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Title: China War Triple Play: Trade War, Tech War, and Boom!
Published: 2018-05-09
Source: https://www.youtube.com/watch?v=fzXAX8QF32Q
Title: China War Triple Play: Trade War, Tech War, and Boom!
Published: 2018-05-09
Source: https://www.youtube.com/watch?v=fzXAX8QF32Q
1/31
Hello, I am Peter Lee for NewsBuds, China Watch. This week on China Watch, Trade War Jaw Jaw has the United States and the People's Republic of China exchange demands. It's a phony war for now, threats, posturing media ops and for Donald Trump at least political jockeying in the run up to the US elections in November. Meanwhile the United States forges ahead in the real war, the2/31
tech war with China centered on 5G wireless. Full speed ahead here, this is the war America wants and expects to win. And there's an important anniversary, May 7, 1999, the day Phil Clinton lost China. Yeah, you'll get the full story here at China Watch. And only at China Watch because we're the last of the independence. America is experiencing relative decline in Asia, but is unwilling to3/31
admit it or accept it. Well, the end game for a declining hedgeman hoping to sustain its overseas cloud is often war. And that's the direction we're heading. Now we got trade war and tech war and the table is getting set for real war. The dead tree and virtual pages of big media are filled with China-related media ops, hand-ringing and finger-wagging, trying to preserve and prolong American4/31
centrality in Asia by all and any means necessary. The United States sent a big delegation to Beijing led by Treasury Secretary Steve Mnuchin to present its demands for trade, investment and regulatory and behavioral reforms by the People's Republic of China. Got the most important issue? Why are there no women on this panel? According to a leaked version of the U.S. proposed negotiation framework, the PRC is5/31
supposed to cut the trade deficit with the United States by 200 billion, stop government support of high tech industries that displeases the United States, stop cyber-spying and allow the free trade of opium and unrestricted prostillization by foreign missionaries. Just kidding about the opium and the foreign missionaries thing, but the whole document has that whiff of imperial white explaining to the Asiatic's that was, I think, designed6/31
equally to satisfy U.S. feelings of importance and to humiliate and provoke the Chinese. Here's a sample. China understands if it fails to uphold any commitment under this framework for discussion, it is likely the United States will impose retaliatory tariffs. China commits not to take any retaliatory action in response. China confirms it will not oppose challenge or otherwise retaliate against the United States imposition of restrictions on7/31
investments from China insensitive U.S. technology sectors or sectors critical to U.S. national security. China also understands it will not oppose, challenge or take any form of action against the United States imposition of additional tariffs or restrictions. China will withdraw its WTO complaints regarding designation of China as non-market economy by the United States and European Union and will refrain from challenging the treatment of China as a8/31
non-market economy. China will not take any retaliatory action in response to actions taken or to be taken by the United States. The interesting and I think overlooked point of these proposals is that it puts interpretation of the agreement and its execution and determination of any Chinese violations entirely at the discretion of the United States. That's a unilateral exercise which is deeply satisfying to Donald Trump but9/31
probably is not going to fly with China or for that matter any nation that harbors doubts about the objectivity and even handiness of the U.S. blame fingering apparatus. There's supposed to be international agencies and treaties that adjudicate these messy disputes. Things like the World Trade Organization and the United Nations. Under Donald Trump's America First Policy however, the U.S. is openly riding roughshod over these institutions. And10/31
if the People's Republic of China was ready to entertain the possibility of gutting its maiden China 2025 plans to move into high tech manufacturing in order to please Donald Trump, it is unlikely they will give Uber China Trade Hawk Peter Navarro the role of Judge Jury and Executioner in rating China's performance. So, there's going to be a lot of haggling, foot dragging and public relations posturing11/31
from both sides as China figures out what kinds of concessions it needs to make and which can be ignored. There's an election coming up in the United States in November 2018. Their congressional midterms for representatives and senators and Xi Jinping can be expected to drag things out and see if, as promised, the Democrats can gain a majority in the house of representatives. In that case, Donald12/31
Trump might be wrestling with impeachment and might have less appetite for fighting a trade war with China. Well, my personal feeling is Trump will respond to political setbacks by escalating tensions to create that anti-China rally around the Donald vibe, so be careful what you wish for. One war that is not phony and is not going away is the U.S. tech war against China, specifically against China's13/31
ambitions to become a major global player in the trillion dollar market for generation wireless networks, equipment and services. I've covered what I call a 5G war in multiple installments of China watch and the story isn't going away. Even as negotiators blabbing Beijing, the U.S. is proceeding with decisive and what it hopes are irreversible measures to win the ongoing 5G battle. Pushing back on China and China's14/31
leading telecoms companies, that's Huawei and ZTE, on 5G is clearly an ongoing U.S. all of government effort that is now slopping over into the private sector and even abroad. To recap previous developments, the U.S. government banned Huawei and ZTE from the U.S. telecom backbone on security concerns and also pressured Huawei's primary handset retailers that's AT&T and Best Buy not to even carry Huawei phones. Then by15/31
presidential order, Donald Trump blocked a takeover of U.S. chipmaker Qualcomm on the grounds that the new owner might be insufficiently enthusiastic about taking on China's Huawei on 5G. Then ZTE was basically put on a fast track to extinction by a U.S. Department of Commerce ruling that blocked it from buying critical components, mainly Qualcomm chips for seven years. And last week, an order was issued that U.S.16/31
military personnel could no longer use Huawei or ZTE phones. Then, there's the FCC's announced measures that would ban Huawei and ZTE from the private sector build out of rural internet access. The obvious Trump administration moves to promote U.S. 5G national champions against China is now having knock-on effects in the private sector and remarkably overseas as well. Consider the proposed $25 billion mega-merger between T-Mobile and Sprint,17/31
the third and fourth largest wireless telephony companies in the United States. Last year, the long-discussed T-Mobile Sprint merger was dead in the water because of antitrust concerns, but now it's been repackaged as a strategic anti-China U.S. national 5G play, as pitched by Maverick T-Mobile Bosman and Here Solon Victim, Jean-Lijer. Secretary of Commerce Wilbur Ross, who instituted the U.S. ban against ZTE, declared himself intrigued by the18/31
5G angle, which merger proponents must find pretty encouraging. An interesting international wrinkle here is that the majority owner of Sprint is Japan's soft bank, which is run by Japan's richest man and friend of Trump, Masayoshi Song. Soft bank owns 83% of Sprint and it is openly desperate for the T-Mobile merger. And you know what? Soft bank is also rolling out a 5G network of its own19/31
in Japan, and its partner is China's ZTE. Will Soft bank grease the wheels for the T-Mobile Sprint mega-merger by ditching ZTE in Japan and joining the U.S. led 5G blockade of China? Watch this space! Another space to watch is Taiwan. As in, Taiwan's media tech applies for ZTE shipment permit under government order. Who cares? Well, now that ZTE is banned from U.S. procurement, its biggest problem20/31
is that it is blocked from buying somewhere around 500 million dollars per year of chips from Qualcomm, like it used to do. No chips means no phones and no future for ZTE. Time to look to non-US chip suppliers. Well, who's one of the biggest non-US suppliers of those chips Qualcomm used to sell to ZTE? Well, media tech of Taiwan, of course. And just when the U.S.21/31
ZTE ban was issued, the Taiwan government suddenly announced new export permit procedures that media tech would have to follow in order to sell to ZTE. Coincidence? I think not. I don't think the Pentagon or the PRC think it's a coincidence either. The timing and content make this a big deal, I think. Taiwan has basically dropped the mask of plucky little Asian democracy and joined America's China22/31
containment axis. Good luck with that. A few years from now, I guess we'll find out whether the technology blockade brings China to its knees or whether China responds by becoming self-sufficient and high-performance chips, kicks the ass of the Western semiconductor industry and if media tech in Taiwan become collateral damage in America's 5G war. Next up, May 7th is an important anniversary in modern Chinese history. It23/31
is the day. Bill Clinton lost China. On May 7th, 1999, U.S. aircraft bombed the Chinese Embassy in Belgrade at the height of the NATO-led military campaign against Yugoslavia, killing three officially and rendering the building uninhabitable. Anti-American demonstrations erupted throughout China and deeply hurt the feelings of the American people who were shocked at Chinese trellishness in refusing to accept President Clinton's apology. The Chinese don't believe it24/31
was an accident. Heck, I don't even believe it was an accident. At the time, a Danish newspaper, Pauli Ticken, teamed with the observer for a multiple-sourced investigative report drawing on NATO and U.S. military sources and concluding that the attack was intentional. For some further circumstantial corroboration, consider this. The mission package that hit the Chinese Embassy was literally the only bombing package in the entire NATO war25/31
that was assembled by the Central Intelligence Agency or CIA. The mission was flown as a special U.S. only operation outside the NATO command structure by B2 bombers flying out of Kansas. CIA Director George Tennant testified to Congress that the thing was just a terrible mistake, that this complex mission had actually been flown to take out a minor Serbian logistics office in Belgrade, out of date maps26/31
were used, so sorry. But to me, it seems more likely, we bombed it on purpose. As to why the United States might bomb the Chinese Embassy, the most interesting allegation was that the U.S. was trying to destroy the wreckage of a 117A stealth fighter bomber that had been recently shot down over Yugoslavia and had made its way to the Chinese Embassy. Not an implausible story, actually.27/31
Another reason might have been that the Clinton administration was bracing for public release of the Cox Commission report, a highly political document that accused the Clinton administration and favored corporations of endangering U.S. security by playing footsie with the Chinese. Political defense by military offense, in other words, you know, like Clinton knocking down that harmless pharmaceutical plant in Sudan to show he was tough on Al Qaeda28/31
and in charge after the devastating truck bomb attacks on U.S. embassies in Tanzania and Kenya. How could Clinton be in China's pocket if he was bombing their embassy? The third reason and the reason the Chinese focused on was that China was an attractive target because it was weak and had no capacity to defend itself or retaliate directly against a U.S. attack. The Belgrade attack provided the29/31
impetus and justification for massive Chinese investments in military capabilities and technologies over the last 20 years. That included the rollout of China's J-20 stealth fighter developed allegedly with input from the Belgrade wreckage. And the Belgrade Embassy attack united the Chinese leadership and elite in the understanding that the PRC's core national security mission was to find ways to resist, counteract, and when possible, roll back the U.S.30/31
military threat. And that's where we are today. China united in its perception of a U.S. threat and hardened to withstand a trade war, a tech war, and possibly a real war. Thanks Bill. That's all for this week. Thank you for watching and thank you for supporting NewsBud. We're 100% people fund an independent media and without you, the people NewsBud doesn't happen. And China Watch doesn't happen