sound policy.

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Saturday Soother – Dorian Edition, September 7, 2019

The Daily Escape:

Garden of the Gods, Colorado Springs, CO – 2019 photo by ForkMan. Cheyenne Mountain is in background.

(There will be no Sunday Cartoons this week.)

Trump’s decision to change our posture toward China from free trade to trade war is one of the most significant policy shifts in recent American history. And despite the hand-wringing by corporations and politicians, there’s a grain of value in what Trump is attempting to do.

For sure, it’s unclear if he really knows what he’s doing, but it highlights whether we have a strategy for our trade relations with China. American policy makers must look at and answer a few questions:

  • Why is our industrial supply chain located within our economic adversary?
  • Doesn’t our military readiness therefore depend on that adversary?
  • Why are American companies allowed to transfer critical technologies to China in exchange for short-term market access?
  • Why is Tesla building self-driving cars in Shanghai?
  • Why should Google be running an Artificial Intelligence (AI) lab in Beijing after canceling an AI contract with the Pentagon?

Our corporate overlords’ answer? Because the market wills it.

But markets choose one global power over another only for narrow financial reasons. The market will happily move its business to a surveillance state if it means bigger CEO bonuses and higher profits. In this competition, Corporate America’s ideological commitment to free trade is as big a handicap to us as the Soviet Union’s commitment to central planning was during the Cold War.

Republicans and their corporate partners reject the idea of America having an industrial-policy to support key strategic economic sectors. China has an industrial policy. It’s focused largely on AI, integrated circuits, telecom, and steel. We no longer have high end manufacturing, and we’re losing other strategic industries.

This means that Beijing is likely to pick our “winners” for us. Corporations use the old Ricardian comparative advantage to organize their supply chains. This means that we will watch helplessly as American innovations are transformed into economic engines in China, while our corporations will reap efficiency gains by locating their engineering and management operations next to their Chinese manufacturing.

Inevitably, the innovation in which we pride ourselves will depart as well.

A recent survey of 369 manufacturers found that American firms are moving their R&D operations to China not just to take advantage of lower costs, but to be in close proximity to their supply chains. About 50% of foreign R&D centers in China are now run by American companies. This has helped China achieve first place in market share for manufacturing R&D.

If we remain neutral regarding where our supply chains are located, “we innovate, they build” will become “they innovate, they build.”

So, an unintended consequence of Trump’s tariff war is that maybe American politicians will wake up to the strategic battle underway with China, and realize how our American corporations are lining up on the side of our competitor and economic adversary.

Enough of the outside world, time for a rainy Saturday Soother if you are on the east coast of the US. Wrongo is sitting on Cape Cod, and the weather service here has announced tropical storm warnings for Saturday. So, settle back and watch the Weather Channel!

Now brew up a mug of Panama Finca San Sebastian ($12/12 oz.) with its deep chocolate notes supported by subtle but persistent sweet floral tones. It comes from the brewers at Thermopolis, Wisconsin’s Jack Rabbit Java.

Now, as you watch Dorian news over and over until your mind is numb, listen to the great 1980’s hit from the Eurythmics, “Here Comes the Rain Again”:

Those who read the Wrongologist in email can view Annie Lennox here.

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