Trump Reignites China Diplomatic Spat, Says Not Bound By "One China" Policy

Tyler Durden's picture

While the domestic US audience was focused on what Trump would say about the latest scandal of alleged Russian intervention in the US presidential elections, which as a reminder, he called "ridiculous" and suggested that democrats are behind the report, China was more curious by Trump's foreign policy thoughts, which may have sparked yet another diplomatic spat, because one week after Trump snubbed America's long-running "One China" policy, today the President-elect questioned whether the United States had to be bound by its long-standing position that Taiwan is part of "one China" and brushed aside Beijing's concerns about his decision to accept a phone call from Taiwan's president.

"I fully understand the 'one China' policy, but I don't know why we have to be bound by a 'one China' policy unless we make a deal with China having to do with other things, including trade," Trump said. Trump's decision to accept a congratulatory telephone call from Taiwan President Tsai Ing-wen on Dec. 2 prompted a diplomatic protest from Beijing, which considers Taiwan a renegade province.

Following Trump's decision to nominate Iowa Governor Terry Branstad as the next U.S. ambassador to China, choosing a long-standing friend of Beijing after rattling the world's second largest economy with tough talk on trade and the call with the leader of Taiwan, pundits thought that Trump would moderate his diplomatic outbursts vis-a-vis China. However, in the Fox interview, Trump brought up a litany of complaints about China which he had emphasized during his presidential campaign, and which may provoke an fresh bout of harsh criticism from China.

"We're being hurt very badly by China with devaluation, with taxing us heavy at the borders when we don't tax them, with building a massive fortress in the middle of the South China Sea, which they shouldn't be doing, and frankly with not helping us at all with North Korea," Trump said. "You have North Korea. You have nuclear weapons and China could solve that problem and they're not helping us at all."

Here, contrary to Trump's allegations, over the past two years China has been doing everything in its power to prop up its rapidly devaluing currency, which recently hit record lows against the dollar as a result of ongoing capital flight by domestic depositors who are scrambling to park their savings offshore realizing just how insolvent local financial institutions are.

The President-elect further criticized China over its currency policies, its activities in the South China Sea and its stance toward North Korea and said it was not up to Beijing to decide whether he should take a call from Taiwan's leader.

"I don't want China dictating to me and this was a call put in to me," Trump said. "It was a very nice call. Short. And why should some other nation be able to say I can't take a call?"

"I think it actually would've been very disrespectful, to be honest with you, not taking it," Trump added.

Trump  questioning of long-standing U.S. policy risks antagonizing Beijing further and analysts have said it could provoke military confrontation with China if pressed too far. As of early noon Eastern time - and thus late at night in China's capital - Beijing had no comment on Trump's remarks.

The call with Trump was the first such contact with Taiwan by a U.S. president-elect or president since President Jimmy Carter switched diplomatic recognition from Taiwan to China in 1979, acknowledging Taiwan as part of "one China." Taiwan is one of China's most sensitive policy issues, and China generally lambastes any form of official contact by foreign governments with Taiwan's leaders.

After Trump's phone conversation, the Obama administration said senior White House aides had spoken with Chinese officials to insist that Washington’s “one China” policy remained intact. The administration also warned that progress made in the U.S. relationship with China could be undermined by a “flaring up” of the Taiwan issue. Following Trump's latest comments, a White House aide said the Obama administration had no reaction beyond its previously stated policy positions.

* * *

Meanwhile, as Trump postures in an attempt to jockey the greatest possible diplomatic leverage in his negotiations with China, and drums on about ending free-trade agreements, China is widening its economic footprint in the U.S. backyard: Latin America. 

As Bloomberg notes in its daily Macro piece, the region has long been thought of by the U.S. as under its umbrella of influence. President Teddy Roosevelt famously used the phrase “speak softly, and carry a big stick” emphasize region hegemony in the Americas.

But the world is shifting. With U.S. influence waning, China is carrying a big carrot: trade. President Xi paraded through Latin America in November, boosting trade ties, and a few days ago the state-owned oil behemoth CNOOC purchased a deep-water oil block in Mexico. As the Middle Kingdom’s economy shifts to a larger middle class and more consumption, demand for agriculture produce is expected to increase on top of an already strong desire for metals and oil, which have been the staple exports from South America over the last decade.

The benefits will spread unevenly across the region with countries such as Brazil, Chile and Peru will likely continue to profit more from China trade (Sorry Mexico, China probably won’t bail you out from Trump shocks). Brazil and Chile already run sizable trade surpluses with China. Their top exports are, unsurprisingly, raw materials and agricultural products.

In 2009, China overtook the U.S. to become Brazil’s biggest trade partner. Now, Brazil runs a $24 billion trade surplus with China, bigger than its total surplus last year.

Half of Chile’s exports are copper and related products, mostly bought by China. During Xi’s fall visit, the two countries agreed to begin talks to upgrade their free-trade agreement signed a decade ago.

While others benefit, Mexico will likely be left mostly on the sidelines, given its limited agriculture exports and falling oil output, at a time when it faces possible trade restrictions from the U.S., which buys more than three- fourths of its exports. Mexico has pumped out less and less crude oil during the last few years amid turmoil at state-owned Pemex. Scant Chinese interest in Mexican exports and a strong appetite for “Made in China” goods have contributed to a $22 billion trade deficit.

Although it opened up its energy sector to foreign investors last year, Mexico needs more funding and better technology to boost output and exports over time. Also, its industrial prowess and access to the U.S. may attract Chinese exporters looking to cut costs, but only when the fate of NAFTA becomes more certain.

* * *

There was a time when China felt hedged in by the economic might of the U.S., but with America’s influence in Asia also starting to slip, the tables could be set to turn.

Trump should be careful how far he pushes Beijing, even if it is only with rhetoric.

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Mercury's picture

Democrats: Tip-toe around authoritarian China but not Russia...

Encroaching Darkness's picture

China could recapture Taiwan in a matter of weeks, I assume. But the assumptions are based on:

(1) Heavy losses of troops from the defenders; but then, China has millions of "barren branches", men who cannot find Chinese wives due to the one-child-per-family policy. Heavy losses might be perfectly acceptable.

(2) Taiwan, despite having ties once with both South Africa and Israel, never got as far as nuclear weapons. If Taiwan has nukes, then maybe reconquest would be a much tougher pill to swallow.

fbazzrea's picture

the master negotiator setting the deal up. (:

brianshell's picture

I'm not sure if he's in the tribe, but he sure follows their playbook.

Lets see who does the best deals, the middle kingdom or the tribe.

Sudden Debt's picture

China needs food to feed it's people.

America sells food to China AT A VERY CHEAP PRICE!!!!!







yttirum's picture

Chinese guberment can't feed Chinaman no more. Too much chinaman work for iphone making, no work for crops. Round eye feed Chinaman, so Chinaman make iphone.

Wonder what happens if them billions of slaves get the American tit pulled out of their suckers?

brianshell's picture

You want America first? Ban foreign ownership of agricultural land.

Sudden Debt's picture

any kind of land for that matter.

You should be a citizen to own land in a country, simple. I fully agree with you on that one also.

Parth's picture

Cut of food supply for one month? Lol are you that stoopid? You could cut of for 10 years and China would not give a sh  t. Cut off iphone 7 etc for one month, AMerica would hand over California to China. Remember Korean war? These folks will eat a bowl of rice for 10 years let North Korea have nukes, and dunp their US Tbills but will not lose face from an amateur jerk like Trump. No chance. No chance at all.

Xena fobe's picture

Have you been to Chinafornia lately?

Parth's picture

I mean you really believe that? Give a Chinaman a bowl of rice and an American a loaf of bread everday for 30 days, hey 30 months. Who gonna scream Mommy! first?

PT's picture

Thank you Sudden Debt for filling in part of the puzzle I couldn't be bothered investigating.  I was about to say that perhaps if China didn't export anything then they would have to restructure their economy so that their own slaves could afford to buy all the stuff that they produce.  Whoever heard of that?  Workers being able to consume what they produce?  Of course, my idealistic vision is totally dependent on China's ability to be independent i.e. what foreign resources must China import to survive?  Labour, resources, energy.  If you have those three things then you can be rich without trading externally.  Otherwise it gets annoying.

overmedicatedundersexed's picture

chinaman say" Trump no likee chinaman...we no send iphone"

Trump responds: "exactly"

Parth's picture

Trump tweets from his iphone. Chinamen says buy Samsung Galaxy Note 7--hahaha.

yttirum's picture

Terry Branstad of Iowa was chosen because of agricultural trade with China (hello! Iowa! Midwest  ag producer!) This was a move to have control over agricultural/food trade with China, that coincidentally can be stopped with sanctions or a "shadow bill" if need be. It's not for any other reason but that, period.

buzzsaw99's picture

at least trump knows who the real enemy is

Uzda Farce's picture
Uzda Farce (not verified) buzzsaw99 Dec 11, 2016 4:59 PM

The CFR globalists, including David Rockefeller and Henry Kissinger, built up "Red China" in the first place.

"The social experiment in China under Chairman Mao's leadership is one of the most important and successful in human history." -- David Rockefeller, 1973

NoWayJose's picture

Trump in action - The Art of the Deal!

Urban Redneck's picture

As I pointed out 9 days ago, One China is not simply a policy IT WAS A DEAL, and that deal is not compatible with One Belt/One Road, so now One China is a Shitty Deal than needs to be renegotiated.  

You'd think someone in Foggy Bottom might be remotely familiar with the Great Game, we've only been playing it for almost 200 years now, since the first time the British invaded Afghanistan.

Parth's picture

True its Trump in action. A big but though. THe deal was already made and unchallenged by Reagan, Bush, Clinton, Bush jr, and Obama, and Germany, UK, France, Australia etc. Its not "Art of the deal" its "breaking a deal", that means no one else will trust America's deal or credit. Cash only and no more Tbills purchased, maybe he don't give money back and file bankruptcy. Get ready for 20% purchasing power cut. As this is the final deal.

Lost in translation's picture

Treasonous rulers in Washington sold out their countrymen and neighbors by giving US industry, technology, and innovation away to the Chinese. And, for 25 years, the Chinese have been using their position to rip America off, and that without peer or equal. They pat themselves on the back for doing so, for their "cleverness."

Meanwhile, ALL of China's neighbors loathe and despise the Chinese. China has not a single friend on her periphery. Not one.

But I digress.

I'm sorry, but please tell me again why President Trump will need to "be careful" with the thugs and thieves in Beijing....

buzzsaw99's picture

the clintons have been selling the usa out the the chinese since he was governor. they singlehandedly built the trade deficit into what it is today. they helped china build their nuke weapons too.

flaminratzazz's picture

agreed but dont forget he was a bush at heart.

bthunder's picture

Because of over $1trillion of US treasuries that can hit the market at any time and spell a very quick end to the Trumponomics.


brianshell's picture

With methods of the tribe aside, Trump has an opportunity to buy back those bonds with sovereign currency. It will be a nice first bite in the apple on the road to weaning the government of borrowing from private banks.

Archive_file's picture

I live in San Francisco. They and their kids could give a fuck about the US and I'd be willing to bet barely any join the military and do national service. They're too busy trying to get into Harvard. A bunch of shallow, materialistic douchbags they are.

Xena fobe's picture

Lots of treasonous U.S. property sellers too.

44_shooter's picture

"...analysts have said it could provoke military confrontation with China if pressed too far. "

Because the current policy of cruising navy ships and flying recon missions over the islands, or trying to force other nations into court cases over the islands existence would NEVER provoke military reaction from China.

Fuck me.

buzzsaw99's picture

they fear a trade war more than a hot war. a trade war with china would be the best thing that ever happened to this country. it would be painful at first but we have gotten soft in the usa and it's time to toughen the fuck up.

yttirum's picture

The Chinese are pussies. Erratic pussies, yes, but pussies like that crazy, bipolar broad from college who carried a Saul Alinsky book around with her. Yeah, that kinda pussy is what I'm getting at.

Herodotus's picture

Let's put General Tso up against Colonel Sanders and let them fight it out.

fbazzrea's picture

cockfighting is now illegal in the USA, i believe. maybe fight in Taiwan. winner takes all--Taiwan.


ebworthen's picture

The "One China" policy meant that the Communist People's Liberation Army (P.L.A.) running the show and treating billions of Chinese as Serfs was "A O.K.!" with the West.

Never-mind that Taiwan was where the people and government we supported in WW II and against Imperial Japan went.

Never-mind that the Korean war and Vietnam War were proxy wars with Communist China.

Never-mind the Soviet Union collapsed 20 years ago.

Now the Russian Federation is the bogeyman.

China is our "friend" and "partner".  WTF?

Makes perfect sense, in la-la land!


FedFunnyMoney's picture

Good. All the Putin loving trumpanzees kids can go die fighting China.

yttirum's picture

Uh, we just gotta pull our food source from their masses and watch their own people tear themselves to shreds. Get with it, dude.

The Blank Stare's picture

Right! The whole country will look like Zombieland 2. Just tell me were to point the cameras. Pay-Per-View for $10 a month. Vegas odds on how long the PLA will last.

Tallest Skil's picture

China hasn't won a war in 400 years, and that was an attack on unarmed Russian peasants. In the last 50 years alone, we (the US) have achieved a 100:1 kill/death ratio against the screaming Chinese horde. Their military is 40 years out of date in every respect.

You will be lined up against the wall and shot, and then we'll bomb China back to the Min Dynasty without a single boot on the ground or plane shot down. Fuck off, you worthless fucking shill.

Stan522's picture

Stupid Lib... Go read his book and you'll know what he is doing. Otherwise, leave the conversation to the adults in the room.....

bugs_'s picture

I love the smell of tables being kicked over in the morning.

44_shooter's picture

"...analysts have said it could provoke military confrontation with China if pressed too far. "

Because the current policy of cruising navy ships and flying recon missions over the islands, or trying to force other nations into court cases over the islands existence would NEVER provoke military reaction from China.

Fuck me.

Hongcha's picture

"We're being hurt very badly by China with devaluation, with taxing us heavy at the borders when we don't tax them, with building a massive fortress in the middle of the South China Sea, which they shouldn't be doing, and frankly with not helping us at all with North Korea,"

I waited more than eight years for someone in our treasonous Admin to state these simple, plain, pro-American truths.  Sayonara to a most corrupt, most venal, most amazingly destructive, hijacked administration.  I will be very happy to see them in the rear view mirror. 

Stan522's picture

For all you reactionary Lib's who DO NOT understand sales positioning, this is the start of a negotiation....!

I just LOVE IT when he does this.....

The years of obama placating and giving into despots around the world HAS ENDED!

angry_dad's picture
angry_dad (not verified) Dec 11, 2016 3:44 PM

Trump will also default on the $2 TRILLION obama borrowed from  the chinx

jfb's picture

That will be very, very good for gold

Archive_file's picture

I live in San Francisco. They and their kids could give a fuck about the US and I'd be willing to bet barely any join the military and do national service. They're too busy trying to get into Harvard. A bunch of shallow, materialistic douchbags they are.

Xena fobe's picture

Well said.  They lack any shred of humanity yet are convinced their culture is superior.  They are also big users of publicly funded benefits as it's easy for them to hide wealth overseas. Trade war would be fine with me.

MEFOBILLS's picture

A bancor system would force trade into balance.  No more Wall Street China Gambit.

Wall Street- China Gambit.


Berlin Wall Falls – it is the end of history 1989


Tianaman square 1989 – China keeps its state banks.


Communist China offers its  1B labor pool to western capitalists


China sweeps away state debts by using magickal swaps at State Banks (transforming the books).


Wall Street Begins Greenmailing American Industry.  Move to China or we will use your pensions and your assets to buy you out.  This is done by hypothecating new loans in Wall Street Banks.


Bill Clinton adjusts provisions in NAFTA 1992 and 1995, screwing over Mexico.


Bill Clinton passes MFN status for China 1994, further screwing Mexico.


 Bill Clinton breaks Glass-Steagall by passing GLB act 1999.  Wall Street now unleashed to do more Green-Mail to then parasitically make wage arbitrage.  (Arbitrage is difference in wages between U.S. and China.)


GLB breaks firewalls between commercial banking, wall street banking, and insurance companies.  Finance becomes incestuous, 601 SPV’s, tranching of mortgage securities, CDO’s, etc., which then starts hypothecation credit bubble against housing.


American Industry (mid 90s) now moving in earnest to China.  The Patrimony of America is sold cheap for wage arbitrage today.  Wall Street is a hero today, and mainstreet labor will become a zero (in future as their jobs are lost).


CRF agent Clinton passes Telecommunication act 1996.  This then starts media consolidation, so American’s will become ignorant zombies in future; unaware of how they are being hosted by finance parasites.


Housing Bubble in U.S. causes increase in private debts, pushes housing prices into unaffordable territory, and this new debt based bank credit then balances government budget.  (Government should never balance its budget by putting private sector in debt).   Greenspan turns a blind eye, because after all –markets are perfect predictors of price (sarc).


China currency manipulates, by issuing Yuan’s from State Banks, to then swap for dollars won in trade.  These dollars then go back to the U.S. to buy TBILLS and other American debt instruments.


China holds dollar price high by buying U.S. Treasury debt, which keeps American interest rates low – further exacerbating housing bubble.  American’s buy China crap, from American industry now relocated  - purchasing their future disenfranchisement.


Neo-Con’s infested in Clinton administration use this flood of private bank credit/debt as means for funding war.  They find common cause with Military Industrial Complex, CIA, and Israel (of course).


Bush administration 2001 continues the machinery put in place by Clinton – private debts fund war, and continues the loss of jobs due to Wall Street/China Gambit.


China continues to issue Yuans from their State banks, to then help relocate American Industry, and to buy U.S. debt, to then keep Yuan favorable priced relative to dollar.  Wall Street continues to make arbitrage.


At this point, the U.S. is importing Cheap Mexican Labor to then compete with China. This further disenfranchises U.S. main-street labor, as their taxes are shifted away to fund social costs of the mexinvasion. Schools and hospitals are funded by American taxpayers, not tax avoiding invaders; Mexicans are not making prices in Mexico as NAFTA is no longer viable.  Now consolidated media passes hypnotism, Mexicans will do the labor that American’s wont (who did it before?)  Wall Street parasites and those who are winning in the Wall Street/China gambit, are enjoying their Mexican maids and yardwork.  American teenagers now forget how to do to manuel labor, which screws the future.


Bush continues the gambit, and increases it further into:  Bomb the World, Invite the world (invasion), and accelerate shifting away of American patrimony – even high tech.


The answer isn’t Tariffs or making deals like Trump thinks.  It is fixing money, especially with a sovereign money system, to then prevent parasite finance actions.


To prevent exchange rate games and currency manipulations e.g. China, a bancor system could be used.



All foreign trade is only barter, and bancors are an accounting method for international  trade.

thedon's picture

Nice summary of how we got where we are. An honest system of trade is simple but not profitable to those who do not mind hot wars to continue stealing the fruits of labor and capital. Just settle all accounts in gold.