Judd Gregg: Trump needs more than pure instinct on China

As we all know by now, President Trump governs largely by instinct.

The president’s instincts regarding China are basically right.

But those instincts will not lead to effective policy if he fails to recognize some important facts.

{mosads}Among them:China is huge.

It has about one billion more people than we have.

We have ten cities with one million people or more. China has 105 such cities. Los Angles is our second largest city by population. China has 25 cities larger than Los Angeles.

This all gives China a disproportionate advantage when it comes to the raw material for the brainpower that drives this digital age.

China is an autocracy and fast becoming a dictatorship as Xi Jinping consolidates his power.

This means it can move decisively, unrestrained by the need for compromise and consultation — or for that matter, for the rule of law — that governs democracies. 

This obviously creates massive issues regarding individual rights. Also, centralized industrial policy — the gravamen of a communist state — has a terrible track record.

But the Chinese model isn’t communist in the traditional sense. It is a merger of capitalist and entrepreneurial activity with central political control and industrial direction in those areas deemed critical to growth.

It is a distinctly new form of governance — and one where the people of China seem willing to forgo liberties in exchange for stability and economic growth.

China’s international policy can best be described as neo-mercantilism. Everything is built to benefit the mother country.

This neo-mercantilism is being pursued at innumerable levels, but none is more definitional then the “One Belt, One Road” initiatives.

Under this policy, announced by President Xi in late 2013, China is investing across a huge swath of the globe.

It is paying for massive infrastructure projects covering 68 countries and 65 percent of the world’s population, running from Asia, across Central and Eastern Europe, and down to Oceania. The path is called the Maritime Silk Road.

The investments are underwritten by the Asian Infrastructure Investment Bank, which is funded by the Chinese government.

The purpose of this incredible undertaking is to massively expand China’s influence and access to these markets, and their natural resources.

It will change the world.

China intends to become the dominant force in commerce in these regions.

It also intends to use the access it gets to push for governance that is more like its own — largely unconcerned with ideas like democracy and human rights.

The One Belt One Road effort is just one of many expansive policies. Others include a massive military build-up; an assertion of influence in areas such as the South China Sea; the manipulation of its currency to advantage its exports; and of course the orchestrated theft of intellectual property developed in other nations, especially the United States.

The president’s instincts recognize much of this in the individual parts while missing the implication of the whole.

His myopic focus on trade imbalance issues, coupled with his natural tendency to dislike both free trade agreements and historic alliances such as NATO, has left his administration only partially armed and substantially misdirected in its policies toward China.

Competing with — and to some extent containing — the Chinese expansion is going to need a much more multi-pronged approach.

There are some things that can be done, and some misunderstandings that can be corrected.

The trade imbalance with China is not the problem, much as the president might suggest so. The problem is China’s manipulation of its currency and its theft of intellectual property.

There will almost certainly always be a trade imbalance with China. They produce too many things we want — things that cannot be produced here at a competitive cost — for it to be otherwise.

In fact, the trade imbalance is a reflection of the fact that Americans can have a much higher standard of living buying Chinese goods at low cost at Walmart than straining to buy goods they could not really afford if they were made here.

The administration’s focus should be on extremely aggressive responses to intellectual property theft and currency manipulation, not on specific goods sold.

Additionally, in order to ameliorate China’s advantage in people power, we should have an immigration policy that brings the best and brightest to the United States.

It is an arrogant delusion to think that we will stay ahead of Chinese efforts in critical arenas of technology, even with our exceptional university and research systems.

We should be sophisticated enough to attract and keep some of the best people who come here. Our present immigration policies do the opposite.

One of the other things the Chinese leadership is concerned about, beside the need to create millions of jobs each year to maintain economic stability, is the rise of individual rights and liberty.

The Trump administration has ceded the ground in the debate over individual liberty. But the president should push forward the ideas of democracy, which resonate loudly even as dictatorships attempt to suppress them. That will get the Chinese leadership’s attention.

China’s overseas commitments — the One Belt One Road initiative and its spin-offs — cannot be countered by us going it alone.

China will get pushback for its hegemonic policies. We should take advantage of the regional concerns it raises.

The administration foolishly abandoned the primary effort to confront China in a multinational way when it dropped out of the Trans-Pacific Partnership (TPP) trade agreement. The president needs to forthrightly acknowledge this mistake and direct his people to re-engage.

Most importantly, the president needs to acknowledge that China has an autocratic leader who will only engage with us when it benefits him.

There are no good intentions here. For Xi, this is about power and retaining it.

Engaging him and China at the margins, which is what the present trade tariffs do, will not have any significant impact on China or its leadership.

We must quickly adopt a multi-faceted approach that appreciates the reality of China’s size, form of government and intentions.

Judd Gregg (R) is a former governor and three-term senator from New Hampshire who served as chairman and ranking member of the Senate Budget Committee, and as ranking member of the Senate Appropriations Foreign Operations subcommittee.