As mentioned in yesterday’s LinkSwarm, Trump has offered temporary tariff relief for everyone…except China. China got hit with even higher tariffs. Evidently the only “trade war” that is happening right now is with China…and China is losing.
Behind the global economic chaos provoked by president Trump’s tariff tsunami, there are growing indications of a strategic purpose. It is now conceivable that plunging into, and then retreating from, a generalised trade war was actually a deliberate means to a truly geostrategic end: to thwart China’s ambition to replace the US as the dominant world superpower.
While Trump’s public statements still chiefly concern the need to impose economic measures to correct decades of unfair foreign trade, senior US officials, including Pete Hegseth, defence secretary, and Scott Bessent, treasury secretary, are increasingly taking a more strategic geopolitical line.
In late January, Hegseth told the US armed forces that America would “work with allies and partners to deter aggression in the Indo-Pacific by communist China”. In Panama, he said that Beijing was investing in the region for military and economic advantages. “War with China is certainly not inevitable … But together we must [deter] China’s threats in this hemisphere.”
Bessent has linked recent US tariff tactics with a shared geostrategic pushback against China, stating that “we can probably reach a deal with our allies, and then we can approach China as a group”.
In this light, the suspension of tariff combat for 90 days with most countries, while doubling down on the levies imposed on China, leaves Beijing isolated and in the firing line.
So far, after reciprocal gestures and vowing to “fight to the end”, Beijing has focused mainly on rallying anti-US sentiment across the globe. But India and Australia declined to join forces with China. ASEAN remains caught between opposing powers. The EU, in a quandary over Russia and Ukraine, likewise continues to hedge.
China has long sought to frame the West as a feeble, fragmented anachronism. Is it conceivable that, by unleashing economic fire and fury on friends and then provisionally reining it in, Trump might succeed, where Western multilateral diplomacy failed, in forcibly forging a credible consensus of opposition to the threat of global Chinese hegemony?
One assumes that Washington understands that it cannot prevail over China alone and a substantive US pivot to the Asia Pacific to press home a contest with China is starting to emerge. Trump has already reached out to Japan and South Korea, and US officials have tackled Vietnam. The Philippines, in striking distance of any hostilities over Taiwan, support the US and talk about preparing for war.
Taiwan, South Korea, India, Japan, Vietnam, Philippines: It’s like a greatest hits of nations that have bad blood with China. It’s no wonder they’ve chosen to trade with the world’s biggest economy rather than a historical enemy with designs of territorial expansion.
The developing world now faces a binary choice, and ruthlessly exploited debt and resource dependencies are not a firm basis for loyalty. This remains the case despite decades of nugatory US investment and engagement.
Under Trump’s tariffs, it is too soon to know how far China will be able to maintain the global supply lines on which its aspirations to become the world leader of innovative consumer production depend. Nor will it be easy to develop export markets big enough to compensate for declining sales to the West and its allies. Beijing’s military influence has begun to expand, but remains localised.
Most importantly, the question of Taiwan is now implicit in US language about deterring Chinese aggression. How does Trump’s assault on China’s geostrategic ambitions affect the threat of an imminent blockade, or even a full-scale invasion? The widespread view that an invasion isn’t inevitable now gives little real assurance.
Indeed, with the US taking an active stance, the status quo based on “ambiguity” is gone. Preparations to besiege Taiwan, let alone to invade, would be spotted in time for pre-emptive action.
104% tariffs on China are not enough, I’m advocating 400%. I do business in China, they don’t play by the rules. They’ve been in the WTO for decades. They have never abided by any of the rules they agreed to when they came in for decades. They cheat, they steal, they steal IP, I can’t litigate in their courts. They take product, technology, they steal it, they manufacture it and sell it back here …
I want Xi on an airplane to Washington to level the playing field. This is not about tariffs anymore. Nobody has taken on China yet … As someone who actually does business there, I’ve had enough. I speak for millions of Americans who have IP that have been stolen by the Chinese … the government cheats and steals and FINALLY an administration … that puts up and says “enough!” …
Xi can only stay the supreme leader if people are employed … It’s time to squeeze Chinese heads into the wall NOW!
Or check out this video from Chris Chappell of China Uncensored.
“The CCP wants to defend global trade. But they’re the ones who destroyed it in the first place.”
“The Chinese Communist Party is freaking out about US tariffs. They’ve launched a full-on propaganda blitz, calling the tariffs abuse. And blackmail. And if anyone is an expert on abuse and blackmail, it’s the CCP. The CCP is also claiming to be the defender of global trade. Yes, China is going to safeguard multilateralism and the multilateral trading system. And they totally are! I’m not being sarcastic here. They really are.”
“The CCP is going to fight for the current global trading system. It’s not because they love international cooperation, which is just propaganda BS. It’s because the CCP has spent decades manipulating global trade to their advantage. So there’s no way they’re going to let all that lying and cheating go to waste. Plus, global trade is basically the only thing keeping China’s economy afloat.”
“China is an export economy. That means their economy relies on manufacturing stuff for the rest of the world to buy. Chinese manufacturing exploded after China joined the World Trade Organization in 2001. Because China was able to make stuff more cheaply than other countries, consumers around the world benefited from lower prices on Chinese imports. But countries also lost tons of manufacturing jobs to China. The US alone lost more than two million jobs between 1999 and 2011 as a result of Chinese imports.”
“Besides manufacturing, the other big driver of China’s recent economic growth was real estate investment. Which became a problem after China’s real estate market started to collapse in 2020. So, the CCP decided to double down on manufacturing. They pumped billions of dollars into building more factories and exporting more goods to keep China’s economy from crashing. Which did work, but now China is making way more stuff than the rest of the world can buy. That’s called overcapacity.”
“China is making way more batteries, solar panels, and electric vehicles than the rest of the world wants. And because China has so much overcapacity, it also doesn’t import much from other countries. Which means China now has a trade surplus of almost a trillion dollars. That’s more than any country’s trade surplus in the past century, even adjusted for inflation. And China doesn’t show signs of stopping. Its export volume is growing three times as fast as global trade. That’s insane.”
“So what happens when China exports more and more stuff? They have to cut prices to be able to sell it all. Which means other countries lose even more jobs to China. Entire industries shut down. There are now certain products you can only buy from China. And when those are critical things like medical supplies, that gives China massive political and economic leverage on other countries. Remember when China stopped exporting medical goods during the early days of Covid? Yeah, that, but on an even bigger scale.”
“So that’s why the Chinese Communist Party is fighting to maintain the global trading system. They dominate it. And without it, China’s economy would fail. And their political control would crumble.”
“But how did China get here? It’s not just about cheap labor. The CCP has built an entire economic system to dominate global trade. Back when China joined the World Trade Organization in 2001, they promised to follow rules to ensure fair trade practices. To be fair to the CCP, something I never thought I’d say, they did make a bunch of economic reforms in order to get into the WTO. But after they joined, they violated the WTO rules repeatedly. They’ve been cheating the system for decades. And largely getting away with it. You see, the WTO rules are set up to prevent government intervention that would artificially distort global trade. But in a communist system, it’s government intervention all the way down.”
He brings up the example of honey producers getting subsidies at every step of production.
“This industrial policy is incredibly effective for the CCP. It’s how the CCP jump-started its entire electric vehicle industry. And they’re now flooding the rest of the world with cheap EVs.”
“Yes, these are all things that other countries do, too. But no one does them on the same scale as the CCP. In 2019, the CCP spent almost $250 billion dollars on its industrial policy. That’s massive.”
“But it’s not just industrial policy. There are also ways China’s entire financial system distorts global trade. Like everything in China, the financial system is political. All banks in China are either state-owned or state-linked, so the CCP controls how they give out loans. Which means state-owned banks give lots of loans to state-owned enterprises, and to other companies the CCP wants to support. And if those companies can’t pay them back? The banks just keep extending the loans. Because it’s better to take the financial risk than to risk getting on the CCP’s bad side.”
“The CCP’s industrial policy and financial system is destroying the global trading system. More countries have stopped relying on the World Trade Organization to stop the CCP’s unfair trade practices. Instead, they’re putting their own tariffs on Chinese goods. Like Europe’s tariffs on China’s EVs. Or President Trump’s tariffs on China’s…everything.”
Then there’s China’s use of transshipping to other countries to get around tariffs and sanctions. “The US has had anti-dumping tariffs on Chinese honey since 2001. So Chinese exporters have tried to get around it with what’s called ‘honey laundering.'”
“So that’s how the CCP’s industrial policy, their financial system, and their export system are all designed to manipulate global trade. They’ve kept China’s economy going, while hurting other countries. Both advanced economies and developing economies are dealing with the fallout. But it’s gotten so bad, that the rest of the world has no choice but to fight back. Not just the US, but also Europe. And as a result, we may be watching the collapse of global free trade. And it’s the CCP’s fault.”
Also, Trump has the upper hand in the fight because China’s factories had already been closing left and right before he took office, due to rising labor costs and dwindling foreign customers. Here’s a China Observer video from 11 months ago speculating that 90% of Chinese factories might have to close.
And that was before Trump’s tariffs.
Trump is going to win his trade showdown with Xi because American has a much stronger economy than China, one that supports vastly higher domestic consumption, and because he holds all the cards.
This story has a little bit of everything: Fake identities, forged passports, human trafficking, shadowy gambling associates and communist infiltrators. But mostly it’s about small Philippines town mayor Alice Guo, who actually seems to be Guo Hua Ping, a Chinese national with ties to the CCP.
“A Philippino mayor may actually be a Chinese woman working for the CCP.”
The Philippines may be onto a Chinese conspiracy so intricate and wild you’d think it was the plot to some thriller flick. I would call it Dr. Filipi-No.”
“Small town Filipino mayor Alice Guo was accused of being a Chinese spy.”
“Guo drew national attention after the police raided Zun Yuan Technology Inc., a Philippine Offshore Gaming Operator, or POGO, in her constituency of Bamban back in March.”
I doubt this POGO is that cute.
“During the raid, police found several documents that tied Guo to the POGO’s operations. This led to a Senate hearing, where Guo was questioned about her involvement with the POGO and seemed unable to answer basic questions about her background.” Some of those clipped.
“Guo gave conflicting information about her father, Angelito Guo, whose business records identify him as Jian Zhong Guo, at one point saying he was Filipino, even though she had previously said he was Chinese.”
“For one, the birth certificates of Alice Guo and her two siblings show that her father, Angelito Guo, married her supposed mother, Amelia Leal, but the three certificates have three different marriage dates.” More of that sloppy CCP corner cutting on display.
“Buuuuut, there might not be an Amelia Leal. Investigators found no records of her birth. Leading one official from the Philippines Statistics Authority to say that it’s possible she doesn’t exist.”
“So who is Guo’s mother, if it’s not Amelia Leal? One candidate is a Chinese citizen named Lin Wenyi. She was listed as an incorporator of several registered companies of the mayor’s family.”
Guo not only listed Lin Wenyi as her mother in bank accounts, she “listed a whole bunch of names, such as ‘Winnie Leal,’ ‘Wenny Leal Lin,’ ‘Weny Lin Leal,’ ‘Winnie C. Leal’ and ‘Amelia Lim Leal.'”
“If Alice Guo’s real mother is Chinese, then this throws a pretty big wrench into Guo’s claim to Filipino citizenship, since the Philippines grants citizenship through the mother.”
“The mayor Alice Guo’s fingerprints matched that of a Chinese woman named Guo Hua Ping.”
“Records from the Board of Investments of the Guo family’s application for a Special Investors Resident Visa show Alice Guo, or shall I say, Guo Hua Ping, entered the Philippines on January 12, 2003 when she was 13 years old…According to those documents, rather than being born in Tarlac on July 12, 1986, Guo was actually born in Fujian, China on August 31, 1990.”
“According to Senator Risa Hontiveros, ‘This confirms what I have suspected all along. Mayor Alice is a fake Filipino—or should I say, Guo Hua Ping. She is a Chinese national masquerading as [a] Filipino citizen to facilitate crimes being committed by [Philippine Offshore Gaming Operators].'”
“The Senate probe also found that Guo allegedly faked her incorporators in the POGO Hongsheng Gaming Technology by stealing the identities of vendors at the public market in Tarlac.”
The Philippine’s Nationalist People’s Coalition expelled Guo from its roster. “Too much of a liar and too corrupt to be a politician? This is almost more impressive than it is nefarious.”
There’s also the human trafficking charges. “Guo was linked to an alleged ‘grand conspiracy to commit labor trafficking’ of around 500 foreign POGO workers who were rescued during a raid on the compound on March 13.”
“Now lots of POGO scam suspects are trying to flee the Philippines. Guo’s family is being subpoenaed. This includes Guo’s father, suspected biological mother, and her siblings Shiela, Seimen and Wesley Leal, along with the accountant in charge of filing documents for Guo family’s businesses.” Her business partners are also being sought.
One wonders how many Guo Hua Pings there are used assumed identities not just in the Philippines, but here in the U.S. How many of the Chinese nationals pouring over our southern border thanks to the Biden Administration’s open borders policies will be taking up fake American identities and positions in illegal gambling operations, fentanyl distribution, or marijuana grow operations?
Despite increasing sanctions and scrutiny on hostile Chinese business practices and intellectual property theft, private equity firms have previously managed to mostly evade scrutiny for taking Chinese money. That may finally be changing.
Takeaways:
“The US is starting to wise up on Chinese investments. It’s been cracking down by closing loopholes But not all the loopholes have been closed, Which means China could be getting US trade secrets.”
“Better late than never. This feels like your grandparents finally learning how to unplug and plug back in the WiFi router. Shouldn’t have taken this long to figure out something so obvious, but glad they eventually got there.”
“After years of letting China buy up sensitive US technology, property, and companies, the US government is finally putting its foot down. In 2018, Trump signed the Foreign Investment Risk Review Modernization Act, or FIRRMA. This changed how the Committee on Foreign Investment, or CFIUS, screened investments in the US for national security issues.”
“Before, CFIUS could only review foreign investments if they resulted in a controlling stake. Now CIFIUS can review any investment.”
“When Biden got into office, he ordered CFIUS to look at all investments that affect critical aspects of the US supply chain, or Americans’ personal data, and several other things.”
“As you might imagine, this has not gone over well with Wall Street, which loves Chinese money more than Snoop Dogg loves marijuana.”
“‘Wall Street now stands as an increasingly lonely voice arguing for more engagement with China.’ This was going on even as China was taking a wrecking ball to its economy with its zero covid policy, committing genocide against an ethnic minority, and selling the organs of political prisoners for profit. Find someone that loves you the way Wall Street loves Chinese money. They’re ride or die…and the people that die are political prisoners.”
“Private equity and venture capital firms were able to get an exception granted in FIRRMA for limited partners. That means that if a foreign entity becomes a limited partner in, say, a private equity fund, CFIUS doesn’t have any jurisdiction over it. Should have seen something like this coming. Finding loopholes is what Wall Street does best.”
“The type of investments that private equity firms are involved in means that Chinese companies could get access to critical technology. Stuff that could affect national security. Portfolio details could hold national economic or intelligence value.”
“The China Investment Corporation or CIC. At $1.3 trillion US dollars, it’s the largest sovereign wealth fund in the world. ‘CIC has said repeatedly that it separates commercial activities from governmental functions and makes its investment decisions independently.'”
“CIC’s board of directors includes representatives from the Chinese government.”
“CIC’s Deputy General Manager Qi Bin has explained that cooperation with developed economies is to be leveraged to obtain advanced technology.”
“CIC is also partnering with large investment companies, like Goldman Sachs, Japan’s Nomura Holdings, and France’s BNP Paribas. CIC’s Deputy General Manager Qi Bin has talked about leveraging these partnerships for the ‘win-win’ ‘mutual benefit’…of Chinese companies. Somehow I’m getting the sense that “win win” has a different meaning in China. I think in English we would call this ‘short-term win for long-term loss.’ I’ll give you my money and you give me your trade secrets.”
There’s finally some efforts for CFIUS to close private equity loopholes.
Pardon me if I express deep skepticism that the Biden White House will actually constrict the inflow of Chinese money…