Brian Cunningham | Why Trump has the upper hand against China

In Donald Trump’s world, you’re either a winner or a loser, and when it comes to China he thinks we’re losers. In fact, the opposite is true, and on the eve of his first big meeting with Xi Jinping, the president hopefully knows two crucial things: 1) China’s communist police state is on the ropes economically and politically and 2) America’s inherent strengths continue to give us the edge. Negotiators are always looking for leverage, and China’s weaknesses, which many Americans are unfamiliar with, are numerous, getting worse—and give the president numerous cards to play against Xi.

Trump told the Financial Times over the weekend that when it comes to China, “it’s all about trade.” There’s a lot more to it than that. We have to deal with Beijing on issues ranging from North Korea and Iran (China is part of the P5+1 nuclear deal) to cybersecurity, militarization of space, our opposition to the new Asian Investment Bank (a Chinese-led version of the World Bank), the South China Sea, climate change (the worst thing China exports is smog that drifts across the Pacific) and more. Think of the People’s Republic as a Rubik’s Cube: multi-faceted, complex and hard to solve.

So trade is just one part of this, and contrary to what politician Trump said on the campaign trail, the trend lines are moving in our direction. We don’t have a $500 billion deficit with China like he falsely claims. Our trade balance (goods and services) was actually 38% lower than that, at $310 billion, and based on the first two months of the year, we’re on track to close the merchandise gap by another 7%. By the way, these numbers have been falling since 2015. Bottom line: with trade shifting our way, the president shouldn’t throw this progress into reverse by sparking a trade war that’ll kill American jobs and drive prices up. Xi arrives in Mar-A-Lago with the conviction that tariff talk was just Trump pandering to voters who didn’t know any better.

And it’s not just more trade dollars that are flowing our way, it’s investment dollars too—and this is one of the cards that Trump should play. Fact: Chinese businesses are pouring record amounts of capital into the United States. Direct investment last year totaled $45.6 billion, says the Rhodium Group’s China Investment Monitor. That’s triple the 2015 number—and ten times more than just five years ago. Chinese investment has touched 425 of 435 Congressional districts and means jobs for some 141,000 Americans—including 53,000 added last year alone, the report adds. And these aren’t construction jobs that go away after a few months; they’re permanent jobs. The U.S. offers stability, property rights, contract enforcement, business transparency and the free flow of information and ideas—all huge problems in China’s corrupt, opaque communist system. The president should make it clear to Xi that not only is America open for business, but that we’ll continue to lure still more Chinese companies here because our system is better.

Meantime, it’s not just companies. Wealthy Chinese citizens, their pockets bulging with cash, are coming here too. Here’s an immigration program that works: Any foreigner who pledges to invest $500,000 in America is eligible for an EB-5 visa, and plenty of China’s richest, savviest citizens have taken us up on the offer. A study by Hurun (a marketing group that tracks wealthy Chinese) and Bank of China estimated in 2013 that more than half of China’s millionaires want to leave; two other studies have estimated that capital flight has already cost China the equivalent of hundreds of billions of dollars. That money creates jobs here and supports our economy. So why squeeze China on trade—which would hurt us—when we can better help ourselves by luring Chinese companies and individuals to invest here?

Sometimes I think Americans have lost any sense of just how attractive our country remains to others. If you’re one of them, may I suggest you read the latest survey by the consulting company AT Kearney, which said in December that the United States — for the fourth year in a row — was the number one choice for foreign investors.

Here’s the part where xenophobic Americans say they’re nervous about foreigners coming here. You know when the time to get nervous is? When foreigners don’t want to come here, when they decide to invest elsewhere. We must welcome the capital and energy of others—not reject it. The world wants to come here. This is the best card that any president could hope to play.

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