We Need To Talk About China

As I write this, President Trump has announced that he is putting a hard hold on U.S. funding for the WHO.  Bravo, I say.  WHO has alternatively been inept and has acted as China’s propaganda arm with respect to the Coronavirus pandemic.  Indeed it declared in January that COVID19 could not be transmitted human to human.  It did not declare a pandemic until March 11 and by then COVID19 was raging across the globe.  But it was even worse.  As the New York Times and other news agencies thoroughly documented China’s suppression of information early in the outbreak, as they arrested doctors, destroyed samples and evidence, and Chinese journalists “disappeared” early in the outbreak when the virus could conceivably have been contained.  Worse, Dr. Tedro gushed with praise for China, stating that “China bought the world time,” and cited them as a “model” for how to handle and outbreak.  At times, it sounded suspiciously like the CCP had provided his script.  None of this was true, however, and anyone with a properly functioning central nervous system knew China was burying the truth, even going so far as to blame the U.S. military, which WHO did not comment on.  Trump is spot on.  If WHO is a propaganda arm of the CCP, let China fund its own propaganda.  The best summary of China’s culpability (and WHO’s complicit propagandizing) is the indefatigable Pat Condell – The Virus That Shames China.
(https://www.youtube.com/watch?v=XgBCBEQwgwM)

But the question is what to do about China.  Its abhorrent behavior in the outbreak of COVID19 is just the latest and most devastating consequence of the totalitarian rule of the CCP.  It is Chernobyl to the 10th power.  After coronavirus burns itself out, our relationship with China cannot be status quo ante.  Here are some ideas of steps I would consider taking vis-à-vis China in the coming years.

COVID19  Commission
The consequences of COVID19 were so devastating, a magnitude much greater that 9/11 both in human costs and the toll on the economy.   It is essential that we get a bipartisan commission to examine the pandemic, its causes, and responses.  Most importantly, we need to determine to what extent China and WHO worked in concert to cover up China’s response, and whether COVID19 originated in a Chinese bioweapons lab or in a wet market as has been claimed.  Further, the COVID19 Commission needs to make recommendations about national catastrophes like pandemics, EMP, or nuclear attacks so that we can be as prepared as we can be. The Commission also should develop a comprehensive list of strategic products that will be prohibited from being manufactured in China.

Journalists
Following the expulsion of journalists by China, we should expel a proportionate number of Chinese journalists.  The Iron Law of Reciprocity applies here.  We know that the Chinese are misreporting cases and fatalities from COVID19.  But we have limited transparency.  We should not be asymmetric in this regard.

Students and Academia.
Normally, students and academia are off limits from diplomatic tensions.  I am especially loathe to punish young people for the crimes of a regime.  But the recent arrests at Harvard and Yale of faculty members for lying about their Chinese ties and the IP theft has been rampant.  We have no reliable way of vetting who is conducting espionage or IP theft for the CCP and both direct theft and the running parallel labs have been well documented by our intelligence agencies.  Finally, if Communism is a superior system, why should WE be educating their youth, only to be competitors.  Scott Adams proposed to send 1 student back for every Chinese fentanyl death.  I would go further.  Send them all home.

Set Off
In commercial life, it is often the case that you may exercise set off rights.  In other words if you owe someone money, but you are harmed by them, you set off the amount of debt by the monetized value of the harm.  The damage done by the Chinese criminal negligence and coverup of COVID19 is enormous.  People died; lives will be permanently altered.  We should consider telling the Chinese that we are setting off against U.S. obligations held in China; we will only pay, say, 75% of the obligation owed.  Sure, it would roil markets.  But our markets have already been roiled.

Taxing investments in China. – Private equity especially helped gut our manufacturing base.  Whole funds were dedicated to buying companies, outsourcing to China and then flipping it for a handsome profit (sound familiar, Mitt?).   I would propose an outbound capital tariff.  PE firms that do this would be subject to an automatic carried interest tax to end this game.  A parallel levy would be instituted on corporations.

Dissolve NATO and Replace
It’s pretty clear that NATO has major issues.  It is a Cold War remnant.  Many members won’t live up to their commitments and Turkey clearly doesn’t belong but there is no mechanism to expel them. I would consider dissolving NATO and replacing it with a reformed hub and spoke concept, with branches in  Europe, the Middle East,  and Asia.   It would be anchored by Poland, Hungary and the Czech Republic in Europe, India in Asia, and perhaps Saudi Arabia and Israel in the Middle East to push back against Iran.  We could call it the Association of Independent States or something and it would be a mutual defense and trading organization.

Stop the Stupid Stuff
The Paris Accord was probably the dumbest treaty I have ever seen.  It gave China a pass on emissions until 2025 while hamstringing the U.S. with harsh emissions standards.  Worse, it formed a “green fund” to develop “green projects” in developing nations that China was exempt from contributing.  Trump was absolutely correct in jettisoning this one-sided deal.  Likewise, he was correct in kicking the TPP to the curb.  At bottom, good trading partners don’t steal each other’s stuff. 

Asia expert Meredith Sumpter said she “fears the deterioration of U.S.-China relations” after COVID19.  But a more accurate term would be “realistically adjusted.”   We made a horrible strategic error in allowing China into the WTO in the mid 90s and assumed it would become a more responsible world player.  If anything, it has become more authoritarian, more aggressive and with COVID19 coverup, the regime has demonstrated that it is willing to violate norms of international behavior, and inflict enormous harm on the world.  Post-pandemic, it cannot be status quo ante.   Of course some of my ideas are very raw and would need lots of work but we need to take real, concrete countermeasures after the pandemic ends.