The Chinese Thief Crying about Theft

If China Wants To Prevent Trade Wars It Should Stop Waging Them
By Douglas Bulloch

A file photo of THAAD, an anti-missile defense rocket South Korea is planning to purchase from the U.S. this year.

The connection between politics and economics is often fraught. 

In the United Kingdom, for example, a putative takeover of a major UK multinational–Unilever–by an American conglomerate Kraft provoked a nationalist response. 

But there was much debate over whether the UK could, or indeed should, find some legally contentious way to frustrate the deal.
In China, clearly and obviously, it is different. 

In fact it is difficult to distinguish between economics and politics in China at all.

China's response to THAAD
Recently China has been responding to South Korea's intention to purchase the THAAD (Terminal High Altitude Area Defense) missile system from the U.S. with unusual vigor. 

Along with Russia, they have made their hostility very public, pronouncing it a threat to their interests, and demanding South Korea and the U.S. respect the "strategic balance" in the region by withdrawing the planned deployment.
Yet these diplomatic representations have not, so far, been enough to dissuade either South Korea or the U.S. 

Indeed Secretary of Defense James Mattis, on his first trip abroad in his new role, confirmed that the deployment will go ahead on schedule later this year.
Nor have China's efforts been limited to diplomatic overtures and high level threats. 

The country has gone so far as to stop flights from Korean airlines, ban the importation of electric vehicles with Samsung or LG batteries, and restrict imports of cosmetics, where Korean brands have a strong market presence. 

They have even prevented the broadcast of wildly popular South Korean soap operas, all in an effort to bring South Korea to heel.
In recent weeks this broader strategic issue has been brought into sharper focus by the crumbling of authority in South Korea, and the launch of an intermediate range missile by North Korea, thought by some to be Chinese in origin. 

But it is an instructive example of how China routinely interferes with normal trading relations in pursuit of political aims, and yet at the same time warns the U.S. against a looming trade war, declaring that such an outcome would not be in the interests of either country.

Using trade policy for political ends
Indeed, when China makes reference to the "ballast stone" and "propellor blade" of U.S.-China trade, it is worth comparing their desire to keep this relationship steady against China's record of trading relations with South Korea dating back (ostensibly anyway) thousands of years.
Although China has no qualms damaging South Korea's positive trade balance precisely in order to teach them a lesson for having the temerity to maintain a close security relationship with the U.S., the U.S. must not draw any conclusions about China's aggressive efforts against their own long standing security interests all the way from the Korean peninsula to the South China Sea. 

That would not be a "win win."
The difficulty for the U.S. is that using trade policy to pursue political ends is either conceived as a way of inducting developing countries into the wider–and importantly interdependent–world system or is much further along the ladder of policy escalation than it is for China. 

Sanctions against Russia followed the invasion and annexation of Crimea for example, and sanctions against Iran followed the repudiation of the Non-Proliferation agreement. 

China, on the other hand, resorts to punitive trade measures almost as a first step, particularly with countries which export extensively to China.

Disruptive and vexatious -- but also normal
Where there is no overt political reason, the U.S. tends to isolate trade disputes to questions of trade practice; dumping, IP violations, etc. 

Whereas China, being an authoritarian and centralized state is more than just a rule setter but directly manages most of the economy.
Investment decisions are made under state direction, facilitated by state banks, and conducted by state owned enterprises. 

Hurt the "feelings" of the Chinese people – as Norway apparently did when the the Nobel Peace Prize was awarded to a Chinese human rights campaigner – and China will simply close its markets to your main exports. (In Norway's case, salmon.) 

It is disruptive, and vexatious, but so normal as to have a name; "The Dalai Lama Effect" after another noted diplomatic sensitivity.
The simple fact of the matter is that for China, trade and investment are key levers of foreign policy and are routinely deployed at an instrumental level in the service of precise foreign policy objectives. 

Investments and market access are offered as sweeteners, and denial of market access and disruption to established patterns of trade is threatened as punishment. 

Anyone who wants to do business with China knows that conditions apply above and beyond price and quality.
Now China is faced with a U.S. President who also sees trade as a lever, and seems prepared to place the U.S.-China relationship in question. 

Furthermore, right across the East and Southeast Asian regions, Chinese and U.S. interests have rarely been so out of joint. 

It is worth noting that if the U.S. made the same connection between trade and foreign policy as China does routinely, relations would have long since broken down.
All of which leaves the distinct impression that if China was really sincere in its desire to avoid a trade war with its own largest export market, it might usefully consider not waging them in the first place.