A temporary truce, not peace. But the world has changed forever

China Translated - Briefing #50

I didn’t know you actually get paid for writing a column piece at the New York Times, so when I got my unexpected “windfall”, I decided to treat my friends to a good Teochew-style dinner last Sunday, on the bank of the Huangpu River.

During the dinner, I was asked what I thought of the ongoing trade war and whether the sky-high tariffs on China would be scaled back during the Geneva meeting between the US and Chinese delegations.

“I believed so,” I said.

“But back to what level?”

“Back to the ~60% level. It’s the level Trump originally suggested.”

“Wow, you are really optimistic, more optimistic than anyone we knew!” My friends were surprised.

“Well, the 145% tariff level was hiked very quickly during a fit of emotion and out of whack. So it could be lowered back just as quickly.”

It turned out I was only directionally correct. The next day, this Monday, we woke up to the news that apart from the 10% tariff that the US has applied to the whole world, all of US tariffs on China after the so-called “Liberation Day” have been either drastically slashed or delayed, without the Chinese side having to agree to any concessions other than slashing its own retaliatory tariffs. It’s as if the clock has been dialed back to April 2nd and nothing had happened. (But is it? Nothing happened?)

Trump called China’s bluff, but he quickly realized that, smoking high on the “China collapse” narrative fed by the likes of Gordon Chang and WSJ’s Wei Lingling, he had vastly miscalculated the power differential between the two powers. (I hope my NYT op-ed played a tiny role in persuading him!)

In the process, China did not blink, while Trump blinked tremendously every day. But Trump has at least one redeeming quality: his shamelessness. So he quickly and smartly folded to avoid a total economic disaster. Had he cared about saving his face, we would still be plunging into that very disaster right now.

But let’s be clear: This is only a truce, not peace—a tactical retreat, not a broader strategic rethinking. The US trade deficit hasn’t changed. The US will not embrace China as a friend and partner anytime soon. All the issues that prompted Trump to start this war are still in place. So, it would be naive to assume the duo will sail towards the end of their 90-day grace period with no more drama.

Something has not changed, but something has changed forever. Something, once seen, can’t be unseen. Subtle changes have been decisively imprinted onto our collective psychology.

First of all, the world gets to see how the US, under a madman, chosen by a mad movement, would cause havoc across the globe. For the first time since WWII, the world has had serious second thoughts about entrusting the majority of its assets in the US.

The world also had a concrete idea of how China would do in a “war” with this kind of America.

A trade war is a war. The US provoked this war, but China stood her ground. The US caved in and went back to where the whole thing started. Although in the past week, official censorship in China has been busy tempering domestic excitement about winning this war, for fear of inciting angry remorse from Trump, but let’s just be honest here: In this war, possibly the largest US-China conflict after the Korean War, China clearly had a tactical victory.

Through this war, the world gets to see that China and the US are indeed equals. “Equals” not just in terms of winning and losing, but also in manners: Even during the depths of this “war”, China didn’t resort to paranoia, didn’t resort to nationalistic hatred, and didn’t incite people to boycott American goods. A European economist I met during the height of the war in Shanghai marveled at the fact that Chinese people were not boycotting American goods, which was the biggest surprise and takeaway from his China trip (and I was in turn surprised by his surprise.)

Instead of getting emotional, China just matched Trump’s move proportionally each time, coldly but surely, no more, no less.

Instead of closing its borders, China opened its arms to the rest of the world, projecting self-confidence and heralding a new era of openness. For instance, just in this past week, China announced the visa-free policy for visitors from Brazil, Argentina, Chile, Peru, and Uruguay, adding to a long list of European countries.

The world will be in deep trouble if both of our two superpowers are paranoid and lacking self-confidence. The Cold War, for example, was essentially about two insecure, expansionist empires at each other’s throats. So the world should be relieved to see that at least one party in this Great Divorce of our century is a self-confident power, and won’t be prone to break things in front of the kids.