Transcript: How This Trump Appointment Will Shake Up Trade w/China - Alan Tonelson, 22 December '16

Thom Hartmann: You need to know this... One of the few consistent messages Donald Trump had during his presidential campaign was that America needs to take a tougher line on China, which he said was killing our economy through unfair trade policies. It was an idea he hit on again and again during the primaries and the general election even as he flip-flopped on pretty much every other issue. And while all that tough talk could have been chalked up to campaign trail bluster, it appears as though Trump was serious.

On Wednesday he chose as the first head of the new White House National Trade Council one of the fiercest China hawks around: economist Peter Navarro. Navarro is the author of a number of books critical of China's trade policy and in 2012 came out with a documentary called "Death by China" that argued that China was a major threat to world peace.

He's also appeared on this program to talk about the similarities between modern China and Imperial Japan just before World War Two.

Peter Navarro: Imperial Japan back in the thirties had a vision of Asia that they wanted to create a co-prosperity sphere and control the territory and markets and resources of Asia. I think China in recent years dropping all pretense of its peaceful rise has had the same imperial dream.

Thom Hartmann: So what does Trump's choice of Peter Navarro mean for the US economy? Is he the guy America needs in order to put the failed era of so-called free trade behind us? Or will his push for more protectionist policies turn a trade war with China into an actual war? Joining me now is Alan Tonelson, founder of the RealityChek blog and author of the book The Race to the Bottom: Why A Worldwide Worker Surplus And Uncontrolled Free Trade Are Sinking American Living Standards. Alan, welcome back.

Alan Tonelson: Great to be here.

Thom Hartmann: Great to have you with us. So, first of all, what are your thoughts on Peter Navarro?

Alan Tonelson: Peter Navarro, I think, is an outstanding choice for this job. He's been one of only a very small handful of scholars, especially on the economic side, who understands that China represents not only a major economic threat to American prosperity, it represents a major security threat to the United States, and that these China challenges are very closely intertwined. And so again, I think he's a fantastic pick. I also think that the creation of this National Trade Council, which I understand is going to be institutionally on a par with the National Security Council and the National Economic Council, sends a very powerful message that Donald Trump intends to be a trade president, and a trade president who is determined to turn trade into an engine of US growth rather than continually job and production offshoring.

Thom Hartmann: That's pretty remarkable.

Alan Tonelson: It would be a sea-change.

Thom Hartmann: Yeah. Oh yeah, this is a complete repudiation of everything from Nixon's opening to China through Reagan's trying to ... to Clinton's presidency.

Alan Tonelson: Sure. And yet, what's really interesting is that even in the ranks of the most hidebound foreign-policy establishmentarians you can think of, there is a growing acknowledgement that what you might call this great American China policy experiment, that as you just pointed out did start with President Nixon back in 1971, has failed; that the idea has always been through various economic policies, national security policies, human rights policies even, we would do what we could to encourage China to join the so-called family of nations, we would end that multi-decade isolation that China had basically been plunged into after that communist takeover back in 1949.

Alan Tonelson: And again with this skillful combination, of course, of sticks and carrots, we would bring China into the 20th century or 21st century and, to use a very famous phrase from the George W Bush years, turn it into a responsible stakeholder in global politics and the world economy. And again, there are clear statements now we've had for organizations like the Council on Foreign Relations that this policy has failed, that China is not only living up to what you might call American expectations, it has been backsliding significantly in recent years on every front you can imagine.

Thom Hartmann: Yeah. I have been singing this song for two decades in my books and my writings and on my radio and television program. It's a little disheartening that a man like Donald Trump is carrying it forward.

Alan Tonelson: And he's also seen this for quite a long time. If you've been following him, if you listen to him on Howard Stern or wherever he was actually appearing, he's been hitting that China note very consistently for a long, long time now.

Thom Hartmann: Well, as have, frankly, most Americans.

Alan Tonelson: Most Americans and almost none of the Washington establishment, Republican and Democratic.

Thom Hartmann: So, is this, so, two quick questions. One, are we looking at the beginning of the death of neoliberalism, at least with regard to international relations and trade, and secondly, you mentioned that this, you know, that our trade policy with China represents a security threat.

Alan Tonelson: Right.

Thom Hartmann: Is that in the context of now we can't build a cruise missile without chips from China, or is that in the context of most of the computers that are for example running the Pentagon, that are running water supply systems all over the country, that are running electric grids around the country, are manufactured in China and may well have firmware or, you know, back doors in them that we don't even know about?

Alan Tonelson: Absolutely.

Thom Hartmann: I mean, or is there some third thing that I'm completely missing?

Alan Tonelson: There is some third thing, but those first two are absolutely right. The third thing is that you've had US technology giants, I mean, world-class firms like Intel and Qualcomm and Texas Instruments, Google, Yahoo, every tech giant you can think of transferring lots of their very best technology - much of which is very defense-related - to Chinese partners. And in fact, over the last year what you've seen is you've seen a new phase here. Companies like Intel and Qualcomm have been investing in so-called venture capital funds run by Chinese government controlled institutions.

Thom Hartmann: Here in the United States?

Alan Tonelson: There. There. That are working on things like drones, advance the intel comms hardware, with clear defense implications.

Thom Hartmann: So our corporations are building China's military.

Alan Tonelson: They have been for a long, long time. This is something of a new form of that, but what's astonishing is that President Obama has done absolutely nothing about this.

Thom Hartmann: Nor president Bush.

Alan Tonelson: Nor president Bush before him.

Thom Hartmann: Nor president Clinton.

Alan Tonelson: But it's reached a really advanced stage in these last few years because China has been putting so much more overt pressure on US companies to play ball or they get shut out of that market.

Thom Hartmann: So today in the Financial Times there was a, you know, a direct response to Peter Navarro from China.

Alan Tonelson: Right.

Thom Hartmann: And the spokesperson for China said words to the effect of whatever the Trump administration does with regard to trade, we will have a response, an appropriate response. Is that a threat? What does that mean? What would happen if China were to say, 'okay we're going to punish you' the way, for example, back in the late sixties and early seventies the Arabs punished us for supporting Israel and, you know, cut off our oil supply.

Alan Tonelson: Right.

Thom Hartmann: If China was to say, okay that's it, you know, no more iPhones going to the United States or something far more sophisticated than that. No more chips for your damn cruise missiles, you know. What happens?

Alan Tonelson: The problem with that so-called threat is that China is an export-led economy, still. China's leaders know this. China's businesses quote-unquote know this and the idea that China is going to declare war on its best customer could not be a clearer example of blowing smoke. And I think they know this and they're hoping they can bluff their way through this. And I think they've decided to bluff the wrong guy.

Thom Hartmann: That's very interesting. Now, President Obama suggested that the Trans-Pacific Partnership was his way of trying to box in China or contain China.

Alan Tonelson: Right.

Thom Hartmann: Although we've also heard from TPP advocates that the next step is to invite China into the TPP.

Alan Tonelson: Absolutely.

Thom Hartmann: So, was that, you know, was that just a way to try and sell it, that it really wouldn't have contained China?

Alan Tonelson: It was a fakeo national security argument and in fact it was totally fake because not only were there clear plans to eventually admit China, there was a backdoor for China that was written into TPP that Mr. Trump recognized during one of those Republican campaign debates. He was roundly roasted for this as being totally ignorant and guess what? He was absolutely right because TPP would have allowed goods overwhelmingly made with Chinese content into the United States duty-free. Son-of-a-gun. Son-of-a-gun.

Thom Hartmann: Yeah. So it looks like the world is upside down.

Alan Tonelson: Absolutely

Thom Hartmann: China has been rapidly militarizing...

Alan Tonelson: Yeah.

Thom Hartmann: And militarizing the South China Sea - the Spratly Islands, for example.

Alan Tonelson: Right.

Thom Hartmann: We talked to John Pilger a week or so ago and he was of the opinion that we were basically provoking a war with China. We now have four hundred military bases encircling that country, they have none encircling us. Do you think that there's any possibility, and by the way, his view on China is kind of almost the opposite of Peter Navarro's although they're both concerned about trade, but do you think that this could evolve into a hot war? Is there a possibility?

Alan Tonelson: There's always a chance, especially you've got such great military forces in this relatively confined region, great navies that are sailing all over the place, often in very close proximity to each other, aircraft streaking past one another, again often very close. It really seems to be quite accident-prone. However, I think that anyone who seriously argues that China has got legitimate worries about aggressive US intentions has to ask him or herself why has the United States for decades so actively enabled the rise of China economically, which inevitably resulted in the rise of China militarily? Why had so much US economic activity, including that technology transfer, fed that beast? It just doesn't make any sense.

Thom Hartmann: Well, we just have 30 seconds left. It seems to me like the reason why is because big corporations are making hundreds of billions of dollars.

Alan Tonelson: Oh, clearly.

Thom Hartmann: And they're buying American politicians.

Alan Tonelson: Clearly, but the bottom line is that as a result of many US actions, China is much stronger than it would have been otherwise.

Thom Hartmann: Yeah. No, I was in China in '86 and we've built ... that's a whole other rant. Alan Tonelson,

Alan Tonelson: Thank you so much.

Thom Hartmann: Thanks so much for dropping by.

Transcribed by Sue Nethercott.

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