A trade deal that is NOT a trade deal

The collapse of the US China trade negotiation is expected. After several months of negotiation, after all the hypes about how good the deal was, how close they were to a deal, it finally broke down. The Americans thought they had the Chinese fooled, that the Chinese were idiots and did not know they were being dragged into a shit hole of Unequal Treaty of the 21^st Century by the Americans.

The truth is that the Chinese knew exactly what the Americans were doing and were playing along giving the impression that all was well. And finally when they saw it right to scuttle the nonsensical negotiation, they did the necessary.

The trade negotiation was not about trade, not about buying how much soya beans or American products. It was about American supremacy and how the Americans wanted to treat China as a colony or as a state of the USA. The top agenda was about changing the Chinese economic system. The Americans demanded that China must dismantle all the state owned enterprises, let the enterprises run like American enterprises, free from the state.

According to Bannon, state owned enterprises with state control, state capitalism are bad and China must changed these to the American way of running their economy. The change is good for China and China would benefit and win the economic war. But China is winning the economic war with state owned enterprises and this Chinese economic model is good for China. And this is exactly the opposite in the US when their so called free model is losing. Now why would China want to change its winning formula? Why would China allow the Americans to dictate how it should run its economy and economy system?

Further, the Americans want the Chinese to amend its laws to protect American companies in China, stop state subsidies to state owned enterprises, pay the Chinese workers like American workers, calling Chinese workers as slave workers. They did not know that a Chinese worker can have a meal with two small pieces of meat and rice as against an American worker that needs a pound of meat for each meal. They cannot see the difference in the lifestyle of a Chinese workers and his needs and those of American workers and their needs. By the way, state subsidies is not subsidies per se. It is still added cost to the products, the money must come from somewhere, it is not free money. China cannot continue to subsidise its state owned enterprises without breaking its own piggy banks. It is productivity that matters.

They wanted American companies to operate in China and free from Chinese control and do what they want. They want to enter Chinese market and make their monies and no technology transfer. They accused China of forcing the companies to give up their technologies. The companies can always go elsewhere, no need to go to China, no need to share or be forced to share their technology.

Worse, they told the Chinese to stop Made in China 2025, ie China cannot pursue technological advancement to be better than the Americans. Can you believe it?

Basically the trade negotiation was never about trade but about changing the Chinese economic and political system, that China must be a democracy like the Americans, and also to suppress China from becoming an advanced technology country.

Why would China want to let the Americans to dictate what and how it should manage its economy and enterprises? The Americans were interfering in the domestic affairs and laws of China. And they expect the Chinese to say yes and agree with an Unequal Treaty where the Americans make all the demands and the Chinese must comply?

The few trade related matters include China buying American produces at American prices, eg soya beans, meat and poultry and at huge volumes in excess of what China needs, thus killing Chinese farmers and meat producers. 

The Americans also demanded China to buy in monetary terms, US$200b of American products, products that the Americans want to sell but the Chinese do not need, but not high tech products that the Chinese want but the Americans did not want to sell.

The trade negotiation was in all ways a political memorandum which the Chinese should surrender their national sovereignty to the Americans, an Unequal Treaty imposed on the Chinese in the 21^st Century.  In no ways would China agree and accept such a roguish and one sided agreement against their national interest. The trade negotiation is certain to fail until and unless the Americans are willing to negotiate a trade deal on equal basis. Until then, all the time and resources over the last few months are as good as wasted, a non starter.

The Chinese want a trade deal, the Americans want a political agreement to be the master of China.  In the words of Bannon, it is an armistice, a surrender document to acknowledge the US as the Empire and China as a colony.  Fail it should be.