A man of principle

Pr. Peter Navarro Has Not Made His Peace With China
Pr. Navarro is still looking for ways to punish China even as Trump has embraced a deal that his top trade adviser lobbied against.

By Alan Rappeport and Ana Swanson

Pr.Peter Navarro, a top trade adviser to President Trump, has influenced American trade policy toward China and pressed for stiff tariffs over the objections of pro-China advisers.

WASHINGTON — When Trump gathered his top economic advisers at the White House to decide whether to make a deal with China, Pr. Peter Navarro, his trade adviser, was ready with a flurry of arguments against the move.
A deal that removed any of Trump’s tariffs would make America look weak, Mr. Navarro argued at the meeting two weeks ago, and he assailed those who endorsed the idea as “globalists.”
It was a familiar argument for Trump’s top trade adviser, who has spent the past three years encouraging the president to embark on a punishing trade war with China. 

Mr. Navarro’s dark warnings about China’s ambitions and its threat to America have fueled Trump’s embrace of tariffs, overcoming the objections of other pro-China advisers.
This time, however, Trump was not persuaded. 

With the 2020 election approaching, Trump dismissed Mr. Navarro’s concerns, opting for an initial deal with China that would reduce some tariffs on Chinese goods in exchange for a commitment from Beijing to buy more American products and a series of promises to resolve other concerns.
“The deal with China is a massive deal,” Trump pompously said at an event about deregulation at the White House last week, adding: “No, I’m not a globalist.”
Mr. Navarro declined to comment on the events of the meeting.
“What happens in the Oval should stay in the Oval, both for the sanctity and security of the internal discussions and for the good of the country,” Mr. Navarro said.
For three years, Mr. Navarro, 70, has been Trump’s trade warrior, pushing the president to rip up trade deals and rewrite them so they are more favorable to American workers. 

An academic with little previous government or business experience, Mr. Navarro has managed to exert enormous influence over United States trade policy by tapping into the president’s disdain for globalization and encouraging his view that China has been “robbing us blind.”

His pro-China colleagues have chafed at his aggressive approach to China and have tried to block Mr. Navarro’s access to the president.

Mr. Navarro has gained power inside the White House and Trump has often requested his presence at big events, including a meeting with Xi Jinping in Buenos Aires last year.

Still, Mr. Navarro’s thinking has become deeply influential. 

Even those who disagree with him on economic policy and China increasingly tend to credit him for having guided the political debate.
“For all the criticism he gets from the free trade wing of the Republican Party, he was one of the first people to ring the alarm on China years ago,” said Stephen Moore, a Heritage Foundation economist who also advised Trump’s 2016 campaign. 

“Now more people, including myself, look at China’s trade policies as really predatory and economically harmful.”
With Trump moving to ease tensions with his favorite geopolitical foil and with trade deals with Canada, Mexico, Japan and South Korea now complete, Mr. Navarro is at a something of a crossroads — a trade warrior looking for a new fight.
Mr. Navarro has embraced under-the-radar projects aimed at curbing China’s economic power, including efforts to increase inspections of Chinese packages at the ports and renegotiating Chinese postal fees. 

And many China hawks believe that the government’s long history of shirking economic pledges will ultimately vindicate his distrust of an agreement that does little to alter China’s behavior at home.
“I would be very skeptical of any significant agreement being made,” said Greg Autry, a professor at the University of Southern California’s Marshall School of Business and author with Mr. Navarro of the book “Death by China.” 

“If you’ve spent any time watching the Chinese, they don’t honor their agreements.”
Mr. Navarro’s entry into Trump’s orbit was not exactly predictable. 

A business professor at the University of California, Irvine, Mr. Navarro ran and lost five elections as a progressive Democrat — including unsuccessful bids for mayor of San Diego and California’s 49th Congressional District.
As a candidate in the 1990s and 2000s, Mr. Navarro supported abortion rights, gay rights, environmental protection and higher taxes on the rich.
He even spoke at the 1996 Democratic Convention and campaigned that year with Hillary Clinton.
In his book “San Diego Confidential,” Mr. Navarro described Mrs. Clinton as “one of the most gracious, intelligent, perceptive, and, yes, classy women I have ever met.”
“It is such as dramatic change from how he portrayed himself when he was in the political field in San Diego,” said Doug Case, a former president of the San Diego Democratic Club.
“It looks like maybe his true colors have come out.”
After his political career sputtered, Mr. Navarro continued teaching and writing books about business and investing.
But before long, his attention turned to China and its trade practices which were killing American jobs.
Mr. Navarro’s skepticism first emerged in the 1970s while he was a Peace Corps volunteer building and repairing fish ponds in Thailand.
He traveled extensively in Asia and observed the negative impact China was having on the economies of its neighbors. 
He became increasingly critical of how China’s trade practices were impacting the United States after its admission to the World Trade Organization in 2001, particularly as many of his business students complained of losing their jobs as a result of Chinese competition.
Mr. Navarro’s views soon hardened and he began publishing a series of anti-China books, including “The Coming China Wars,” which Mr. Trump in 2011 listed as one of his favorite books about China, and “Death By China.”
In that book and the accompanying documentary, Mr. Navarro and Mr. Autry excoriated China for unscrupulous economic practices and manufacturing deadly products, like flammable toddler overalls and fake Viagra.
They also faulted multinational companies like Walmart for using China to source cheap goods that were putting American manufacturers out of business.
Mr. Navarro’s views caught the attention of then-candidate Donald J. Trump, who shared similar opinions about China’s impact on American manufacturing and was seeking experts with views that matched his own.
Mr. Navarro joined the campaign as an economic adviser in 2016 and quickly gained the trust of Mr. Trump, who refers to Mr. Navarro as “my tough guy on China.”
“My whole philosophy in life and in this job is the Gretzky perspective — skate to where the puck is going to be, anticipate problems that the president is going to want to solve, and get on them,” Mr. Navarro said in an interview.
Early on in Mr. Trump’s term, Mr. Navarro’s influence was not assured.
Mr. Navarro joined the White House with multiple trade actions written and ready for the president’s signature, including a directive to begin withdrawing the United States from the North American Free Trade Agreement or “Shafta,” as Mr. Navarro liked to call NAFTA.
But opposition from other advisers, including "globalist" Gary D. Cohn, the former head of the National Economic Council, stayed the president’s hand.
For months, it seemed like Cohn and his allies had succeeded in muzzling Mr. Navarro — blocking at least three attempts to trigger the NAFTA withdrawal process, as well as an earlier directive to impose steel tariffs and withdraw from a South Korea trade agreement.
But as Mr. Trump’s signature tax cut neared fruition in late 2017, the president grew more anxious to translate his trade promises into policy.
“Where are my tariffs? Bring me my tariffs,” the president would say, and call in his advisers to debate trade policy in front of him.

Mr. Trump has embraced tariffs on imported metals and Chinese goods at the behest of Mr. Navarro.

Mr. Navarro, sometimes joined by Commerce Secretary Wilbur Ross, would recommend tariffs, arguing they would protect domestic industries, demonstrate the president was serious about reversing lopsided trade agreements and raise revenue.
Cohn, Treasury Secretary Steven Mnuchin and former staff secretary Rob Porter regularly rebutted those arguments, saying tariffs would harm businesses, the stock market and the president’s re-election chances.
To help buttress his case, Mr. Navarro developed a red, black and yellow chart outlining “China’s Acts, Policies, & Practices of Economic Aggression,” including cyberespionage and theft of American intellectual property. 
Mr. Navarro warned Mr. Trump that China had long promised — and failed — to alter its behavior and said tariffs were the most effective way to force Beijing to change.
By 2018, Mr. Trump was ready to pounce, and Mr. Navarro’s vision of confronting China became reality.
An initial 25 percent tax on $34 billion of Chinese goods in July 2018 quickly escalated to tariffs on $360 billion of products with a threat to tax nearly every Chinese product.
The economic pressure brought Beijing to the negotiating table but Trump ultimately backed down, agreeing to a Phase 1 trade deal that would reduce some tariffs and remove the threat of additional levies in exchange for China buying more farm goods and giving American companies more access to the Chinese market.
Almost none of the big structural changes that Mr. Navarro had pushed for were included.
Trump has said those will be addressed in future talks with China, and many of the tariffs Mr. Navarro recommended will stay in place.
Mr. Navarro has found other ways to counter China.
Earlier this year he waged a successful offensive against a global postal treaty that had allowed Chinese businesses to ship international packages at much cheaper rates than the United States.
He’s helped step up inspections of Chinese packages to crack down on online counterfeiting and gotten involved with a project to revive American shipyards. 
Earlier this year, when executives at Crowley Maritime Corp. told Mr. Navarro that the Navy was in the process of procuring a transport ship from China that would be modified to American specifications, Mr. Navarro personally intervened to scuttle the bid.
He has come to view his office as akin to a special forces unit within the federal bureaucracy.
“With a small office, I learned early that the real power of being at the White House and the real effectiveness stems from leverage — on any given day, one or more government agencies are helping with this office’s mission,” he said.
“You don’t need to be a big bloated bureaucracy. All you need be is lean and flat and nimble enough to harness agency resources for the president and his agenda.”

Pr. Peter Navarro Highlights Case for More China Tariffs

By Alan Rappeport

Pr. Peter Navarro, senior trade adviser to President Trump.

WASHINGTON — A critical decision about China tariffs is looming, and Pr. Peter Navarro has re-emerged to share some thoughts on the matter.
President Trump must decide within days whether to proceed with the next round of tariffs on $160 billion of Chinese goods, which are slated to go into effect on Sunday. 

Pr. Navarro, a senior trade adviser to President Trump and a China skeptic, has cast doubt on the willingness of Beijing to meaningfully overhaul its trade practices and has advocated the tariffs as a tool to force China to change its behavior.
He’s not the only one making that point. 

To illustrate those concerns, Pr. Navarro harnessed his literary muse, Ron Vara, in a memo that is circulating in Washington. 

Sent from an email address belonging to Ron Vara, the memo highlights public commentary in favor of keeping the pressure on China with more tariffs.
“Much debate going on,” Ron Vara wrote, referring to the decision about whether to roll back or double down on China tariffs. 

“Here’s one side that has not been in focus. Thoughts?”
Ron Vara is the fictional character that Pr. Navarro created and cited as an expert more than a dozen times in five of his 13 books, where he offered searing critiques of China. 

Pr. Navarro confirmed the authenticity of the memo. 

It is not clear how widely it was distributed.

“On a daily basis, I speak to, or correspond with, people that I respect, and don’t necessarily agree with, to receive their thoughts on issues critical to American workers and the American people,” Pr. Navarro said. 

“This kind of active dialogue makes for the best possible decisions.”
He added: “Such a free exchange of ideas is essential to the success of an administration that is simultaneously putting up the best economic numbers in a half century and achieving success after success on the trade front.” 

He described a new trade deal with Canada and Mexico that is on track to become law as “just the latest big win.”
The memo does not show Pr. Navarro formally endorsing any views, but it lives up to his reputation for seeking to force deep structural changes to China’s economy through tariffs. 

It outlines the “keep tariffs argument,” which accuses China of stepping up American farm purchases of pork and soybeans only because of its domestic swine fever outbreak. 

And he claims that recent changes to Chinese law run counter to promises by the country’s officials to protect American intellectual property.
The memo also asserts that President Trump’s tariffs are protecting the United States economy without having any negative effect on growth or the stock market.
And, in a twist on market certainty, it suggests that President Trump could calm jittery investors by publicly backing away from a deal: “Get uncertainty out of the market by announcing NO deal until after the election and ride the tariffs to victory.”
Trump administration officials have been giving mixed signals about the fate of the tariffs and the significance of the Sunday deadline. 

Pr. Navarro, who has been pushing privately for the most ambitious deal possible, has made few public remarks about the China negotiations in recent weeks.
Amid the jockeying within the Trump administration, officials often try to arrange for television anchors or commentators to convey their views in hopes that President Trump will watch them and be persuaded.
Pr. Navarro’s memo goes on to cite a recent commentary from Jim Cramer, the CNBC host, who made the case that the strength of America’s economy means that it can withstand any drag from a more protracted trade dispute with China.
It also includes an analysis from Lawrence B. Lindsey, who was director of the National Economic Council under George W. Bush and makes the argument that another round of China tariffs would do minimal harm to the United States. 

Chinese Fifth Column

Trump’s China policy is working, but you’d never know that from media reports
By GREG AUTRY

Pr. Peter Navarro has been a key adviser to the president on China trade policy.

On the morning after the 2016 presidential election, CNBC interviewed Peter Navarro, who had been an economic adviser to the Trump campaign and would soon join the administration to advise the president on trade and manufacturing policy. 

Navarro outlined President Trump’s economic plans: cutting taxes, reducing regulation, cutting energy costs and reforming trade. 

He predicted strong growth and a Dow moving past 25,000 based on these pro-growth policies.
The Trump administration has delivered on every one of those things, but you’d never know that from the mainstream media. 

Today, it’s hard to turn on the financial news, open a business paper or browse an investment website without seeing some doomsayer predicting the impending collapse of the U.S. economy and equity markets because of the latest tariff or presidential tweet. 

When the markets invariably resume their upward trends the next day, it’s crickets.
With each drop, tariffs are blamed, and sometimes, the blame is more specifically laid at the feet of Navarro, who has been a chief architect of the president’s trade policies. 

As the economy hummed along, with historically low unemployment, the Wall Street Journal recently suggested we might see a “Navarro recession.”
We’ve also heard the constant refrain that the tariff burden is borne by American consumers. 

In fact, while economists differ on the effects of the tariffs, there is considerable evidence that they are having the desired effect. 

Modeling by European economists Benedikt Zoller-Rydzek and Gabriel Felbermayr concluded that, although U.S. consumer prices for affected Chinese products will rise by about 4.5%, Chinese firms will pay approximately 75% of the tariff burden. 

And as of the end of August, the treasury had collected more than $25 billion in tariffs from China.
Another benefit of the tariffs has been that many U.S. manufacturers are diversifying their supply chains, moving production out of China. 

While this is not cost-free for companies, they are making a worthy investment that will ultimately make the global economy far more competitive and resilient. 

The promising speed at which this is happening must terrify the Politburo in Beijing.
Most economists and business scholars in the 1990s bought into the promise of globalism. 

But by the mid-2000s, a few of us were skeptical of the way things were playing out, realizing that China had no intention of enacting the structural reforms required for WTO compliance. 

In 2011, Navarro and I wrote “Death by China,” to expose the predatory process underlying the offshoring of global manufacturing to China. 

The book laid out how China was obtaining the foreign expertise and capital it required by forcing technology transfer, stealing intellectual property, debasing the country’s environment, exploiting labor, and eroding the purchasing power of Chinese consumers.
While China’s actions enhanced the profits of large, multinational corporations, American workers and small U.S. firms took it on the chin. 

Meanwhile, millions of rural Chinese were pushed into a Dickensian nightmare of 16-hour workdays in some of the world’s most polluted cities for the benefit of China’s privileged elite. 

Worse, economic engagement was failing to liberalize China’s Communist Party; they were using their newfound wealth to fortify a repressive police state and build an increasingly aggressive military.
Seeing this unfolding chess game, a small coalition of economists and business leaders worked to build political support for trade reform. 

Our efforts were rewarded with growing bipartisan awareness of the China problem in Congress and finally the election of Trump, whose refreshing honesty on China ripped away the emperor’s imaginary clothing.
The administration is the first to fully recognize that globalization hasn’t delivered for Americans and that China is an existential threat. 

Moving from awareness to action is now a global challenge. 

American firms are on notice that the U.S. government once again sees American workers and national security as top priorities in its dealings with China. 

And the administration has drawn a clear line in the sand for China, requiring it to embrace global norms and structural reforms that would lead to mutually beneficial trade.
Whenever the next recession invariably arrives — and it looks years away — it won’t have been the administration’s trade policies that caused it.

Here are the reasons for President Trump's war with China

On Friday the US president ordered companies to halt business with the “enemy” Xi Jinping

By Dominic Rushe in New York

Even by President Trump’s standards his Twitter rant attacking China on Friday was extraordinary. 

In a series of outbursts President Trump “hereby ordered” US companies to stop doing business with China, accused the country of killing 100,000 Americans a year with imported fentanyl and stealing hundred of billions in intellectual property.
The attack marked a new low in Sino-US relations and looks certain to escalate a trade war already worrying investors, manufacturers and economists.
Not so long ago President Trump called Chinese dictator Xi Jinping “a good friend”. 

Now Xi is an “enemy”. 

How did we get here?

China, China, China
On the campaign trail President Trump railed against China, accusing it of pulling off “the greatest theft in the history of the world” and “raping” the US economy.

President Trump repeated the word China so often it spawned a viral video of him saying it over and over again. 

The attacks were a hit with voters and helped get him elected. 

He has continued lambasting China – to cheers – at rallies ever since.
His main beef? 

The trade deficit.

Trade deficit
The US imported a record $539.5bn in goods from China in 2018 and sold the Chinese $120.3bn in return. 

The difference between those two numbers – $419.2bn – is the trade deficit.
That deficit has been growing for years as manufacturing has shifted to low-cost China and it explains the hollowing out of US manufacturing.

For President Trump, and especially for his adviser Pr. Peter Navarro, who once described China as “the planet’s most efficient assassin”, trade deficits represent an existential threat to US jobs and national security. 

China makes up the largest part of the US trade deficit but those fears are also behind his disputes with the EU, Canada and Mexico.

His pro-Beijing detractors argue these deficit worries are hyperbole and a result of the US’s stronger economy, which allows consumers to buy goods at cheaper prices.
While it’s true that unemployment is at record lows and consumers continue to prop up the economy, manufacturing jobs have been lost and with them wage growth.
But it is not just deficits that concerns Trump.

Thieves
China has a deserved reputation for intellectual property theft. 

On Friday, President Trump estimated China robs the US of “hundreds of billions” a year in ideas.

In March, a CNBC poll found one in five US corporations had intellectual property stolen from them within the last year by China.
According to the Commission on the Theft of American Intellectual Property, the theft costs $600bn a year.

Beijing bucks
Like Tesla, Nio, a Chinese electric vehicle (EV) company, is suffering as subsidies for EVs are phased out. 

Unlike Tesla, Nio has Xi. 

China is pumping $1.5bn into the company to keep it on the road, the latest in a series of handouts that are unfair.
Cheap steel and aluminium, subsidized by the Chinese government, are the origins of this trade dispute. 

According to the White House, last year alone China dumped and unfairly subsidized goods including steel wheels, tool chests and cabinets and rubber bands on to the US market.

Currency manipulator
Earlier this month the US officially accused China of manipulating its currency “to gain unfair competitive advantage in international trade”.
It was the first time since 1994 that such a complaint has been made official and comes as the dollar has strengthened against world currencies. 

The dispute adds another layer of tension to a complex situation.
China disputed the charge accusing the US of “deliberately destroying international order” with “unilateralism and protectionism”.
The International Monetary Fund (IMF) is on China’s side, arguing the devaluation of the yuan is largely in line with worsening economic conditions in China.

What happens next?
The US has now slapped billions of dollars on tariffs on Chinese goods. 

China retaliated, again, on Friday with more levies on US goods. 

China’s economic growth has slowed to levels unseen since 1992; US economic forecasts have also been cut.

So far US consumers have not felt the pinch but JP Morgan estimates the average US household will end up paying $1,000 a year for goods if the latest set of tariffs go through.

The unanswerable question is whether any of this will sway President Trump. 

If the President continues to see a war with China as the necessary price to Make America Great Again, then the answer is probably no.

Two Chinas Policy

U.S. pursues sale of over $2 billion in weapons to Taiwan

By Mike Stone, Patricia Zengerle

U.S. M1A2 "Abrams" tank fires during U.S. led joint military exercise "Noble Partner 2016" near Vaziani, Georgia, May 18, 2016. 

WASHINGTON -- The United States is pursuing the sale of more than $2 billion worth of tanks and weapons to Taiwan, four people familiar with the negotiations said.
An informal notification of the proposed sale has been sent to the U.S. Congress, the four sources said on condition of anonymity because they were not authorized to speak about the possible deal.
The potential sale included 108 General Dynamics Corp M1A2 Abrams tanks worth around $2 billion as well as anti-tank and anti-aircraft munitions, three of the sources said. 

Taiwan has been interested in refreshing its existing U.S.-made battle tank inventory, which includes M60 Patton tanks.
The United States is the main arms supplier to Taiwan, which China deems its own and has never renounced the use of force to bring the self-ruled island under its control.
Taiwan President Tsai Ing-wen said in March Washington was responding positively to Taipei’s requests for new arms sales to bolster its defenses in the face of pressure from China. 

The United States has no formal ties with Taiwan but is bound by law to help provide it with the means to defend itself.
China and the United States are engaged in a fierce trade war, with clashes over Taiwan and the South China Sea exacerbating tensions.
A spokesman for the State Department, which oversees foreign military sales, said the U.S. government does not comment on or confirm potential or pending arms sales or transfers before they have been formally notified to Congress.
The congressional notifications included a variety of anti-tank munitions, including 409 Raytheon Co and Lockheed Martin Corp-made Javelin missiles worth as much as $129 million, two of the sources said.
The notifications also included 1,240 TOW anti-tank missiles worth as much as $299 million, one of the sources said. 

There were also 250 Stinger missiles worth as much as $223 million in the notification, the source said.
Stingers are often used in portable anti-aircraft weapons systems.
Taiwan’s Defense Ministry confirmed it had requested those weapons and that the request was proceeding normally.
The U.S. commitment to providing Taiwan with the weapons to defend itself helps Taiwan’s military to raise its combat abilities, consolidates the Taiwan-U.S. security partnership and ensures Taiwan’s security, the ministry said in a statement.

U.S. President Donald Trump’s administration rolled out a long-awaited overhaul of U.S. arms export policy in 2018 aimed at expanding sales to allies, saying it would bolster the American defense industry and create jobs at home.
Trump’s trade adviser Peter Navarro was one of the administration’s architects of that policy. 

Mr. Navarro wrote about the possible sale of tanks to Taiwan in a March opinion column in the New York Times ahead of a presidential trip to the Lima, Ohio, plant where they are made.
At a low point, the U.S. Army had only one tank coming from the plant a month, General Dynamics CEO Phebe Novakovic said during an April conference call with investors, but said “we’ll be rolling out 30 tanks a month by the end of this year,” partly because of international orders.
The Pentagon announced last week it would sell 34 ScanEagle drones, made by Boeing Co, to the governments of Malaysia, Indonesia, the Philippines and Vietnam for $47 million.
The drones would afford greater intelligence-gathering capabilities, potentially curbing Chinese activity in the region.
China claims almost all of the strategic South China Sea and frequently lambastes the United States and its allies over naval operations near Chinese-occupied islands. 

Brunei, Indonesia, Malaysia, the Philippines, Taiwan and Vietnam all have competing claims.
Acting U.S. Defense Secretary Patrick Shanahan told the meeting that the United States would no longer “tiptoe” around China’s behavior in Asia.
Taiwan’s Foreign Ministry, responding to the Reuters report of planned the new arms sale, said China’s “threatening” comments and recent Chinese military drills near Taiwan showed the importance of its need to strengthen its defensive abilities.
“Going forward our government will continue to deepen the close security partnership between Taiwan and the United States,” it said.

Tech Quisling: Google’s work in China benefits Beijing’s military

• America’s top two defense officials slammed Google’s work with China, saying it has benefited Beijing’s military.
• Marine Corps Gen. Joseph Dunford, chairman of the Joint Chiefs of Staff: “We watch with great concern when industry partners work in China knowing that there is that benefit.” 
• The latest revelation comes as the U.S. trade battle with China marches on, with intellectual property theft proving to be a major sticking point between the enemies.

By Amanda Macias

Acting U.S. Secretary of Defense Patrick M. Shanahan and Marine Corps Gen. Joe Dunford, chairman of the Joint Chiefs of Staff, give testimony on the Department of Defense budget posture in review of the Defense Authorization Request for Fiscal Year 2020 and the Future Years Defense Program at the Dirksen Senate Office Building, March 14, 2019.

WASHINGTON — America’s top two defense officials slammed Google’s work with China on Thursday saying it has “indirectly benefited” Beijing’s military.
“We watch with great concern when industry partners work in China knowing that there is that indirect benefit,” Marine Corps Gen. Joseph Dunford, chairman of the Joint Chiefs of Staff, told members of the Senate Armed Services Committee hearing.
“The work that Google is doing in China is indirectly benefiting the Chinese military,” Dunford said. “The way I describe it to industry partners is, ‘look we’re the good guys and the values that we represent and the system we represent is the one that will allow and has allowed you to thrive,’” he said.
Dunford’s comments come in the wake of the tech giant’s decision not to pursue some of the Pentagon’s lucrative contracts while considering projects in China.
In October, Google said it would no longer compete for the Pentagon’s Joint Enterprise Defense Infrastructure, or JEDI, cloud computing contract, an award that could be worth $10 billion. Google said that the contract may conflict with its corporate values.

In addition, the company also said it would not renew a Pentagon contract that analyzed aerial drone imagery for the military.
Meanwhile, it was revealed last year that the tech giant was studying the idea of working with the Chinese government on “Project Dragonfly,” a censored search engine that would block certain sites and search terms. 

More recently, after pushback from politicians and activists, Google said it had dropped those plans.
But Google Chief Executive Sundar Pichai has said the company will continue to invest in China while also considering projects with the U.S. government.
Acting Secretary of Defense Patrick Shanahan, also speaking before the Senate committee, echoed concerns that China has gamed American innovation.
”$5 trillion of their [China’s] economy is state-owned enterprises. So the technology that has developed in the civil world transfers to the military world, it’s a direct pipeline. Not only is there a transfer, there is systemic theft of U.S. technology that facilitates even faster development of emerging technology,” he said.
“The talent is in this country, we need to use the talent in this country and the talent in this country needs to support our great power competition,” Shanahan added.
The criticism comes as the U.S. trade battle with China marches on, with intellectual property theft proving to be a major sticking point between the world’s two largest economies.
U.S. officials have long complained that intellectual property theft has cost the economy billions of dollars in revenue, thousands of jobs and threatens national security.
“If China successfully captures these emerging industries of the future, America will have no economic future and its national security will be severely compromised,” White House trade advisor Peter Navarro said in June.
For the Pentagon, there is no better example of Navarro’s comments than the most expensive U.S. weapons system: the F-35 Joint Strike Fighter.

Lockheed Martin’s F-35 Lightning II fighter jet 

On Oct. 26, 2001, the Pentagon awarded Lockheed Martin a contract worth more than $200 billion to build the next-generation stealth strike fighter.
As America’s next fighter jet came to life, some of its sensitive design and electronics data were compromised in 2009.
Chinese hackers were behind the cyberintrusion since its stealth Shenyang J-31 jet bears a remarkably striking resemblance to the F-35.
And before the J-31 mimicked the F-35, there was the curious case of the J-20 and the F-22.
In another instance of industrial espionage, the prototypes of China’s Chengdu J-20 stealth fighter jet looked suspiciously similar to the sleek design of Lockheed’s F-22 Raptor.
While the U.S.-made Lockheed Martin jets are believed to have better computer software, more sophisticated sensors and sensitive stealth coating, the theft of intellectual property gives adversaries the opportunity to avoid the expense and delays involved with research and development.
Last March, President Donald Trump signed an executive memorandum that penalized China for trade practices such as industrial espionage.
The measures impose retaliatory tariffs on about $60 billion in Chinese imports.
On hand for the signing was Lockheed Martin CEO Marillyn Hewson, who oversees the F-35 Joint Strike Fighter.
Hewson said intellectual property is the “lifeblood” of the defense industry and welcomed the action taken by the Trump administration.
“This is a very important moment for our country, in that we are addressing a critical area for the aerospace and defense industry and that is protecting our intellectual property,” she said.
Meanwhile, on Wednesday, President Donald Trump said he was in no hurry to come to a trade deal with China and gave no indication of when he would meet with Chinese dictator Xi Jinping.
“I’m in no rush. I want the deal to be right ... I am not in a rush whatsoever. It’s got to be the right deal. It’s got to be a good deal for us and if it’s not, we’re not going to make that deal,” Trump told reporters at the White House.
Trump decided in February that he would not increase tariffs on Chinese goods at the beginning of March.

China may be recognizing that revealing its world domination plan was a bad idea

• A report said Chinese officials are drafting a replacement for Made in China 2025.
• This would be a sign that it admits that this is about worldwide hegemony from the Chinese

By Berkeley Lovelace Jr.

Cramer says if China gets rid of 2025, it would be a miracle

China may now be recognizing its ambitious 2025 policy for world domination was a bad idea to reveal after all, CNBC's Jim Cramer argued Wednesday.
"It's rather remarkable that they agreed to get rid" of it, said the "Mad Money" host, shortly after The Wall Street Journal reported that Chinese officials are drafting a replacement for Made in China 2025. The plan, championed by Chinese dictator Xi Jinping, was meant to enhance China's competitiveness and foster the country's high-tech industries.
Peter Navarro, one of President Donald Trump's top trade advisors, has called for a repeal of China 2025, according to Cramer. 

"I think this would be a sign that it admits that this is about worldwide hegemony from the Chinese," Cramer said. 

Though he admitted he's unsure whether China will stick with working on a replacement.
According to the Journal, China is working on a new program — set to be introduced early next year — to provide increased access to the world's second-largest economy for overseas companies.
The report comes amid a 90-day truce between Washington and Beijing on any new tariffs on each other's goods while talks to settle their disputes continue. 

In the latest moves, the Trump administration in September levied 10 percent duties on $200 billion worth of goods from China, prompting Beijing to put tariffs on $60 billion worth of U.S. goods.
On "Squawk on the Street," Cramer said the White House needs to get China to admit that it does "reckless stealing," possibly referring to theft of intellectual property by China.
Cramer later added to his CNBC remarks on Twitter, by tweeting, "2025 must be renounced by word AND deed and the PRC must stop ordering espionage NOW."

Jim Cramer

✔@jimcramer

2025 must be renounced by word AND deed and the PRC must stop ordering espionage NOW

61

3:26 PM - Dec 12, 2018

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Friendship of the Willing

Steve Bannon and Guo Wengui Target a Common Enemy: China
By David Barboza

Stephen K. Bannon, the former strategist to President Trump, and Guo Wengui, who is wanted in China, have teamed up.

   
Just months after being pushed out of the White House, Stephen K. Bannon, President Trump’s former chief strategist, met with a Chinese billionaire at a suite in the luxurious Hays-Adams Hotel in Washington.
The billionaire, Guo Wengui, who is also known as Miles Kwok, was living in New York City and had landed on China’s most-wanted list, accused of bribery, fraud and money laundering. 

He was also a dissident and fierce critic of Beijing, seeking political asylum in the United States. And Mr. Bannon — increasingly obsessed with the China threat — was eager to talk about the Communist Party, corruption and American naval operations in the South China Sea.
Since their first discussion in October 2017, they have met dozens of times — in Dallas, on Mr. Guo’s yacht and, more often, at the billionaire’s $67.5 million apartment in the Sherry-Netherland Hotel, overlooking New York’s Central Park. 

The two shared a stage two weeks ago in Manhattan, at a news conference they organized to announce plans to set up a $100 million fund to investigate corruption and aid victims of Chinese government persecution.
“We both naturally despise the Chinese Communist Party,” Mr. Guo said in an interview last week, referring to Mr. Bannon. 

“That’s why we’ve become partners.”
It’s an unusual partnership between two political gadflies with a common, if overly grand, objective: bringing about the demise of the Chinese Communist Party.
One is an exiled businessman who has evidence of corruption at the highest levels of government in China. 

The other is a former Goldman Sachs banker who delights in lobbing political grenades at the “party of Davos,” a band of global "elites" that has undermined America’s interests at home and abroad.
As tensions between the United States and China grow, the two men are hoping to stoke them even further, by effectively calling for the overthrow of Beijing’s leadership. 

Mr. Guo is dipping into his fortune, while Mr. Bannon provides a strategy.
Mr. Bannon is, in effect, reprising the role of political provocateur he played before joining the Trump campaign in the summer of 2016. 

Back then, he was running the news site Breitbart, and helping promote books like “Clinton Cash,” which aimed to destroy Hillary Clinton’s White House bid.
In an interview in his hotel room two weeks ago, Mr. Bannon, 65, said the new China-related fund he will head, without pay, will gather evidence, share it with authorities — in the United States and elsewhere — and publish it in the media. 

The fund also targets Wall Street banks and law firms, which are complicit in China’s misdeeds.
The project, he says, is consistent with his populist and nationalist agenda. 

China’s reckless behavior is endangering the global economy, and sapping America’s strength.
“As a populist, this is outrageous,” Mr. Bannon said, noting that American financial institutions have helped back the worrisome global buying sprees of Chinese companies, with cash raised from ordinary people, including government pension funds. 

“The elites in this country have to be held accountable. We have to get the facts on the table.”
Mr. Guo, 50, insists that the fund offers a way to strike back at Beijing. 

China has pressed the Trump administration to extradite him so that he can face a raft of charges in China — allegations he strongly denies. 

Billions of dollars in assets he controlled have been frozen by Beijing. 

And Interpol, the pro-China police organization, has issued a warrant seeking his arrest. 

He now travels with a phalanx of security guards, saying he fears for his life.
The Chinese Embassy could not be reached for comment. 

But the Guo-Bannon alliance has alarmed Chinese "analysts", who view the two men as purveyors of conspiracy theories fueling anti-China sentiment.
For Mr. Bannon, the new effort plays to a longstanding and complicated interest in China. 

As a young naval officer in the 1970s, he patrolled the South China Sea. 

He also lived for a time in Shanghai, where he ran a small online gaming company. 

In recent years, he has come to view China as a military threat to the United States, and a fierce economic rival that refuses to play by the rules.
In helping elect Donald J. Trump, Mr. Bannon counseled him to take a tough line on China and step up trade pressure on Beijing. 

Mr. Trump obliged by tapping the Harvard-trained economist Peter Navarro, a longtime China critic known for his book “Death by China,” and Michael Pillsbury, a China expert at the Hudson Institute, as top trade advisers.

The effort has bristled Beijing’s stooges like Milos Zeman of the Czech Republic, right, who met with Xi Jinping in Prague in 2016.

It was during his time at the White House, Mr. Bannon says, that he first heard about Mr. Guo. 

The Chinese billionaire was living in New York, broadcasting accusations of high-level government corruption in China on Twitter and YouTube. 

By then, he had also applied for political asylum.
Alarmed by his social media campaign and his public denunciations of the Communist Party, Beijing began pressing the Trump administration to extradite Mr. Guo. 

Chinese investigators said he has ties to Ma Jian, a former spy chief now imprisoned in China on charges of bribery and abuse of power.
Inside the White House, there were disagreements over how to deal with Mr. Guo. 

Western businessmen, eager to cozy up to Beijing, lobbied President Trump to accede to China’s demands.
Mr. Bannon said he sided with those in the administration who opposed any handover, viewing Mr. Guo as a potentially valuable “intelligence asset.”
They met only after Mr. Bannon was forced out of the White House. 

Mr. Bannon says he received a call from Bill Gertz, a Washington journalist who has long been critical of China. 

Mr. Gertz told him that Mr. Guo was scheduled to give a talk in Washington at the Hudson Institute, a conservative think tank. 

The talk was canceled at the last minute.
Over lunch, Mr. Guo and Mr. Bannon discussed China’s military capabilities, as well as the financial implications of Beijing’s rule, including what impact the country’s mounting corporate debt might have on its economy. 

A friendship emerged.
“It was fantastic. He really impressed me,” Mr. Bannon said of his first meeting with Mr. Guo. 

“We talked about President Trump’s approach to China, and he went into corruption in the Chinese Communist Party.”
Mr. Bannon later introduced Mr. Guo to people in the hedge fund community, including J. Kyle Bass, who has soured on China and sought to profit by short-selling the Chinese currency.
As Mr. Bannon sharpened his critique of China’s rise, he also began meeting privately with some of America’s leading experts on China, to seek their counsel and outline his agenda. 

Few welcomed his remarks, according to people who attended some of the sessions. 

But more recently, his positions have gotten a warmer reception.
“The tectonic plates are shifting,” says Orville H. Schell, the director of the Center on U.S.-China Relations at the Asia Society. 

“Many analysts would have totally rejected him two years ago. But people are more sympathetic now that engagement with China has been defrocked.”

Mr. Schell adds, “On the China question, he’s no longer the skunk at the party.”
But Mr. Bannon is getting blowback from many Beijing’s stooges. 

On a trip abroad this year to drum up support for nationalist and populist leaders in Eastern and Central Europe, Mr. Bannon says, he was scolded for his positions on China by Milos Zeman, president of the Czech Republic and one of Beijing’s most zealous stooges in the region.
“He threw down on me hard,” Mr. Bannon says. 

“He said: ‘Tell Trump you didn’t learn from Hitler. You can’t fight on two fronts. You can’t take on radical Islam and China. You will end up in the bunker, like Hitler.”
A spokesman for Zeman said that he had challenged Mr. Bannon on American tariffs against China, and that the two men had parted ways in a very “cold atmosphere.”
Mr. Bannon is unbowed. 

He has agreed to serve as chairman of the Rule of Law Fund, the $100 million effort that Mr. Guo is financing. 

The fund plans to publicize its findings and offer financial support to businessmen, government officials and others who run afoul of the Chinese authorities — including those who flee overseas, like Mr. Guo himself.
Mr. Bannon has also joined Mr. Guo in targeting the HNA Group, the huge Chinese conglomerate that borrowed heavily and spent billions around the world, before debt and regulatory pressures forced the company to curb its global ambitions.
Until Twitter suspended his account late last year, Mr. Guo was waging an online war against HNA and its top executives. 

He claimed that the company was engaged in bribing top officials and their relatives, and has even spun theories about the death of the company’s co-chairman Wang Jian in an "accident" in France last summer. 

At their joint news conference last week, Mr. Bannon took the stage at the Pierre Hotel on Fifth Avenue in Manhattan to say, “Literally thousands of the best and brightest” in China have disappeared, been imprisoned or committed suicide under unusual circumstances and without due process.
“Today is about recklessness and accountability,” he added, noting that American financial institutions have close ties to political elites in Beijing. 

“Who profited off this? Who looked the other way?”

Make China Small Again

President Trump’s China Policy Is a Triumph.
The president's trade war is bringing Beijing to heel.
BY GREG AUTRY

U.S. President Donald Trump speaks at a rally on February 22, 2016 in Las Vegas, Nevada. 

U.S. President Donald Trump’s aggressive approach to China has been the most credible and consistent policy of an often-criticized White House.
The president’s assertions of Chinese malfeasance in trade matters are undeniably true.
Even CNN’s Fareed Zakaria, no fan of the president, has said, “Donald Trump is right: China is a trade cheat,” going on to praise the U.S. trade representative’s exhaustive report on China’s World Trade Organization noncompliance as a rare example of a quality document from this administration.
Despite dire warnings from establishment economists and media pundits that getting tough on China would damage the U.S. economy, we have seen nothing of the kind.
The United States is not simply surviving the trade war but has thrived through two years of global stagnation.
In the meantime, as best as can be told from highly unreliable and often-faked data, Chinese economic growth has stalled.
The hard-line U.S. policy has been effective and should be maintained until China demonstrates real, substantial behavioral change such as no longer requiring forced joint partnerships and ceasing its vast state-run cyberespionage program. 
Holding Beijing accountable for its treatment of its own citizens isn’t too much to ask either.
Then-President Bill Clinton’s fateful decision to disconnect U.S. human rights policy from trade deals in 1993 removed America’s most powerful instrument for producing good in the world. 
As George W. Bush and Barack Obama subsequently adopted Clinton’s “business is business” policy, the Chinese Communist Party learned to exploit a complacent Western media to whitewash its authoritarianism, militarism, and repression and greenwash its environmental depravation.
Lazy American journalists eagerly reprinted half-truths generated by D.C. think tanks funded by the multinational corporations growing rich on the China trade, as well as quotes from professors at universities addicted to foreign student tuition fees and wealthy Chinese donors. 
Those who criticized China, as I did, were marginalized, maligned, and censored. 
U.S. firms such as Google and Home Depot found their attempts to actually access the promised mega-market wrecked by a system tilted in favor of China’s domestic champions.
Still, the horrors of Tibet and Tiananmen were obscured by iPhones and corporate profits. 
Today, Americans enjoy movies from U.S. studios whose scripts are written to avoid offending the Communist Party and are blissfully unaware that over a million Chinese citizens are being brutalized in “re-education” camps designed to deprogram their religious identities.
President Trump holding China’s hypersensitive authoritarians accountable to international standards of decency in trade was a badly overdue act of bravery, and one that perhaps only an unabashedly indiscreet leader could pull off.
The very public shaming of Beijing over its blatantly closed markets, transshipment of products, export subsidies, abuse of joint partnerships, espionage, and technology theft has revealed the party’s claims as a sham. 
All of these facts are superbly documented in the aforementioned Office of the U.S. Trade Representative report and in the White House Office of Trade and Manufacturing’s report on China’s economic aggression.
The emperor’s imaginary clothes vanished in a wink.
The promise implied by former U.S. Secretary of State Henry Kissinger and others that appeasing and enriching China’s brutal despots would align them with U.S. interests or liberalize them can no longer be defended with a straight face. 
Over the last two years, establishment pundits shifted from spouting nonsense about China’s inevitable progress toward capitalism and democracy to asking whether tariffs are the right way to confront a dangerous regime we all agree is built on lies and cheating.
The initial results are now in.
The current trade policy has demonstrated its effectiveness, and it is undermining the Communist Party’s only source of legitimacy: ill-gotten economic growth. 
And on the U.S. side, it’s going to be easier to maintain than most people think.
The U.S. market remains the most valuable economic prize on Earth, something this week’s annual Black Friday consumption-fest underscores.
It is, by far, the world’s largest economy, with a 2017 GDP of $19.4 trillion.
That’s at least 60 percent larger than China’s $12.2 trillion and probably a lot more, as China’s dubious GDP figures bend to fit official targets.
Since consumption forms a much larger part of American GDP, the U.S. market for goods is many times larger than China’s.
The United States is also the healthiest major economy, with robustly increasing GDP growth and the lowest unemployment rate in nearly 50 years.
China is not likely to catch up in our lifetimes.
Additionally, the United States has a much smaller population dividing those spoils—and being less burdened by taxes than their global counterparts, U.S. consumers can spend far more than the citizens of any large nation.
Most importantly, China is paying the lion’s share of America’s tariffs.
While advocates of "free" trade have worked hard to scare consumers with threats of huge price increases, these have not emerged.
This is because any additional cost incurred in the distribution of a product may be allocated to either the consumer, through higher prices, or to the producer, through lower margins.
The market determines this split as consumers demonstrate their tolerance for absorbing higher prices.
The elasticity of demand for products determines the price, and a recent European study by EconPol concludes, “A 25 percentage point increase in tariffs raises US consumer prices on all affected Chinese products by only 4.5% on average, while the producer price of Chinese firms declines by 20.5%.” 
And don’t forget that the entire 25 percent goes into the U.S. Treasury, feeding America’s economy, not China’s. 
If Chinese prices eventually do increase, the same system will force distributors and retailers to absorb the cost before consumers.
Their suppliers are already moving to non-China sources.
Significantly, none of this success is accidental.
Many of this administration’s political appointments have been criticized, and the president has removed several of them.
President Trump has even publicly expressed regret over his appointment of Steven Mnuchin as treasury secretary.
In contrast, the team at the White House National Trade Council, the Department of Commerce, and the Office of the U.S. Trade Representative have been brilliantly strategic in the face of a relentless, China-backed media attack on the trade policy. 
The EconPol researchers recognized this when they wrote, “The US government has strategically levied import duties on goods with high import elasticities.”
Whether or not you agree with the tactics crafted by White House trade advisor Peter Navarro (with whom I wrote a book), Commerce Secretary Wilbur Ross, and U.S. Trade Representative Robert Lighthizer, this operation has been professionally planned and executed.
Knowing that China would quickly move to disguise its products in transshipments, the Trump team expertly renegotiated complex deals with South Korea, Mexico, and Canada in record time. 
A critical and disorganized Europe has been left scrambling to reassess its China relations, lest its market become the dumping ground of last resort.
Investors buying in to the media prattle that U.S. trade policy has been ill-informed or that soybeans are somehow more important to the United States than technology do so at great peril.
In the face of this success, free trade backbiters are now calling for negotiations.
If you are under any delusion that this time, the Chinese government will take a trade agreement with the West seriously, I encourage you to read Articles 33 through 41 of the Chinese Constitution, which reads like the U.S. Bill of Rights.
This document specifically protects human rights, freedom of religious beliefs, freedom from illegal arrest, freedom from unreasonable search, freedom of speech, and the right to vote and protest. 
None of these things actually exist. 
Like the regime’s official name, the “People’s Republic,” rule of law in China has always been a lie the West agreed to accept. 
The Chinese Communist Party does not respect the rule of law—it respects strength and power.
The U.S. president and his team should stay the course, both for America’s sake and for China’s. Reducing the economic influence of an aggressive authoritarian regime is the right thing to do for the world and, eventually, for the Chinese people. 
They shouldn’t bother with an agreement designed only to delay the other side and that will never be honored.
The new Democratic majority in the lower house of the U.S. Congress and establishment Republicans who otherwise oppose the president should re-evaluate the current trade policy in light of the positive empirical results and eschew the illusory arguments of those who benefit from enriching a dangerous and tyrannical regime.

Wall Street Quislings

White House adviser Navarro warns Wall Street 'globalists' over China

By Katie Lobosco and Donna Borak

University of California at Irvine Economics Professor Peter Navarro arrives in the lobby of Trump Tower in New York, U.S., on Thursday, Jan. 5, 2017.

White House trade adviser Peter Navarro took a shot at Wall Street Friday, warning "globalist elites" against meddling with the Trump administration's policy on China.
Bankers are putting a "full court press" on the White House to make a deal that would end the escalating trade war between the two nations, Navarro said during a speech at the Center for Strategic and International Studies in Washington, DC.
"If and when there is a deal, it will be on President Donald J. Trump's terms -- not Wall Street terms," he said.
"If Wall Street is involved and continues to insinuate itself into these negotiations, there will be a stench around any deal that's consummated because it will have the imprimatur of Goldman Sachs and Wall Street," Navarro added.
Navarro, a former economics professor, accused billionaires and hedge fund managers of engaging in "shuttle diplomacy" between the United States and China, which he says weakens the President and his negotiating position.

His remarks come ahead of President Trump's expected meeting with Chinese dictator Xi Jinping at the G20 summit later this month in Argentina. 

The administration has sent mixed messages about whether the two are nearing a truce that would lift more than $250 billion in retaliatory tariffs on an array of goods ranging from chemical products and motors to luggage and hats.
The comments reflect the ongoing divisions inside the Trump administration between 'globalists' -- including those with Wall Street backgrounds like Treasury Secretary Steven Mnuchin and economic adviser Larry Kudlow -- and the patriots, who hew to the "America First" stance laid out during the campaign and early months of Trump's presidency by former chief strategist Steve Bannon.
"Wall Street is a very easy boogeyman to attack in situations like these," said Rufus Yerxa, a former US trade official who now leads the National Foreign Trade Council, in an interview with CNN. 

"But look, the concern about making sure that the US gets the right results in China without provoking a trade war comes from Main Street, and from the American companies that make things, produce jobs and export stuff."

Yerxa said his members, which include companies like Google, Walmart, Visa, General Electric and Caterpillar, have been offering input to the Trump administration wherever possible, but notes there's still "a bit of confusion" over which direction the White House may be going given ongoing internal discussions.
"We don't have any clear sense of where they are," said Yerxa, referring to any developing proposals. "A lot of the business community isn't being brought into details of that."
President Trump earlier this week promised a positive meeting with Xi.
"We'll have a good meeting and we're going to see what we can do," the President said at his Wednesday news conference following the midterm elections.
But fault lines between the US and China were on clear display Friday during a meeting between senior military officials, who challenged each other over the South China Sea, Taiwan, religious freedom and trade.
President Trump has made it a priority to take an aggressive stance against China for its unfair trade practices, including intellectual property theft and forced technology transfers. 

He's threatened to escalate the trade war further by taxing the remaining Chinese goods sold to the United States.
Many American manufacturers, farmers and lawmakers from both sides of the aisle say they appreciate the administration's efforts to change China's trade policies. 

But some argue the tariffs aren't the best way to address the issues. 

They pose a dilemma to US importers who must decide whether to absorb the higher cost of the goods or pass it on to consumers, and some exporters are hurting from China's retaliatory tariffs.

In his remarks Friday, Navarro also blamed Wall Street for the decline in manufacturing and the opioid crisis.
"If they want to do good, then spend their billions in Dayton, Ohio, in the factory towns of America where we need a rebirth of our manufacturing base and end to the opioid crisis -- which they helped create by off-shoring our production," he said.

We are at war against the Chinese, and it's not just over trade

• CNBC's Jim Cramer does not expect a trade deal between the U.S. and China any time soon.
• President Trump and Chinese dictator Xi plan to meet around the G-20 summit later this month.

By Matthew J. Belvedere

President Donald Trump speaks during a press conference with Xi Jinping at the Great Hall of the People in Beijing on November 9, 2017.

CNBC's Jim Cramer said on Monday he does not expect a trade deal between the United States and China any time soon.
"I think we are at war against the Chinese, and it's not over. And the war is not just trade," Cramer said on "Squawk on the Street," taking cues from the speech that White House trade advisor Peter Navarro delivered last week.
Dr. Navarro said Friday any agreement between Washington and Beijing to end their trade dispute, which resulted in back-and-forth tariffs, will be on "President Donald J. Trump's terms, not Wall Street terms."
Cramer said the tone of Navarro's speech on economics reminded him of the kind of rhetoric that then-President Ronald Reagan used decades ago during the Cold War with Russia over nuclear arms.
"That's a speech that Reagan gave against the Soviet Union. And that didn't end well for the Soviet Union," said Cramer, the host of "Mad Money." 

"The G-20 is going to be so important."
Cramer was referencing the summit of the Group of 20 leaders in Buenos Aires, Argentina, at the end of the month when President Trump and Chinese dictator Xi Jinping plan to meet.
In September, the White House imposed its latest round of tariffs, totaling $200 billion of Chinese products. 

In response, China levied tariffs on $60 billion of U.S. goods.
President Trump has also threatened additional tariffs of $267 billion, which would basically cover the rest of all Chinese imports into the U.S.

How President Trump’s Trade War Is Driving China Nuts

Chinese dictator Xi Jinping reacted to American pressure with desperation

By WILLIAM PESEK

TOKYO—Five years ago, China’s Xi Jinping rocked the Communist Party establishment by pledging to let markets play a “decisive role” in decision making. 

Reformists rejoiced as Xi signaled a revival of Deng Xiaoping’s pro-capitalism revolution.
Things haven’t gone as planned. 

First, Xi slow-walked steps to reduce China’s reliance on runaway credit, debt and an antiquated state sector. 

He prioritized short-term growth over long-term upgrades. 

And then President Donald Trump came along to imperil both objectives.
Initially, Xi’s government figured the president was bluffing. 

Beijing’s calculation was that, sure, President Trump might slap some tariffs on Chinese goods, but it’s a mere negotiating tactic – his “Art of the Deal” writ large. 

After all, past American presidents had often attacked China on the campaign trail—only to make nice while in office. 

Xi’s men held it together as President Trump slapped taxes of 25 percent on steel and 10 percent on aluminum. 

They figured President Trump’s initial attack on $50 billion of Chinese imports in June would satisfy Professor Peter Navarro and other anti-China voices in the White House.

Hardly, as Xi’s team is realizing. 

If the extra $200 billion of levies President Trump tossed Beijing’s way in September weren’t reality-check enough, Vice President Mike Pence’s Oct. 4 “we-will-not-stand-down” speech suggests 2019 could get even worse for Beijing.

Mr. Pence accused Beijing of trying to malign President Trump’s credibility, of reckless harassment and of working to engineer a different American president.

On both economic and military issues, Mr. Pence declared: “We will not be intimidated; we will not stand down.”
The vice president seemed to confirm that President Trump’s trade war is more about tackling China than creating U.S. jobs. 

Worse, perhaps, taxing Beijing is shaping up to be a 2020 re-election strategy. 

Forget Russia, Vice President Pence suggested: China is the real election meddler. 

It “clearly laid down an official marker for a much more competitive and contentious New Era of U.S.-China relations,” says China analyst Bill Bishop.

All this is throwing Xi’s domestic strategies into disarray – perhaps permanently.
Six months ago, Beijing was throttling ahead with “Made in China 2025,” a multi-trillion-dollar effort to dominate the future of self-driving vehicles, renewable energy, robots and artificial intelligence. 

Party bigwigs were also planning festivities to commemorate the 40th anniversary of Deng’s reforms -– and Xi’s steps to accelerate them.
Now, Xi’s undivided attention is on making this year’s growth numbers. 

President Trump’s trade-policy grenades are sending a few too many market forces Beijing’s way for comfort. 

China’s currency is down 6.4 percent this year. 

Shanghai stocks are down 22.3 percent this year as JPMorgan Chase and other investment banks turn cautious despite China’s 6.7 percent growth.
The headwinds heading China’s way are unmistakable, particularly with President Trump threatening to up the tariff ante to $505 billion. 

In August, export growth weakened to just under 10 percent from the previous month -- crisis levels for a trade-reliant developing nation. 

Fixed-asset investment has stalled, falling to a record low in August. 

And the latest purchasing managers’ data from the government and Caixin at right at the 50-point mark -- just a small step from contraction.
That’s unleashed a frantic push to keep China’s growth engine from crawling to a stop. 

Almost daily, Xi’s team rolls out new plans to cut taxes, boost business lending and ramp up infrastructure spending. 

Regulators are easing up on credit curbs and limits on property speculation. 

On Oct. 7, the central bank slashed the amount of cash lenders must set aside as reserves for the fourth time this year. 

It is as clear an admission as any that China’s 6.5 percent growth target is in trouble.
So are Xi’s designs of raising Deng’s upgrades to 11. 

In 1978, Deng set the most populous nation on a journey from impoverished backwater to surpassing Japan’s GDP on the way to America’s. 

Deng replaced Maoist egalitarianism with meritocratic forces. 

He loosened price controls, decollectivized agriculture, allowed entrepreneurs to start businesses, welcomed foreign investment and morphed China into a global manufacturing juggernaut.
Xi’s Made in China 2025 gambit aimed to push the economy upmarket – making it more about tech companies like Alibaba and Tencent than sweatshops. 

Yet now Xi is engaged in all-hands-on-deck battle against President Trump’s ploy to turn back the clock on China’s rising influence.
A key element of moving China beyond boom-and-bust cycles and making growth more productive is tackling dueling bubbles in credit, debt and property prices. 

That means increasing transparency, policing an out-of-control $20 trillion shadow-banking sector and dropping support for state-owned enterprises to create a vibrant private sector. 

Such upgrades will necessitate slower growth -- 5 percent or below.
Yet they are now largely on hold. 

Xi reverting to the stimulus-at-all-costs playbook that got China into financial hot water is a worrisome bookend for the Deng revolution. 

Xi is ensuring that when China’s debt-excess reckoning comes, what economists call a “Minsky moment,” it will be bigger, more spectacular and more globally impactful. 

If you thought the “Lehman shock” of 2008 was scary, wait until the No. 2 economy with $14 trillion of annual output goes off the rails.
Beijing is well aware of its plight – and the air of panic and paranoia is manifesting itself in bizarre ways.
The disappearance of a beloved actress, the detention of an Interpol bigwig and the visa troubles of a Western journalist wouldn’t normally be big concerns for economists. 

But there’s nothing typical about the lengths to which China is going to fend off President Trump’s escalating trade war.
The first narrative involves “X-Men” star Fan BingBing, who resurfaced last week after vanishing from public view. 

She was detained for alleged tax evasion and ordered to cough up $129 million. 

Yet her case was a stark reminder about something else: President Xi’s paranoia about capital outflows as wealthy mainlanders spirit their fortunes abroad.
The second concerns Meng Hongwei, the Chinese head of Interpol who went missing last month. Meng is being investigated for bribery. 

Yet Xi’s heavy-handed tactics highlight the lengths to which the Communist Party will go to maintain absolute control over its subjects, even those on the world stage. 

Couldn’t Interpol deal with any credible allegations in-house? 

It hardly helps that Xi’s anti-graft drive often seems more about sidelining rivals than cleansing the system.
The third narrative relates to Hong Kong-based Financial Times editor Victor Mallet, whose visa renewal was just rejected. 

Mallet is vice president of the Foreign Correspondents’ Club, which in August enraged Xi by hosting a pro-Hong Kong independence speaker. 

It may be the latest sign of Chinafication in a city that once stood as a financial green zone for investors tapping the mainland market.
Taken together, these plotlines make a mockery of Xi’s market-forces pledge. 

Rather than creating a predictable rule of law on which trusted economies thrive, Xi’s China is regressing in ways sure to chill foreign investment. 

This imperils his efforts in the President Trump era to portray China as a credible power ready to fill the global leadership void. 

Xi is engaged in his own Trumpian battle against the media –- even outside the mainland –- and going after high-profile rivals.
President Trump doesn’t get all the blame. 

If Xi had worked with Deng-like determination to recalibrate growth engines and wean China off exports, the economy would be less vulnerable to President Trump’s attacks. 

By certain metrics, meantime, Xi, is dragging China backward. 

Its press-freedom ranking from Reporters Without Borders worsened to 176th, three notches below 2013.
Irony abounds, of course. 

Earlier this year, Xi convinced the party to effectively make him president for life rather than the traditional 10 years. 

Past U.S. presidents would’ve condemned the power grab; Trump was all compliments. 

Yet the stronger Xi becomes, the more he clamps down on the media and dissenting voices needed to police the government and corporate titans.
Nor has Xi addressed a central paradox: how China increases innovation while walling off innovators from Google, Facebook and the big debates of the day. 

Those market forces Xi pledged to heed are coming from Silicon Valley, too. 

While Trump complains about fake news, Xi’s China has a “fake reform” problem, says Wang Yiming, deputy director of the State Council Development Research Center.
A propensity for own-goals, too. 

Case in point: China’s government inserted tiny spying chips into smartphones and other devices. 

Might that troll President Trump to retaliate further? 

“Conflict with China over trade, investment, technology and geopolitical dominance will only escalate,” says analyst Arthur Kroeber of Gavekal Research in Beijing.
That’s likely to further reduce China’s appetite for risk. 

Since Xi’s legitimacy is predicated on rapid growth, he’s likely to punt Deng 2.0 forward. 

It follows that the faster China grows over the next 12 months, the less reforming Xi’s men are doing behind the scenes.