China had a great Donald Trump era experience. It did not look that way, given the former U.S. president’s trade war, Twitter tirades and general anti-China bombast.
Below the surface, though, China was able to project itself as the stabler power as Trump upended global institutions. President Xi Jinping used the Trumpian chaos to conclude history’s biggest trade deal. Beijing harnessed its “Belt and Road” initiative and Asian Infrastructure Investment Bank to curry favor everywhere. Trump, meanwhile, did zero to raise America’s economic game, playing right into Xi’s hands.
Now, Joe Manchin is helping to make 2021 a year that China won, too. By suddenly torpedoing President Joe Biden’s roughly $2 trillion Build Back Better Plan, the senator from West Virginia is looking out more for China’s competitive edge than America’s.
What a supreme irony. The same year Time magazine celebrated electric-vehicle pioneer Elon Musk as person of the year, Manchin’s act of political sabotage made coal mines great again.
Goldman Sachs was quick to assess the damage. By killing a major effort to recalibrate the economy, gross domestic product in the first quarter of 2022 will now be 2%. That’s down from Goldman’s previous 3% estimate. Yet the downgrade to America’s longer-term prospects is far more worrisome.
The Omicron variant puts the U.S. on the brink of even bigger downgrades. Though China’s “zero-Covid” has been criticized for over-the-top lockdowns and travel curbs, the U.S. is awash in pandemic fatigue at the very worst moment. U.S. vaccination rates have largely stalled near the 62% mark, leaving a 332-million-person economy in harm’s way.
This is not a let’s-celebrate-China column. There are myriad ways in which the Xi era since late 2012 did real damage to the China brand. Xi’s chilling crackdown in Hong Kong, tech leaders like Jack Ma and saber-rattling toward Taiwan are epic own goals tarnishing China’s global standing. Beijing’s image-destroying policies in Xinjiang are marring a Winter Olympics set to start in February.
China’s censorship of the global media, the internet and corporate boardrooms everywhere increased exponentially on Xi’s watch. This latter dynamic has CEOs around the globe bending their corporate messages into pretzels to justify doing business in China.
Look no further than the International Olympic Committee literally reducing itself to doing public relations for China over forced labor camps in Xinjiang. Can the “Olympic spirit” ever recover from top IOC official Richard Pound saying “I simply do not know. Personally, I do not know\ when asked about human rights violations? Or the IOC covering for China concerning the fate of tennis star Peng Shuai? I doubt it.
The real bull market in 2021 was in CEOs caving to Xi. Yet Manchin is unwittingly helping Xi increase China’s global footprint anyway. As Manchin looks out for the fossil fuel industry, China’s government is investing trillions to dominate the future of renewable energy, electric vehicles, green infrastructure, semiconductors, 5G, aerospace, robots, biotechnology, automation, 5G, robots, digital currencies while leading the race to mint the most tech unicorns.
By scuttling, watering down or miniaturizing Washington’s most important investments in tomorrow, the Manchin’s among U.S. lawmakers are making the Communist Party’s job that much easier.
True, Biden’s first year in office has not gone as Beijing expected. He hasn’t yet removed Trump’s taxes on hundreds of billions of dollars of mainland goods. Nor has Biden’s assertive plan to force some Chinese companies to delist from U.S. exchanges cheered China’s leaders. Biden greatly increased the number of mainland companies in which Americans can invest.
In other ways, though, Beijing has been pleasantly surprised by other Biden policy aspects. Biden, for example, has not rejoined the Trans-Pacific Partnership fold, as Xi feared. That created space for China to roll out the 15 Asia-Pacific country Regional Comprehensive Economic Partnership juggernaut.
The Manchin downgrade in Washington means that the U.S. isn’t tending to domestic challenges by building economic muscle. Biden’s plan would’ve raised productivity and supported entrepreneurship. It would mean the U.S. is getting its engines in shape to produce new jobs, not using old-school economic tools like trade wars to wrestle them back from Asia.
Manchin just ceded 2022 to Xi’s economy. It’s always possible Biden can get Manchin back to the negotiating table. But a skeletal U.S. stimulus would be an early Christmas gift to China.