Farmers Exposed by U.S.–China Long Game

10:22AM Aug 14, 2019
United States versus China
In Xi’s words and actions, China thinks it can win and believes history is on its side. “China wants to replace us as the No. 1 power in the world,” says Mark Stys, a geoeconomics analyst and president of WS Wealth Management.
( Photo Illustration: Lindsey Benne )

The U.S. is likely at the beginning of a very long economic competition with China — a nation that has proven wealth doesn’t make a government adhere to international norms. What might the world look like if China gains supremacy and power? A present certainty: Basic freedoms don’t exist in China, and the leadership is anchored to the communist party.

China’s advances the past 30 years are stunning, but they are the achievements of a one-party dictatorship. Xi Jinping dangles his role as president to the media, but that tag is superseded by his title of “General Secretary of the Central Committee of the Chinese Communist Party.”

In Xi’s words and actions, China thinks it can win and believes history is on its side. “China wants to replace us as the No. 1 power in the world,” says Mark Stys, a geoeconomics analyst and president of WS Wealth Management. “This is geostrategy. The bigger your economy, the more you can spend on defense.

“They want to provide technology, loans and construction across the world and own the infrastructure of these countries. They want to be the producer and the provider — and that’s not positive for the free world,” Stys adds.

No matter the efforts of Xi, China must have food to feed 1.4 billion citizens. “In many ways, food is our advantage,” contends Jonathan Ward, founder of the Atlas Organization, a consultancy for business and government on U.S.-China competition. “We have tons of friends in the world facing this same issue, and very few want a world dominated by the communist party of China.”

U.S. Economic Edge

In the short-term, the U.S. has a competitive advantage, Stys says. “We have a $21 trillion economy and China has $13 trillion economy. Based on the size of the economies and how important exports are to both countries, every $1 of loss to us is an $8 loss to them. China exported $540 billion to the U.S. last year and that means 4.2% of their economy is built on exports to the U.S.”

China is also affected by agricultural circumstances unrelated to tariffs. “They’ve got 13 regions with armyworm infestations hitting crops. Swine fever is in 31 regions, killing millions of their hogs," Stys says.

He notes the Chinese economy is 70% to 85% capable of feeding its own population. Some estimates say swine flu and armyworm could knock out 20% of China’s ag production. That could reduce the country's ability to feed its people to 50% to 65%.

Stys expects tariff resolutions by the end of 2019, but acknowledges U.S. farmers are in a precarious position. “China can replace ag product sourcing, and farmers could feel the brunt. But it wouldn’t be a shock to see the Trump administration hand-in goals to balance long-term trade and get commitments to increase income for agriculture,” he says.

The Big Backfire

The U.S. cannot afford to ignore China’s aspirations regarding global supremacy, Ward says. “What America needs to understand is we are in a dedicated, long-term contest with a rising superpower that wants to replace us as the world’s dominant power.

nd, it’s an authoritarian state where rights we enjoy in the U.S. and rights we’ve fought for over generations do not exist. Freedom of press, religion and assembly do not exist; all of these features of American democracy are not in China. We have to understand their growing economic power is going to be converted into military power.”

Ward believes China’s “long-term goal is to become a dominant global superpower by 2049, which is the 100th anniversary of the founding of the People’s Republic of China. The only country standing in the way is the U.S.”

“This is a huge picture and the most important contest in 50 years for the U.S., but we have not had a broad-based awareness as a country to know what’s at stake,” Ward says.

The U.S. policy of coaxing China into the free world and inviting them into major trade institutions has backfired: “For the last 30 years, it has been all about engagement and hoping China will be our friend. That has proven to be a failure,” he adds. “However, there is a consensus in D.C., maybe the only thing both parties agree on, and that is taking on China.

“In the 2020s, if we maintain our current pattern, China surpasses the U.S. economically, and its military budget will increase enormously. All the technological competition  (artificial intelligence, 5G and quantum computing) that will define national power for decades into the 21st century, will happen. They have a plan, and we’re just getting our act together. We have to act now,” Ward explains.

China One Step Closer to Global Superpower Due To Trade Imbalance and Technology Stronghold

$540 billion
The amount of goods the U.S. imported from China in 2018; exporting only $120.3 billion.

$4 trillion-plus
China racked up this amount in trade surpluses from 1992 to 2016.

$255 to $600 billion
The annual estimated cost to the U.S. due to intellectual property theft; China is the key infringer.

China plans to dominate the ag tech industry as well as nine other sectors by this year.