According to reports, President Xi Jinping did a little saber-rattling over the Republic of China on Taiwan with President Trump. More or less, he seemed to be saying if America doesn’t handle Taiwan properly, the two countries will clash — and put the relationship in great jeopardy.
No one really knows what that means, forever and ever we’ve had a policy of strategic ambiguity, which amounts to an American defense of Taiwan’s autonomy and independence. I don’t think any of that is going to change. Nor do I think Mr. Trump wants it to change; it’s not really negotiable. And Taiwan, and especially the Taiwan Semiconductor Manufacturing Company, or TSMC, may well be at the center of the world’s A.I. competition. That’s a Taiwanese company that has just opened a substantial operation at Phoenix, Arizona. As well as other places in America. I doubt very strongly that Mr. Trump wants any of that changed. Or worse, give it up. Mr. Xi is bluffing.
In recent weeks he has watched America end his influence in Venezuela, the Panama Canal, soon it will be Cuba, and of course Iran. I mean Communist China’s buying 90 percent of Iran’s oil and gas exports. But with Mr. Trump’s air-tight blockade of Iranian ports, China is starving for energy. They might make a deal with us, but that too remains to be seen if it comes under Treasury Man Scott Bessent’s investment board idea.
Meanwhile Mr. Trump has elbowed China out of the Middle East and out of the Western Hemisphere. And on top of all that, China’s economy has never recovered from the real estate property crash of a couple years ago. They used to post GDP growth rates of 15 percent or more. Now that’s down to 5 percent or even less, which is essentially for them a recession. And if they have bad economic statistics cropping up, they have decided not to publish them at all.
Remember, China is Communist China, the CCP. Way back in the 1980s and 1990s, they flirted with some free market reforms that actually improved their economy, and generated a functioning private sector. Yet in the 21st century under subsequent dictators, most notably Mr. Xi, the economy has been turned back into a tightly-run statist enterprise, with enormous corruption and repeated economic failure.
In world trade, they are highly protectionist and rarely keep their promises to open up markets. As someone who worked on Mr. Trump’s first term Phase One trade deal, I can tell you a lot about their broken promises. My point here is that while China has invested substantially in a strong military, their economy is malfunctioning and their political standing in the world is slipping badly.
All this reminds me of President Reagan and Gorbachev. The American economy was booming in the Reagan 1980s. The Soviet economy was collapsing. Gorbachev desperately wanted Reagan to drop what was then known as Star Wars, which has now become the Golden Dome defense of America. And of course Mr. Trump’s Space Force. Anyway, Reagan refused to negotiate Star Wars away. He bluntly told Gorbachev that the strong American economy was producing the resources to support space defense, but that the Soviet economy couldn’t possibly match us.
I think the same is true today with Messrs. Trump and Xi. Here’s my favorite statistic: on a per capita basis, American GDP is well over $90,000 per person. And China? On a per person basis their GDP is just shy of $14,000. That gives America a nearly seven-fold economic advantage over China. So Mr. Xi may saber-rattle all he wants, but Mr. Trump has the goods to keep America first.
