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Will Trump hop on an American Silk Road?

By       Message Pepe Escobar     Permalink
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From Asia Times

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If it's a trade war with China he would rather have, the new president will find himself on the back foot from day one


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Hysteria reigns supreme at the dawn of the Trump era, with the President rebranded across the whole ideological spectrum as an American Mao or even an American Hitler.

Let's step away from this "American [media] carnage" to examine a few facts concerning the unofficial G2: US-China relations.

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A case can be made that Beijing has already landed a 1-2-3 punch, pre-empting the possibility of a US-initiated trade war.

It started with Jack Ma's by now notorious visit to Trump Tower, when he developed his idea of helping small American businesses sell their products in China and across Asia through Alibaba's network, thus creating at least "1 million jobs" (Ma's number) in the US.

Then came President Xi Jinping's masterclass at Davos, where he positioned himself as Ronald Xi Reagan selling "inclusive" globalization to the stalwarts of international turbo-capitalism.

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Finally Ma again, also at Davos, came up with a crystal clear, cause-and-effect formulation on globalization and US economic distress.

Ma said, "In the past 30 years, companies like IBM, Cisco and Microsoft made tons of money." The problem was how the US spent the wealth: "In the past 30 years, America has had 13 wars at a cost of US$14.2 trillion." So what if the US "had spent part of that money on building up their infrastructure, helping white-collar and blue-collar workers? You're supposed to spend money on your own people. It's not that other countries steal American jobs. It is your strategy -- that you did not distribute the money in a proper way."

In the meantime, something quite extraordinary happened at the Asian Financial Forum in Hong Kong, one day before Xi's Davos speech. China Investment Corporation (CIC) chairman Ding Xuedong, referring to Trump's much-vaunted US$1 trillion infrastructure building plan, said that created fabulous investment opportunities for China and his US$800 billion sovereign fund.

According to Ding, Washington will need at least an astonishing US$8 trillion to fund the infrastructure spectacular. Federal government and US private investors are not enough: "They have to rely on foreign investors." And CIC is ready for it -- focusing already on "alternative investments in the US."

Assuming the Trump administration welcomes CIC -- and that's a major "if" -- it will be a slow start. Only US$80 billion of CIC's overseas investments are currently held in US government debt. A massive national security/antitrust controversy will be inevitable. And yet, if successful, the move could be a win-win towards an American Silk Road.

Time to tweak your supply chain

Now let's take a look at the options. Trump's campaign promises to declare China a currency manipulator and slap a 45 percent tariff on Chinese imports are, in theory, still on the table.

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Peter Navarro -- author of Death by China and Crouching Tiger: What China's Militarism Means for the World -- will be directing the new National Trade Council at the White House, focusing on "China's unfair subsidy behavior."

At the same time, countless reports such as this one are focusing on US-China trade war scenarios. And they do not look good for making America great again.

To start with, Beijing is not manipulating the yuan. On the contrary, the People's Bank of China wants a stable exchange rate, translating into stable trade.

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Pepe Escobar is an independent geopolitical analyst. He writes for RT, Sputnik and TomDispatch, and is a frequent contributor to websites and radio and TV shows ranging from the US to East Asia. He is the former roving correspondent for Asia (more...)
 

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