China Is Counting On Its Trade Surplus In Battle For Supremacy

Resolving differences on trade, investment and industrial policies by March 1, as Presidents Donald Trump and Xi Jinping have resolved, is a terribly ambitious goal considering the complexity of the issues.

More importantly, however, China's bilateral trade surplus is at the epicenter of its efforts to achieve parity or surpass the United States as the pre-eminent global superpower.

This contest is waged in four theaters - the Korean Peninsula, the South China Sea and broader Pacific and Indian Oceans, the race for dominance in artificial intelligence, and most importantly, the standoff over trade.

Past U.S. presidents appeased Beijing by letting it enable, effectively unchallenged, North Korea's nuclear weapons and missile programs. Those now pose a direct threat to the U.S. mainland, and Trump has responded by coordinating tough international sanctions.

Unfortunately, China and Russia have enabled North Korea to circumvent critical elements of those sanctions. That permits North Korean President Kim Jong-un to slow walk the denuclearization that was anticipated by the U.S.-North Korean framework agreement.

Festering American preoccupation with the Korean Peninsula distracts attention from the South China Sea, where Beijing's forces have taken possession, expanded and militarized islands in international waters, and violated the freedom of navigation and the sovereignty of neighboring states.

China is building a navy to challenge American sea power. That shakes confidence among our Southeast Asian friends, and it has established a naval base on the Horn of Africa and has taken possession of a vital port in Sri Lanka.

With the Belt and Road Initiative, China is financing a network of ports and rail connections stretching from China to Europe and duping developing nations, like Sri Lanka, into debt servitude. Importantly, it seeks an undisputed sphere of influence through island nations stretching from Taiwan to Sri Lanka and the Maldives and on to the Horn of Africa.

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Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and widely published columnist. He is the five time winner of the MarketWatch best forecaster ...

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