The leaders of the world’s two largest economies each presented their views in a pair of speeches on Friday that highlight the extent to which the U.S. in the Trump presidency is ceding leadership in trade.
President Xi Jinping of China, the world’s second-largest economy, discussed climate change, globalization, multilateralism and connectivity in an address on Friday to leaders of 21 countries who gathered in Vietnam for the annual meeting of the Asia-Pacific Economic Council.
He spoke minutes after President Trump, who talked mostly about America and the indignities he contends it has suffered at the hands of trading partners.
Xi spoke of connection. “This is a new journey toward greater integration with the world and an open economy of higher standards,” he said. “We should uphold multilateralism, pursue shared growth through consultation and collaboration, forge closer partnerships, and build a community with a shared future for mankind.”
Trump listed grievances. He accused China of stealing intellectual property, muscling out private enterprise, hacking into the computer systems of U.S. companies, competing unfairly and failing to open markets for goods and services. “We are not going to let the United States be taken advantage of anymore,” Trump told the gathering.
Xi used the words “shared” and “community” eight times apiece. He used the word “open” 18 times, three times more than Trump, who used the word “community” once. Twice Xi mentioned “climate change,” which Trump never uttered.
The stance marked a turnabout from a day earlier in Beijing, where Trump flattered Xi and blamed his American predecessors for the imbalance in trade between the two countries.
Trump tends to talk tough when surrounded by the press. Alone with his fellow leaders, it seems, is another story. After meeting on the sidelines of the summit with Russian President Vladimir Putin, Trump told reporters that he believed assurances by Putin that Russia “did not meddle in our election.”
Though Trump later appeared to walk back the suggestion that he placed more stock in the assurances of the former head of the KGB than he does in a determination by U.S. intelligence agencies that Russia interfered in the election, the exchanges with both Putin and Xi suggest struggles by the self-proclaimed dealmaker to hold his own with counterparts.
Xi talked of China’s Belt and Road initiative, as part of which the country has pledged to spend more $1 trillion to build infrastructure across Asia, Africa and Europe over the next decade. As Anja Manuel, a former adviser to Secretary of State Condoleezza Rice, noted recently in the Atlantic:
According to the CIA, 92 countries counted China as their largest exports or imports partner in 2015, far more than the United States at 57. What’s most astounding is the speed with which China achieved this. While the country was the world’s largest recipient of World Bank and Asian Development Bank loans in the 1980s and 90s, in recent years, China alone loaned more to developing countries than did the World Bank.
One result: There are now more than 10,000 Chinese firms (most privately owned) operating in Africa, up from 2,500 a decade ago, according to research by McKinsey & Co. Visit South Africa, to name one destination for Chinese investment, and you’ll see the evidence at construction sites and shops all around you.
At APEC, 11 nations, including Australia, Japan, Mexico and Canada, said they had achieved significant progress toward a revised trans-Pacific trade pact, which Trump withdrew from in March. America “has lost its leadership role,” Jayant Menon, an economist at the Asian Development Bank, told the Times. “And China is quickly replacing it.”
Which leaves the question how the smallness of the vision expressed by Trump helps the people who voted for him, particularly those in areas of the Midwest and Northeast that have experienced the trauma of the loss of jobs in manufacturing.
The U.S. imports more goods from China than it exports. The difference stood at $347 billion in 2016, a decrease of 5.5% from a year earlier. But the U.S. exports more services to China than it imports. The difference was $37 billion in 2016, up 12.3% from year earlier.
The surplus in services represents demand in China for such American exports as logistics, software, financial know-how and tickets to movies made in Hollywood. It reflects visits to the U.S. by people from China, and students who come to the U.S. from China to study.
“If our trade deficit for goods is somehow related to unfair trade practices, then how does Trump explain America’s large and growing surpluses for services,” Mark Perry, a professor of economics at the University of Michigan, told the South China Morning Post in May.
Trump doesn’t say much about that surplus. Nor does he put forth or embrace efforts to bring college-educated graduates to Rust Belt cities that might benefit from an influx of productivity and capital.
Writing recently in the Harvard Political Review, Henry Sullivan Atkins cited the payoff in Pittsburgh of efforts to transform an economy that once relied on heavy manufacturing.
According to Atkins, “Pittsburgh offers a textbook example of successfully attracting these college-educated adults: The number of city residents aged twenty-five and older with a college degree skyrocketed by 37.3 percent from 2000 to 2013.
Over roughly the same period, productivity among workers in the Pittsburgh region rose 10 percent, average annual wages increased 9 percent and the overall standard of living rose 13 percent.
“This demographic sea change didn’t occur in a vacuum; rather, it was the result of a series of careful policymaking decisions that came from the city,” Atkins writes. “Firstly, the city invested in providing a top-notch education for its residents, collaborating with Carnegie Mellon and the University of Pittsburgh to transform Pittsburgh from the Steel City of the 1980s into a STEM juggernaut in fields like computing, robotics and biotechnology.”
In September, Trump directed the Department of Education to invest $200 million toward the teaching of science, technology, engineering and math in public schools. Tech giants, including Amazon, Facebook, Google and Microsoft, added $300 million to the push.
“Where that money will be pulled from remains to be seen, but with around just 40 percent of schools currently teaching computer programming, it would be good if this push had some success,” noted Mallory Locklear for Engadget.
Credit Trump for jump-starting a partnership with potential for payoff in the form of college graduates, skills and jobs. Leadership takes a thousand such acts (and the investments that accompany them), but the approach hints at a way forward for the U.S. that has nothing to do with withdrawing from a world that has moved on.
