The good China is the one that has built great cities and provided housing and education for millions of people. The good China allows its citizens to travel around the world and get an education, and has helped create a growing middle class.
The bad China is the one that’s mostly hidden to outsiders. It’s the government that controls Internet access for its citizens, cracks down on political dissent, closes newspapers, jails dissidents, restricts individual freedoms, launches cyber-attacks, and uses its clout around the world to manipulate economies.
And all the while it is building up its military strength.
There is no question that dealing with China, along with Russia, is going to continue to be our biggest challenge long-term.
Our competition with China right now is economic, and we’ve been losing that battle for a long time. China has become our third-largest trading partner, behind only our neighbors Canada and Mexico. Yet China holds more of our American debt—more than $1.5 trillion—than any other country. (Although Japan is close.) As we saw in the summer of 2015 when the Chinese stock markets collapsed, our economies are tied together in a very negative way.
Many years ago, there was an adage that “When General Motors sneezes, the stock market catches a cold.” In those days, GM was such a big player in the economy that if it stumbled, our economy suffered, too. The recent precipitous decline of the Chinese stock market caused our own Dow Jones average to plummet 1,000 points in a couple of days as investors ran for cover. Likewise, our trade deficit has been a dangerous drag on our economy. When China devalues its currency, this upsets the already tenuous balance of trade.
We know that we have become dependent on the emerging Chinese markets—but they have become dependent on us, too. In 2014, we imported 17 percent more Chinese goods than any other country in the world. Hong Kong, which is a wholly owned subsidiary of China, was second and Japan a distant third. The health of the Chinese economy depends on us. They need our trade more than we need them.
Foolishly, we don’t use that to our advantage.
For the last few decades, China’s economy has been growing at a phenomenal 9 to 10 percent each year, although more recently there are signs of a cooling off. Despite these recent upheavals, economists have made predictions that within the next decade, China will replace the United States as the world’s largest economy. What have we done to make sure we will be able to compete with them? What have we done to beat them?
I’ll tell you what we’ve done: We’ve rolled over.
There are people who wish I wouldn’t refer to China as our enemy. But that’s exactly what they are. They have destroyed entire industries by utilizing low-wage workers, cost us tens of thousands of jobs, spied on our businesses, stolen our technology, and have manipulated and devalued their currency, which makes importing our goods more expensive—and sometimes, impossible.
I know from my own experience that this is a difficult problem. The Chinese are very savvy businesspeople, and they have great advantages over our manufacturers. I’ve had several Trump-brand products made there.
That’s a good example of the difference between a politician and a businessman. To stay in business I have to be smarter than my competition. I could make a very important point if I refused to have my goods manufactured there.
As long as we’re playing under these conditions American companies don’t have a choice. Third-world countries have substantially lower production costs. They have lower overhead and pay their workers a lot less. As a businessman, I have an obligation to all of my employees and to consumers and stockholders to produce the best product at the lowest possible price.
However, as a matter of American global policy, we want to take away China’s advantages. Last year, President Obama went to China and they held a beautiful banquet for him. Before Chinese president Xi Jinping made a reciprocal visit here, the White House announced plans for a lavish dinner. I made the point that hosting a state dinner in his honor was about the last thing I would do. Instead I’d tell him it was time we got down to business, and we would go to work. For starters, the Chinese regime must stop devaluing their currency because doing so makes it even harder for the rest of the world to compete.
The reality is that China needs a strong American economy as much as we need their business. In May 2015, for example, Americans bought $1 out of every $5 worth of products China exported that month. We buy almost 20 percent of all their exports, considerably more than the EU does, which is the second-biggest consumer of Chinese goods. And that American percentage is increasing every year, making China more and more dependent on the American consumer for its own prosperity.
As Steve Forbes wrote in his magazine, “China’s holdings in US Treasuries, which reached record levels in 2013, are setting off alarm bells. They shouldn’t. They underscore that Beijing is becoming more dependent on the US and the rest of the world for its strength and prosperity.”
Remember: The Chinese need us as much as we need them.
Maybe even more.
So what should we do about it? We are going to use the leverage we have to change the situation so that it favors America and our people. We have to start by getting tough with the Chinese. I’ve negotiated with Chinese companies. I know how they do business. I’m actually landlord to China’s largest bank, which has its offices in Trump Tower. We’ve successfully negotiated several leases. It hasn’t always been easy. These are skilled people but I never backed down.
Believe me, I know the best negotiators in this country, and a lot of them would be ready to go to work creating a fair balance of trade. If people like Carl Icahn were representing America, we would see a big difference in our trading policy.
We actually hold a very strong hand. Unfortunately, our politicians are either too stupid or too foolish to understand this. Maybe they are both. We have several very good options, but it is always important to be flexible—and never reveal our cards. Our politicians talk too much.
President Obama makes strong statements and promises us vigorous actions then nothing happens.
So what happens when he makes those promises and never follows through? He loses all his credibility. I wonder what our great generals, men like MacArthur and Patton, would say if they heard a president revealing our plans for the Middle East or daring our enemies to cross a line.
A very good story recently quoted a businessman describing me as “unpredictable,” noting it was one of my better qualities and helped me make a lot of money. Now that I am running for president, which so many experts predicted I would not do, that same trait has made it really hard for all my critics to figure out how to compete with my message. They’re all busy playing nicely, following all the establishment rules, taking every predictable step, trying to fit inside the conventional wisdom—and when I don’t play that game, they don’t know how to respond.
Tipping your hand is one of the dumbest mistakes you can make in a military confrontation. I’ve read a lot of history and I don’t recall reading that General George Washington made hotel reservations in Valley Forge, or that he sent ahead his best wishes to the Hessians in Trenton. The element of surprise wins battles. So I don’t tell the other side what I’m doing, I don’t warn them, and I don’t let them fit me comfortably into a predictable pattern. I don’t want people to know exactly what I’m doing—or thinking. I like being unpredictable.
It keeps them off balance.
As a leader, I also know there are times when you should keep your cards close to the vest. When I was assembling property to build a skyscraper, for example, I had to buy many small lots so I could combine them into one very large and valuable buildable location, and total secrecy was an absolute necessity. If the owners of those properties had found out what I was doing they would have been able to squeeze considerably more money out of me for their properties.