Apple Daily: Who's more provocative -- Trump or Xi?

2018/08/11 19:43:22 fontsize-small fontsize-default fontsize-big
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"Will Trump make China great again? The Belt and Road Initiative and international order" is the eye-catching title of a paper by two British scholars, Astrid Nordin and Mikael Weissmann, who said Trump's isolationism is likely to help Xi Jinping realize his Chinese dream of the nation's "great rejuvenation."

Trump would not agree with the two academics' view, according to a Politico report which quoted the United States president as telling 13 American CEOs on Aug. 7 that Xi's Belt and Road Initiative (BRI) is an "insulting" project that would sabotage global trade.

It looks weird for a U.S. leader who himself has been challenging the existing global economic order to call his rival's initiative insulting. Are Trump and Xi really disparaging each other? Or is Xi's BRI, if successful, likely to destroy the current global economic order?

Because the BRI has been compared to "the Marshall Plan of the 21st century" -- with both seen as attempts to export the excess capacity of their countries' industries and extend their economic influence to recipient countries -- let's look at their differences:

First, over 90 percent of the investment under the U.S.'s Marshall Plan was in the form of grants, while China's is mostly in the form of loans for major infrastructure projects. If partner countries fail to pay back the loans, their facilities and resources will end up in China's hands.

After World War II, U.S. grants were mostly used to help rebuild European businesses that then made money and paid taxes to their governments. Those funds in turn were used to complete infrastructure projects.

Second, the Marshall Plan succeeded in engendering post-war Europe's economic integration, leading to the birth of the European Union. During the process, recipient countries were encouraged to help one another and forced to engage in institutional reforms that enabled them to lower trade barriers and to march toward a common market.

China, in contrast, is itself not an open and fair market. It's a centrally controlled economy, which gave Trump a good reason to wage a trade war. Trump knows that China is neither interested in nor capable of creating an open market like the EU in its BRI target areas.

Indeed, if China's BRI could create a regional economic bloc, it would pose a real challenge to the existing world trade order. Precisely because China is not able to lead a regional reform of the economic system, its BRI will probably not succeed as the Marshall Plan did.

Even China's close ally Russia has published a report citing a Kazakhstan sociologist's study that found that the percentage of Kazakhs who do not like Chinese immigrants has risen from 18 percent in 2007, when China began to introduce BRI investments in that country, to 46 percent last year. China's economic aggression has even alarmed Russia.

In addition to neighboring countries' wariness, China is now under great pressure from a trade war with the U.S. and its own financial crisis. More ominously, China's chronically ill state economic system raises a big question of whether it is capable of pushing forward the grand BRI. (Editorial abstract - Aug. 11, 2018)

(By S.C. Chang)

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