POSTSCRIPT / January 10, 2017 / Tuesday


Opinion Columnist

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Trump won’t mind losing Phl to China?

IS PRESIDENT-ELECT Donald Trump ready to lose the Philippines to China and Russia on account of his alleged great friendship with President Rodrigo Duterte and their common partiality to Russian President Vladimir Putin? We doubt it.
There are many reasons why Trump will not sacrifice this strategic ally in the Asia-Pacific region, but the biggest reason is that above his being a global businessman Trump is (will be) the President of the greatest military power and biggest economy on earth.
Candidate Trump may be different from President Trump, but his campaign promises that had helped elect him still ring in voters’ ears. Then there is the pressure of the US security establishment and the conservative politicians lording it over Capitol Hill.
Such domestic pressure, not so much his alleged budding kinship with Manila’s leader, will influence his eventual China policy. If he decides that reining in China is to the best interest of the US, that will be it, whatever Duterte thinks or wants.
Even as a candidate, Trump has shown a not-so-friendly attitude toward Beijing. He has vowed to slap steep tariffs on Chinese imports. He has declared China a currency manipulator. Watch for his follow-through.
He demands a renegotiation of trade agreements lopsided against the US. He sees China’s growth as illegitimate, fueled by an unfair currency policy and resulting in the flooding of the US with cheap Chinese products.
In an unprecedented move violating the US one-China policy, Trump talked with the lady president of Taiwan, an island republic long regarded by Beijing as a renegade province that it will eventually absorb.
There are no clues yet of how Trump views Duterte’s advanced state of infatuation with China – and also Russia. We may have to wait till after Trump’s inauguration on Jan. 20.
Nat’l interest to trump business interests?
THERE IS also much speculation on what levers, including business pressure, China might pull to influence Trump’s moves affecting US security operations in the Philippines and the rest of the region.
Trump has business interests around the globe, including China. He has not made clear how he intends to avoid conflicts by separating his business interests from his duties as president of the world’s biggest economy.
He has had his eye on China’s fast growing property market. A month before the November elections, talk was rife that his Trump Hotel Collection plans to build dozens of hotels in major Chinese cities in partnership with Chinese firms.
Since big Chinese companies are mostly government-controlled and all land is owned by the state, Trump or his property associates will end up doing business with the government of China. Conflicts could arise.
The Industrial and Commercial Bank of China, the world’s biggest lender, rents space in Trump Tower, a 58-story mixed-use skyscraper on Fifth Avenue in Midtown Manhattan.
The China state-owned ICBC was Trump Tower’s largest office tenant as of 2012, occupying 11 percent of its office space, at $95.48 per square foot, a comparatively high rate for the address.
The Secret Service protects the building serving as headquarters of The Trump Organization and housing the primary penthouse condominium residence of Trump.
Bringing jobs, factories back to US
TRUMP has promised to revive US manufacturing, bring jobs back from abroad, and nullify trade agreements disadvantageous to American workers. He said: “They get the jobs, they get the factories, they get the cash, and all we get — we get illegal immigration and we get drugs.”
Manufacturing jobs have declined 37 percent since their 1979 peak. Cheap labor overseas has reduced costs and conditioned consumers to expect low-priced goods. Today, only 2 percent of goods are manufactured in the US.
Even his own Donald J. Trump collection of suits, ties, dress shirts and accessories is made overseas.
Ivanka Trump’s apparel line is sewn in Asia, including China, under a contract with G-III Apparel Group Inc. The brand generates some $100 million in sales, banking on cheap labor that produces $140 sheath dresses and $80 sweaters.
If manufacturing apparel is moved back to the US, as Trump has threatened to do, that could double the cost of goods, according to some estimates.
Official figures have it that US goods and services trade with China totaled some $659.4 billion in 2015. Exports were $161.6 billion, imports $497.8 billion. The US goods and services trade deficit with China was $336.2 billion in 2015.
China is the US’s largest goods trading partner with $598 billion in total goods traded in 2015. The US goods trade deficit with China was $366 billion that year.
As of October 2016, the US debt to China was $1.115 trillion, or almost a third (29 percent) of the $3.841 trillion in Treasury bills, notes, and bonds held by foreign countries. The rest of the $19.9trillion debt was owed to the American public or the US government itself.
Since November 2013, when China held $1.317 trillion in US debt, it has been reducing its holdings to allow its currency, the yuan renminbi, to rise by loosening its peg to the dollar. The idea is to make the yuan more attractive to forex traders in global markets.
China’s long-term goal is for the yuan to replace the US dollar as the world’s global currency. Yesterday, their exchange rate was 0.144278 Chinese yuan to the US dollar.
Trump has accused China of manipulating the yuan to keep it low enough to remain competitive with other emerging markets. Before February 2014, China had been strengthening its yuan in response to US pressure, but reversed course when the dollar rose 25 percent in 2014 and 2015, dragging the yuan with it.

(First published in the Philippine STAR of January 10, 2017)

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