As the coronavirus pandemic ravages the global economy, a consensus is forming that China must pay a price. The virus provides the optics and convenient pretense that makes a Chinese reckoning more politically expedient. However, this is not an isolated incident requiring a one-time punishment.
Rather, the Chinese regime has exported economic, environmental, and viral costs on the world without repercussions for decades. The Chinese Communist Party acts with naked self-interest in all respects, enabled by the United States and the rest of the West, countries that remain supine while they do so. The appeasement must end — and force is required.
Confronting China’s mercantilist behavior is what Trump successfully ran on, and the president has done an effective job advancing American interests through the trade war. This alone, however, isn’t enough to address the costs China has inflicted on the U.S. and the world. China’s pathological predations and disregard for other civilizations must be viewed holistically.
The coronavirus has wiped trillions from the U.S. economy and is doing the same thing to Europe. The virus originated in Wuhan, either due to accidental contamination from a nearby lab or as a byproduct of extremely unhygienic, dangerous wet markets that facilitate the sale of live animals for consumption. It then proliferated by way of the Chinese Communist Party’s denial and suppression. This is not the first time the world has suffered at the hands of a Chinese viral export.
At least three of the last five influenza pandemics originated in China. (It could potentially be four, as there’s compelling evidence the Spanish flu, which claimed 50 million lives, also came from China.) This is not including bird flu (1997), and SARS (2003), which are also Chinese in origin. Many of these outbreaks were results of the country’s practices and the government’s incompetence.
This pattern is not a coincidence.
History repeats itself, and China as a source of global infection is not just a metaphor. Studies on the viral ticking time bomb that is the Chinese system of wet markets have been well known — yet no action has been taken. China has imposed its harmful practices and lies on the world.
Don’t forget about pollution either. The U.S. is no saint here, and high carbon output is indeed necessary to power and feed a country. However, context shows the egregious extent of China’s pollution and the harm it imposes on the world.
The U.S. has stayed at around 5 billion metric tons per year of carbon dioxide emissions for most of recent history and was often far below that number. (It didn’t break 3 billion metric tons per year until 1963.) American carbon emissions peaked at 6 billion metric tons per year in 2007, while the European Union hit its peak at 4.5 billion metric tons per year. Those figures have since declined to 5 and 3.5 billion, respectively.
Meanwhile, China currently releases almost as much carbon dioxide as the U.S. and EU did combined at their apexes, a whopping 9.8 billion metric tons per year. India, a rapidly growing economy nearly identical to China in population, emits just 2.5 billion metric tons per year.
Of course, we mustn’t forget China’s economic predation, theft, and fraud. This is widespread and difficult to enumerate fully. China’s militarization of and arbitrary claim to the South China Sea is an increasingly hostile attempt to abuse its neighbors and control a territory through which 33% of global shipping passes.
China conducts economic warfare with excessive steel dumping, severely harming U.S. companies and global industry. Experts describe Chinese practices as “war, not trade,” with its means of staying competitive being simply cheating on international trade. China also manipulates its currency to gain unfair trade advantages.
China, aptly dubbed the “Great Predator,” steals intellectual property and forces technology transfers to enter its markets, something the West doesn’t impose on Chinese companies.
“It’s an unprecedented level of larceny,” says Secretary of State Mike Pompeo. “So they’re not just taking it by forced technology transfer or stealing it by way of contract but outright theft.”
Chinese businesses frequently obfuscate and outright lie about their accounting practices by cooking duplicate sets of books or reverse-merger scams, pilfering investors that fall for their deceit. The most recent example came just this month: Luckin Coffee.
Full restitution for China’s misdeeds is not possible. But we can still seek a reckoning.
Blunt force instruments are necessary both to discourage the behavior going forward and to provide some degree of recompense. Diplomatic finesse does not work on this nation, and symmetrical costs must be imposed, starting with:
- Delisting Chinese companies from American exchanges. Stop enabling frauds that refuse to abide by our accounting standards to raise capital in our markets.
- Massive tariffs for U.S. companies that import products from supply chains outsourced to China. U.S. companies will abandon China, inflicting economic punishment on a country whose only real “competitive advantage” is sweatshop labor. Corporations can go exploit cheap labor elsewhere.
- An intentional default on Chinese-owned debt. The U.S. just passed a $2 trillion stimulus to try and keep its companies and citizens solvent while it fights the coronavirus, with more likely on the way. The Federal Reserve will inject at least $4 trillion-$6 trillion more to keep financial markets stable. China is owed nothing: These massive costs are its fault. Let China threaten not to buy our treasuries anymore. There is plenty of demand to fill the void. China only owns a little over $1 trillion in U.S. debt, so greater damages must be inflicted in conjunction: A U.K. think tank’s recent suggestion of a $6.5 trillion lawsuit is along the right track. Reparations are appropriate.
This doesn’t come close to addressing the damage China has wrought fully, and some global coordination is needed. But these are the kinds of dramatic, message-sending initial steps the U.S. must take to end these transgressions. China will retaliate, and it will be uncomfortable, but it must be done. The only way to stop a super predator is with a larger super predator. Reciprocity is long overdue.
Jason Orestes (@market_noises) is a former Wall Street financial analyst who focuses on contemporary political developments affecting economics, markets, and culture. His financial commentary can be found on Jim Cramer’s TheStreet, where he is a regular contributor.
