Talking to China Expert James McGregor About Trump?s Haphazard Trade War

But if Trump’s madman approach to trade negotiation has frustrated politicians and economists in the United States — where the federal government has already signed off on a $16 billion package for farmers smarting from a decrease in Chinese imports — the state apparatus in Beijing appears to be just as flummoxed by America’s irrational actor.James McGregor, an American author, businessman, and Council on Foreign Relations member who has lived in China for three decades, considers the Trump trade war a danger and an opportunity for both sides, as the normal mechanisms of influence and exchange are falling away. Intelligencer spoke with him about Trump’s strategy, or lack there-of, and the reasons why China might treat this as a pivotal moment in their economic relationship with the U.S., while we are more likely to remain complacent.To start at the beginning, what does the U.S. want out of a trade war, and what does China not want to give up?Well the U.S. actually wants China to do away with state capitalism and its industrial policies, while China just wants to move ahead in the way it’s been moving ahead in the past.Basically it’s Trump’s impression that China is taking advantage of the American trade system, which is partly true. And that’s a real threat, we’ve got to make our system work better.You were recently quoted by Thomas Friedman, saying that China “instead of reforming and opening, has been reforming and closing.” Could you expand on that concept?I just returned from Washington and there’s one bipartisan thought in Washington, which is “China is a bad guy.” How did that come about? If you really want to get China to change, TPP would have been a huge incentive, as it was a major trading block that – in order to become part of it, they would have had to conform to.The unique thing about Trump is that he’s this orange wrecking ball, and the Chinese don’t know how to deal with him. China is always looking for strategy and logic, and Trump never gets near either of those things.Is there a strategy evolving in China, or is it up in the air over there as well?The Chinese strategy is to treat this like a moment to regroup and protect themselves and to reduce and eventually eliminate their dependence on American technology, and reduce their dependence on American agriculture. It’s all unnecessary, and there could be tragic consequences.How much pain do you think Trump is willing to endure if the economy really starts to take a hit?The Chinese have been in America asking people, “When does Trump need a deal for his reelection,” because they look at Trump as only caring about himself. I don’t want the regulators coming in and doing a dawn raid on my company for antitrust or pricing issues.” They were scared of China as much as they were focused on the market.China had America in a really good position and they overreached. If the trade war really hits Chinese growth, that’s a problem.Trump asserts that China has more to lose in a trade war than the U.S. Do you think that’s correct?There are no winners in a trade war, both sides lose. That’s how they’re thinking: “How do we really work together to move ahead because of this?” Meanwhile, leaders in the United States are yelling at each other on cable news everydayIn November 2018, President Xi and Trump came to a sort of detente at the G20 meeting in Buenos Aires. The Chinese and Americans will both have a framework for restarting the talks, and by then they both might be feeling enough economic pain in their own countries that they’ll be motivated to get this on a path toward trying to smooth it out.Do you see an American exit strategy?I guess the exit strategy would be to let China come to a deal in which both sides can claim it’s good for them. How would this tariff affect the squeeze the U.S. is already facing?Just when we need allies to work with on China, Trump’s trying to alienate every country he can. Could be in the end, folks will say, ‘It’s not particularly original, it doesn’t particularly work for me,’ that is, ‘It’s got two good things and nine bad things, I’m out,’ ” Pompeo said in an audio recording of the private meeting obtained by The Washington Post. In the meantime, Europe is still learning how to live with America’s impertinent president.The DOJ releases transcript of Trump lawyer’s possibly obstruction-related voicemail for Flynn, but rebuffs federal judge’s request for moreThe Washington Post reports:Federal prosecutors on Friday declined to make public transcripts of recorded conversations between Michael Flynn and Russia’s ambassador to the United States in December 2016, despite a judge’s order. …The transcripts of the Flynn-Kisylak calls would provide a rare glimpse into the power of American surveillance to capture the private discussions of foreign emissaries — and an intimate look at a budding relationship between a top Russian official and one of the president-elect’s most trusted lieutenants in the weeks before Trump took office.Bloomberg on what they did release:A lawyer for President Donald Trump asked for a “heads up” from former national Security Advisor Michael Flynn’s attorney as Flynn was poised to enter a cooperation agreement with prosecutors from Special Counsel Robert Mueller’s office, according to a transcript of the message made available Friday.The lawyer, John Dowd, said in a voicemail the warning was necessary for the sake of “protecting all our interests, if we can, without you having to give up any … confidential information.” Dowd also reminded the general’s lawyer of the president’s “feelings” toward Flynn and said “that still remains.” …In the transcript, which was peppered with ellipses and incomplete phrases, Dowd raised the prospect of information that might be damaging to the president.