Summer holidays in Australia are traditionally a time for lazily catching up on long-neglected books. In the cold heart of Beijing they are also doing some catch-up reading — at a more feverish pace.
“The Chinese are now frantically reading everything Peter Navarro has written and becoming increasingly worried,” Deborah Elms, executive director of the Asia Trade Institute, recently told CNBC.
So who is Navarro? The 67-year-old economics professor at the University of California has been selected by Donald Trump to be director of the newly established National Trade Council, which will have a key advisory role in trade and industry policy.
Like Trump, Navarro is somewhat ideologically dissident and difficult to characterise. He is a registered Democrat, although he was once a Republican and claims to have written speeches for Ronald Reagan. He believes in the threats of man-made climate change and cites left-wing New York Times columnist Paul Krugman in a way that would make many conservatives cringe. He is also a ferocious China hawk.
I have read Navarro’s two key books, Death By China: Confronting the Dragon — A Global Wake-up Call and Crouching Tiger: What China’s Militarism Means for the World. They should be compulsory for anyone interested in the future shape of US-China relations.
Crouching Tiger is the more recent and also the better written. It essentially looks at the likelihood of war between China and the US, and draws on the advice of a range of leading military and geo-strategic analysts. It examines China’s military capabilities exhaustively, quite soberly outlines a variety of possible future scenarios and looks at the policies each side may adopt to avoid war. The author ultimately comes to the view that some type of military conflict is almost inevitable.
Navarro’s earlier book, Death By China (which has its own accompanying movie on YouTube), is in some ways the more provocative. It has been labelled “hate speech” by Chinese Communist Party media organs. It is this work that first drew Navarro to the attention of the US president-elect. Indeed, reading Death By China is at times a bit like listening to a Trump rally.
This Navarro quote gives a bit of the flavour: “Every time a consumer walks in to Walmart, the first thing they have to do is be aware enough to look for the label. Then when they pick up that good and it says ‘Made in China’, I want them to think, ‘Hmm. It might either break down or kill me, number one. This thing, if I buy it, might cost me or someone in my family or my friends their job.’ Last, ‘Hey if I buy this that money is gonna go over there to help finance what is essentially one of the most rapid military buildups of a totalitarian regime since … when? The 30s.’ I mean, make no mistake about that.”
Like a Trump rally, in Death by China, few members of America’s corporate and government establishment escape criticism (in this case for their cluelessness or self-interested cheerleading when it comes to China). Like their counterparts in Australia, some entirely deserve it.
Again, like Trump, some of the things Navarro says are just plain wrong. For example, the statement that “Australia runs an ever-larger trade deficit with China — despite its vast natural resource wealth” is incorrect. We have long run a trade surplus.
Other controversial statements are often not substantiated. His allegation that the Chinese “reverse-engineered a semiconductor design from Intel” piqued my interest as I used to do quite a bit of legal work for Intel Corporation in China. While what he claims is not impossible, he provides no hard evidence for it.
That said, like with Trump, if you push past the bombast, Navarro does actually draw attention to important facts and issues that have been left unexamined for too long.
“No story about the recent globalisation era can ignore the leading role played by China, both as a key driver and beneficiary of it,” economist Tony Makin recently wrote in these pages.
That is true. At the same time one needs to recognise there also is something deeply unsatisfactory and flawed about China’s development and its integration into the world trading system. China-style state-sponsored mercantilism is not actually what apostles of free trade Adam Smith or David Ricardo had in mind.
There are also big unanswered questions as to whether it has been strategically wise to allow a regime with values so hostile to our own to become such an industrial and military powerhouse.
China has never really been just a business partner, it is also a strategic rival. People often lose sight of that.
Furthermore, the reassuring argument that trade with and investment in China must “inevitably” lead to a more liberal or democratic country has not really come to pass. In truth it was always about as likely as hoping that our leading corporations “engaging” with the Construction Forestry Mining and Energy Union would cause its leaders to somehow morph into card-carrying Institute of Public Affairs members.
Will anything actually change? There are many who have argued that Trump’s threats with respect to China (for example, the suggestion he will impose a 45 per cent tariff on all Chinese goods) were just campaign hyperbole and are best ignored. To those I say: Look at those who Trump is appointing to key roles. Read what they have written. Consider again which way you want to bet.
First published in The Australian as “Donald Trump’s China Hawk Sends Crouching Tiger Into A Spin” on 3rd January 2017 © Dan Ryan 2024. All Rights Reserved.
