Sina Delenda Est

Merry Xmas, Naughty China, Navarro Is Coming To Town
By Gordon G. Chang

Christmas came early to China and General Motors, with both getting coal in their stockings last week. 

The two unpleasant surprises are almost certainly related.
This long-running saga—it could last years—started Wednesday. 

Then, Trump’s Transition Team announced the creation of the National Trade Council. 

Peter Navarro, a University of California, Irvine economist, was picked to head up the new body.
The U.S. has for decades maintained help-China and free-trade policies, but it has not had an industrial one for a long time. 

Navarro, whose formal title will be Assistant to the President and Director of Trade and Industrial Policy, is being charged with developing a national plan to rebuild American industry.
“For the first time,” the Transition Team press release states, “there will be a council within the White House that puts American manufacturing and American workers first, and that thinks strategically about the health of America’s defense industrial base and the role of trade and manufacturing in national security.”
Navarro, Trump’s team said, “is a visionary economist.”
That label is certainly on the mark. 

Not everyone likes his vision, however.
Take the inhabitants of Beijing. 

As the Financial Times reported Thursday, Navarro’s appointment “shocked Chinese officials and scholars who had hoped that Mr. Trump would tone down his anti-Beijing rhetoric after assuming office.”
The assumption in the Chinese capital was that Trump would follow the pattern of Bill Clinton, George W. Bush, and Barack Obama, who had all cooperated with China after campaigning against it. 

And in this particular case, the Chinese thought Trump would be the businessman “open to negotiating deals,” as Zhu Ning of TsinghuaUniversity put it. 

“But they have been surprised by his decision to appoint such a hawk to a key post.”
Navarro is not a hawk. 

He is the hawk, America’s pre-eminent China skeptic. 

Author of Death by China, the 67-year-old has led the charge against Chinese mercantilism and predation.
Beijing, sensing what was at risk, was quick to go on the offensive after the announcement of Navarro’s appointment. 

There were comments from the Ministry of Commerce and the Ministry of Foreign Affairs.
And the Chinese state propaganda apparatus went into overdrive, trotting out academics. 

“China is preparing itself for U.S. trade actions,” said Cui Fan of the China Society of WTO Studies to the FT. 

“China will respond with counteractions of its own.”
Cui’s timing was perfect. 

One day after the FT published his threat, the Shanghai Municipal Development and Reform Commission announced it had fined SAIC General Motors Corp., the joint venture of General Motors and Shanghai Automotive Industries Corp., 201 million yuan ($28.9 million) for monopolistic practices, specifically setting minimum prices for dealer sales of Cadillacs, Chevrolets, and Buicks.
“There is no clear evidence that the Shanghai GM fine is in retaliation for Navarro’s appointment or any comments by Trump,” the Detroit Free Press correctly noted.

Yet there are in Beijing few coincidences, so the betting is that the timing of the announcement is, as NBC News suggested, “an early shot over the bow” to the incoming president.
China’s enforcement action had been rumored for months, but the specific timing of the announcement makes the penalty look like a warning to Trump. 

Chinese media have made that connection.
The official China Daily, on the 14th of this month, issued an article reporting that Beijing would levy an antimonopoly fine against an American carmaker and then raised the retaliation issue by quoting Zhang Handong of the price supervision bureau of the National Development and Reform Commission. 

Zhang said there was nothing “improper” about the fine, but he looked defensive because his words, which appeared directed to the president, came right after the Global Times promised Trump that Beijing would retaliate should he start a trade war with China. 

The paper, a tabloid controlled by the authoritative People’s Daily, specifically threatened Boeing, Apple, and American soybean and maize farmers as well as U.S. educational institutions. 

U.S. auto sales in China, the Global Times promised, “will suffer a setback.”
GM’s minimum prices may constitute a violation of China’s antimonopoly rules, but the prosecution of the automaker’s joint venture is hideous. 

Beijing is busy recombining already large state enterprises back into formal monopolies, and Chinese regulators have disproportionally targeted foreign competitors in what is a patently discriminatory campaign.
Chinese officials may think that they can apply pressure on Trump—and by extension Navarro and Commerce Secretary pick Wilbur Ross—but they have a lot to learn about American politics in the post-Obama world.
Trump did not win on November 8 because he had the support of GM’s Mary Barra, Apple’s Tim Cook, or Boeing’s Dennis Muilenburg. 

He won because he promised to bring industry back to America and thereby got the votes of blue-collar America. 

Therefore, if Beijing continues to pressure American companies, Trump won’t feel the heat from executive suites. 

In fact, he will revel in the distress of CEOs—and he will get a boost as they have one more reason to leave China and return to the U.S.
American business is already in the process of rethinking that country, as the latest annual survey from the American Chamber of Commerce in China reveals. 

A quarter of respondents said they have either moved or were planning to move operations out of China, with some bringing capacity back to the U.S.
As CNBC reports, American businesses have in fact taken steps in that direction. 

Last month, for instance, Coca-Cola announced plans to sell its China bottling operations. McDonald’s wants to bail too.
“China is powerful enough to withstand pressures from the Trump government,” boasts a Global Times editorial. 

“If Washington dares to provoke China over its core interests, Beijing won’t fear setting up a showdown with the U.S., pressuring the latter to pay respect to China.”
With American business souring on that country, Chinese threats begin to seem hollow.

That’s one fewer reason for Trump, Ross, and Navarro to care what Beijing thinks.