Pretty much everyone not hopelessly enamored with Trump has seen his tariff war, qua tariffs, as having produced an embarrassing retreat. The Wall Street Journal gave a representative shellacking in The Great Trump Tariff Rollback.
However, Mr. Market’s celebration of Trump’s proclaimed reset with China rests on dodgy foundations. The Trump Administration is still implacably committed to checking China’s advance in any way it can, even if the means to do so seem to be in short supply.
Only one trade “deal” has been completed so far, that with the UK. The rest are pending, with Trump tastelessly crowing how countries were lining up to negotiate so as to avoid the nose-bleed level tariffs he threatened to impose.
BREAKING:
Donald Trump:
"The countries are kissing my ass, begging to make a deal on tariffs" pic.twitter.com/4UXxvS2bOI
— Megatron (@Megatron_ron) April 9, 2025
However, China itself called out a point of vulnerability as Trump was pulling out his tariffs bazooka.1 China anticipated that the US would use these negotiations to extract provisions that would enable the US to isolate or otherwise disadvantage China. From the Financial Times on April 21, Beijing warns countries not to act against China in trade deals with US:
Beijing has warned it will retaliate against countries that negotiate trade deals with the US “at the expense of China’s interests”, fuelling global tensions as the world’s two economic superpowers face off over tariffs…
While the report said the US strategy was intended to pressure Beijing to come to the negotiating table and abandon its defiant stance, China has shown little sign of backing down.
China’s leader Xi Jinping visited Vietnam, Malaysia and Cambodia last week, where he sought to shore up relations with Beijing’s trading partners.
China’s fears look to be playing out. The Financial Times today reports that the new trade agreement with the UK contained restrictions justified as “security requirements” for investments in the steel and pharmaceuticals industries in the UK that look to be directed at China. From China criticises UK trade deal with US:
China has criticised a trade deal between the UK and US that could be used to squeeze Chinese products out of British supply chains, complicating London’s efforts to rebuild relations with Beijing.
The trade deal the US sealed with the UK last week, which includes strict security requirements for Britain’s steel and pharmaceuticals industries, was the Trump administration’s first since it announced sweeping “reciprocal tariffs” last month.
Asked about the deal, Beijing said it was a “basic principle” that agreements between countries should not target other nations.
“Co-operation between states should not be conducted against or to the detriment of the interests of third parties,” China’s foreign ministry told the Financial Times.
And I want a pony. Continuing:
Last week’s trade deal included cuts to punitive US levies on UK car and steel exports, but did not remove a baseline 10 per cent tariff on British goods.
The sector-specific tariff relief for steel and cars was also only granted on condition the UK “works to promptly meet US requirements” on supply chain security and the “ownership of relevant production facilities”.
UK officials have said Trump has made clear that China is the intended target of that condition. The deal specifies tariff relief for British products would depend on so-called Section 232 investigations, which determine whether and how specific imports affect US national security…
Zhang Yansheng, a senior researcher at the China Academy of Macroeconomic Research, said it was clear Washington would force other governments to accept similar provisions in trade negotiations to isolate China.
“For the UK to do this, it’s not fair to China,” he said. “This type of poison pill clause is actually worse than the tariffs.”.
The South China Post reported that the EU read the UK trade deal restrictions on investments similarly to how the Chinese did. From As EU scrutinises US trade deal with Britain, China is the ‘elephant in the room’:
Sources from the EU and its member states said the text showed that Trump wanted to ensure America’s allies would work to cut Beijing out of important supply chains, namely steel and pharmaceuticals. China is not named in the agreement, but it is alluded to throughout.
“The language in this agreement on alignment with the US on forced labour, data security, economic security, and investment bans can only be read as China being the elephant in the room,” said Sam Goodman, senior policy director at the China Strategic Risks Institute, a British think tank.
Britain agreed to “promptly meet US requirements on the security of the supply chains of steel and aluminium products intended for export to the United States and on the nature of ownership of relevant production facilities”, the text read, in what observers saw to be references to Chinese ownership in the industry….
Henry Gao, a professor specialising in international trade at Singapore Management University, suggested that the deal’s China focus would be a running theme as countries around the world scrambled to avoid tariffs.
“As predicted, China is a central concern. The agreement highlights issues like ownership of production facilities, preventing non-participants from using the deal to bypass tariffs, coordinating on non-market policies, and addressing forced labour in supply chains, all directed towards China without naming it,” Gao said.
Let’s back up a bit to explain why this US move is, or at least is intended to be, significant. It sets a precedent, conveniently with a weak trade counterpart. The UK had wanted post Brexit, and still had not gotten, a “free trade” deal with the US. We pointed out that in bliateral trade deals with the US, unless the counterparty has economic heft, the US dictates terms; negotiations are only at the margin.
The US already runs trade surpluses with the UK, so the point of this deal was not to improve trade balances. It was to extract other goodies.
Note that the US allowing the UK to export up to 100,000 cars (just a smidge under what they sell here now) was the gimmie to get concessions. But pharmaceuticals, where the US demanded UK protections, is number two, per official UK data for calendar 2024:
Steel is not listed as a top export. But could the US whinge about the steel content of some finished or intermediate goods?
The Chinese trade surplus with the UK is over four times as large as America’s. That means both China and the US accumulate financial claims on the UK. The export surplus country can simply keep cash balances in the foreign currency, but most want to put it to work in some manner. Hence, for instance, during the 1970s oil embargo years, the Saudis bought so much property in London’s Mayfair that it came to seem like a ghost town.
So China, even more than the US, would presumably want to hold some, perhaps a lot, of equity-type investments in the UK, like buying or staring up manufacturing operations, or acquiring positions in publicly traded companies.
And the reason this precedent is particularly problematic to China is the degree to which Southeast Asia, which runs large trade deficits with China (and hence is a target for Chinese investment) and surpluses with the US, is in the crosshairs (note Southeast Asia is not the only area of concern but the most obvious) and large surpluses with the US, has been signaling that they need to appease the US with respect China in their pending trade deals. From the Bangkok Post on April 11, in Facing Trump tariffs, Vietnam eyes crackdown on some China trade:
In hope of avoiding punishing US tariffs, Vietnam is prepared to crack down on Chinese goods being shipped to the United States via its territory and will tighten controls on sensitive exports to China, according to a person familiar with the matter and a government document seen by Reuters.
The offer, the details of which are reported by Reuters for the first time, came as senior US officials, including influential White House trade advisor Peter Navarro, raised concerns about Chinese goods being sent to America with “Made in Vietnam” labels that draw lower duties.
Vietnam has for weeks been offering sweeteners that it hoped would persuade US President Donald Trump’s administration to take a benign view of its huge trade surplus with America. Instead, it was hit with a 46% tariff as part of Trump’s “Liberation Day” salvo.
Note that the US rejected Vietnam’s speedy offer to cut all its tariffs on US goods to zero and fingered Vietnamese re-export/labeling abuses as the reason. From the Economic Times of India, citing Fox and Newsweek:
[Peter] Navarro, the senior US trade counsellor, turned down the offer in an appearance on Fox News, calling it a “national emergency,” as per the report. Navarro indicated that the US would not negotiate with Vietnam on this issue, saying that the trade deficit with Vietnam had “gotten out of control” and complaining that the nation was “cheating” by relabeling Chinese goods as its own and employing unfair trade practices…
Navarro also highlighted that “If you simply lowered our tariffs and they lowered our tariffs the zero, we’d still run about $120 billion trade deficit with Vietnam.”
The same day that Vietnam said it was going to tighten up on export labeling to the US, so too did Thailand. From a second story in the Bangkok Post, Thailand vows crackdown on false claims of origin in US exports:
Thai authorities will step up a crackdown on the practice of foreign companies circumventing high US tariffs by claiming false certificates of origin as it prepares for negotiations with the Trump administration to secure relief from a 36% tariff hit.
The Southeast Asian nation, which had an almost US$46 billion trade surplus with the United States, plans to add more products to a watchlist of 49 goods as false claims of origin are among the key concerns of US authorities, the Commerce Ministry said in a statement Friday.
The government has identified about nine more groups of products deemed at high risk of circumventing the rule of origin by companies using Thailand as a base for re-exports to the US… The products include steel, copper wire and aluminium among others…
The bid to deter companies from misusing the local content rule will be cheered by Thai companies, who have long been complaining of dumping of cheap Chinese made goods in recent years. President Donald Trump’s move to impose a record 145% tariff on Chinese goods has stoked concerns among local manufacturers of an even greater influx of cheap products.
A survey of chief executives of Thai companies released Wednesday showed that almost 71% of the participants were worried about cheap Chinese goods flooding Thai markets, leading to lower use of production facilities or more factory closures.
When China reported trade data for April that showed a big drop in exports to the US, it claimed an overall increase nevertheless due to large increases in shipments to the EU and Southeast Asia. We said the latter was at best channel stuffing. There was no jump in economic activity in the region to support such an increase on an organic basis.
Now in addition to such crude measures as false labeling, one way to undercut US tariffs on China, if the ones in any Southeast Asian country wind up being lower, would be to locate Chinese factories in that country. One might therefore think that these nations would be unhappy at the idea that the US was trying to restrict Chinese direct investment in them.
The reality is more complicated and less favorable to China. China has made an art form of building and operating so-called “zero dollar” factories so as to produce maximum benefit to China and the minimum to the host country. From the Bangkok Post in Thai economy put at risk by surge in zero-dollar exports:
The government is being urged to address zero-dollar exports and investments from China, as they are expected to intensify due to the US tariff measures…
The US tariffs will also affect the movement of production bases, with Southeast Asia and Thailand likely to be key destinations for foreign direct investment (FDI) worldwide, he [Amonthep Chawla, chief economist at CIMB Thai Bank (CIMBT) Economic Centre] said…
“Despite the positive outlook for FDI flows to Thailand, the country faces challenges related to zero-dollar investments and exports, particularly from Chinese investors,” he said.
“This issue has been ongoing in Thailand and is expected to worsen given the heightened geopolitical risks.”
Zero-dollar exports refers to trade activities that result in little or no economic benefit for the exporting country.
Mr Amonthep said while Thailand posted record FDI inflows last year, the country’s Purchasing Managers’ Index (PMI) showed only marginal growth and did not contribute significantly to employment.
Thai export growth was in double digits, but again did not provide significant benefits to the economy due to minimal growth in net exports, he said.
An example, which is a very sore point, are so-called zero-dollar tours. Low-end tours from China that constitute the bulk of arrivals are perceived to be of no value to Thailand. The busses they travel on are owned and operated by Chinese companies. The tour guides are Chinese (when by law they should be Thais with licenses). The visitors stay at Chinese owned-and-operated hotels. They go to Chinese owned-and-operated restaurants. They are taken to Chinese owned-and-operated retail stores.
An economist, an outspoken critic of globalization and financialization and who regularly praises China, did not dispute the Thai view. His comment:
That’s why Chinese businessmen were so widely abhorred throughout Asia. And Chinese officials even bragged to me about how cutthroat they were in their business dealings.
It’s far too early to see how this struggle over investments and influence will play out. But also keep in mind that Trump has undermined himself with what looks like his tariff baselines of 10% generally and (per Scott Besssant) 30% for China. And the break for Shein and Temu, which have become important to low-income shoppers, are tariffs on small packages of a mere 54%. Even those lower levels will generate domestic inflation and harm, perhaps fatally, many small businesses.
In addition, Trump’s madman negotiating strategy is producing the reverse of what he’d like to see, which is plunging approval. From Joshua Schwarz at Responsible Statecraft:
Despite some advantages, however, the madman strategy is far from a panacea and entails significant drawbacks that will likely limit what Trump is able to achieve. One major issue (for which I provided evidence in a peer-reviewed study that conducted surveys of the American public) is that a leader who is perceived as mad is likely to face increasing levels of disapproval among their own domestic public. This can then undermine their bargaining leverage with foreign leaders.
The madman strategy is generally unpopular domestically because the public values competence in leaders, and thus is unlikely to look kindly on a leader it perceives of as actually or potentially crazy.
So even if Trump actually does win on some level with China, he is set to lose where it matters, here at home.
____
1 For newbies, this is not a flattering metaphor. It refers to Hank Paulson’s quickly-revealed-to-be ineffective Fannie/Freddie bazooka.
Yves is describing U.S. use of Britain today in a similar way to what occurred in 1944 in negotiating the creation of the IMF and World Bank. After twisting Britain’s arm to adopt the US rules, the United States used its capitulation as a battering ram to get the rest of Europe to join in. (I describe the details in Super Imperialism.)
Britain is indeed playing a similar role today in acquiescing in “national security” clauses that obviously are aimed at China. Trump himself said that his threat to create trade chaos as a threat to obtain “give-backs.” And the giveback that he wants is for countries to join the US attempt to isolate China.
So the question is, what will other countries choose: to make a short-run deal to recover some of the U.S. market, which looks like it will be shrinking for the next few years? Or to look to China and its allied countries where growth is much more dynamic?
The problem is that the interest of other “countries” is not necessarily that of their governments, over which U.S. officials have much more sway.
Note the hypocrisy of Trump today in Saudi Arabia claiming that the era of unipolar U.S. dominance is over. His “tariff policy” is an attempt to force other countries to accept the U.S. unipolar plan, or accept the Trump-sponsored chaos.
And the deal with the UK is the opening salvo.
Did you miss that China runs large trade surpluses with Southeast Asia? And they are growing? China is importing jobs from its generally poor neighbors. And you depict participating in growth, as in worsening of the same, as a plus?
https://www.scmp.com/week-asia/economics/article/3306974/can-southeast-asia-shield-industries-surge-chinas-exports-post-trump-tariffs
Yves, I’m trying to understand what Michael Hudson said that you were responding to. Is it this part?
Not that you don’t make good points, I’m just not sure of the connection to what Michael Hudson appear to be saying about growing versus shrinking markets to sell into.
The point is Hudson pre-supposes that Southeast Asia will participate in that growth. Instead, recent trends show that China is engaging in extractive practices with respect to Southeast Asia to help achieve that growth. So why is that in any way a plus for Southeast Asia?
Maybe it’s a lose-lose economically no matter what for Southeast Asia. So where do they want to align politically? With Trump or Xi? With BRICS or the West?
Southeast Asian countries have made a point of not aligning with either side but playing one off against the other.
India has explicitly said it rejects the US premise that it has to take sides.
China has never forced any country to align with either side. The USA has been forcing every country to align with it against China.
The problem now is that the World has changed. Before there was no need to threaten other countries to make sure that they would comply with US desire.
Today even with threat and Trump’s one man show their compliance can not be taken for granted.
As for trade deficit with China, it does not mean much as long as they use what they import from China to export to other countries especially the USA with whom they have trade surplus.
Without China their supply chain would be broken.
One of Roosevelt’s strategic objectives for World War II was to bring an end to colonialism, and he was up front about this during the talks with Churchill at the Atlantic Charter Conference held in August 1941, four months before Pearl Harbor. This was documented by Elliott Roosevelt in his book As He Saw It written shortly after the end of the war:
Elliott was an Army Air Force Reserve Officer in the area at the time searching for locations to build refueling stop airstrips for the ferrying of planes manufactured in the USA to Britain, and his father arranged for him to take a break from those duties for a few days to serve at his aide at the conference. He followed up a few pages later:
R. Bruce Craig’s book Treasonable Doubt: The Harry Dexter White Spy Case describes the events that took place at Bretton Woods at considerable length. White, who reported to Secretary of the Treasury Henry Morgenthau, led the USA delegation at the conference and the book leaves little doubt that the post-war international financial structure was being designed with the intention of supporting the transition of former colonies into sovereign largely self-sufficient states. FDR, Morgenthau and White intended that the World Bank And the International Monetary Fund would be the instruments to supporting these transitions and shield the emerging nations from the predatory financial tentacles extending from either Europe or the USA:
As Elliott Roosevelt noted that vision died with the death of his father. Or perhaps even earlier when Henry Wallace was denied renomination by acclamation when the poobahs of the Democratic Party establishment twisted the arm of the temporary chairman of the session that had just renominated Roosevelt to gavel it closed about 10:00 PM July 20, 1944.
FDI may be the key. The crudities of the US approach does open the possibility of China reversing its existing practices, developing reciprocal trade agreements, and using the surplus it has with any country as a basis for positive investment in that country’s economy, increasing local employment and financing the develop of infrastructure (particularly rail and electric vehicles), create new industries and develop and grow old industries which are free to export to any country with which the UK has or seeks economic relations and thereby increase the rates of employment and economic growth within the UK as an alternative to Trump’s Freddy Freeloader option.
It would also be an excellent basis for bi-lateral and multi-lateral deals with EU member states which China can assist in developing sensible trading relationships with Russia, particularly in he energy sector so that relations normalise positively and without undue loss of face (and preferably with the long overdue loss of Commission crazies lie Useless, Callous and those of that ilk).
Did you not read the post? FDI is what the US wants to restrict. And FDI in Southeast Asia, per the zero dollar factories, is NOT producing an increase in net exports. Southeast Asia has a worsening balance of trade with China and is not getting much if any jobs out of it either.
The part you are missing is that the Anglosphere economic model is predatory with respect to its own citizens and other countries. Mercantlism, which is what China practices, is predatory only with respect to other countries. As I indicated, now that I have lived in Southeast Asia, I have come to realize that the view of most left-leaning Americans about China is naive.
I must admit I hadn’t heard of the term ‘zero dollar factory’ before, but I’ve often heard a complaint made about that type of development – its certainly a phenomenon that seems to go hand in hand with the Belt and Road. Much of the new Chinese funded infrastructure is built almost entirely with imported Chinese labour (even the security). Anecdotally, many of the new industrial zones associated with various port schemes are using lots of imported staff with locals treated very differently. This seems to be a key reason for the targeting of Chinese nationals by Baloch militants in Pakistan.
Some of this is undoubtedly cultural – Chinese companies simply trust Chinese workers much more – but its also inherent to the domestic Chinese development model. China is not by any means the only offender in this – to different degrees, all the export oriented economies do similar things with their aid and government aid projects. But it is increasingly bearing comparison with classic colonialist style models of development (for example, resource extractive railways built to favour the outside dominant countries, with the debts often left for the locals).
Even a very brief scanning of media across SE Asia shows that this is a hot topic – and has been for years. The view of China (and other large countries) looks very different when you are in one of those neighbouring countries than it does from the US or Europe.
More anecdata, I visitied Sri Lanka a couple of years ago ( I was born there, but have lived most of my life in the UK ). Speaking to the locals about the large Chinese port that was built on the southern coast of the island, called Hambantota port, I was surprised at the level of anger directed towards the Chinese by these locals. The main criticism was that the whole port was designed and built by the Chinese, importing even their own manual labourers from China to lay brick, move building materials or dig. None of the locals got a look in at any level, other than senior Sri Lankan pols ( the Rajapaksa family ) getting kick backs for signing off on the project.
This seems to be a particular feature of port developments – I’ve heard very similar things about Chinese funded (but usually, with debts loaded onto locals) ports around the world. A friend of mine – ex PLA grunt – spent a while as a security operative in Africa on Chinese mining investments. He told me that it never even occurred to the managers to recruit locals for anything but the most menial work. They were in something of a bubble and were probably isolated from what the locals thought of this.
Even if it can make some economic sense to do this, its very tone deaf to local concerns and is very counterproductive in the long run. Even the Japanese, who are usually extremely reluctant to work with non-Japanese – at least make an attempt.
What the emergence of China is bringing to these countries is the opportunity to get more fair treatment. It is up to China’s partners to seize this opportunity.
By its very emergence China is doing its homework. The others has to do theirs. You can not ask China to do the homework for the whole world.
Are you saying that living in SE Asia has shown you that China pursues mercantilist policies and this is in some aspects to its SE Asia neighbours’ detriment?
I can believe that but those neighbours themselves aspire to do the same thing! Their problem is that China does it better….
Somebody has to be lunch in the mercantilist world. :-)
I suggest you do some homework.
Thailand is not mercantilist or even all that commercially oriented (despite a lot of low-level entrepreneurship in the form of food vendors and street stalls). For instance, college students consistent answer surveys on employment preferences that they’d rather have a job that was fun than one with good prospects.
Similarly, the government looks to have discouraged the development of an IT industry. A contact taught IT at uni in the West, in addition to (mainly) working in the biz, such as having started up and run a successful computer products company (which included getting patents approved) and doing a lot of software work in many different countries before he landed here. He taught in most of the unis here at different points. He said the schools set out to teach IT in such a way as to destroy enthusiasm for it. 3/4 of the students enrolled in the programs decided not to work in IT. He suggested changes to make the courses both more appealing and work-relevant. They were always rejected.
He never explained why this was, but to me, it seems pretty clear that the motive was to prevent the creation of IT/computer rich men, which would disrupt the existing social hierarchy.
It ran balance of trade deficits consistently until the Asia Shock of 1997 and the IMF’s tender ministrations. Then like the rest of the IMF victims, it set its currency pegs lower so as to run surpluses so as to amass a good sized FX reserve so as never to have to go to the IMF again. Moreover, the recent rise in Thailand’s surplus (per the reference above) is largely attributable to China zero dollar exports, again not a function of Thai policy.
That’s what wrong with mercantilism in the long run. Mercantilists eventually run out of edible mercantilees. What do the mercantilists eat when they have killed and eaten the last edible mercantilee?
Chinese food?
Or maybe sauerkraut?
And I am disagreeing with the US. And I am certainly not missing that the Anglosphere (although I would say Western) economic model is predatory, but its reliance on extraction and IPR rents and overpriced education designed bring ignorance to the masses are its soft underbelly, which both China and Russia have demonstrated they can hack into pretty effectively. Night is falling rapidly on the Western élites’ time in the sun, as revealed by sanctions which are destroying the dollar as a reserve currency (first slowly and then it will be a rock falling from the sky) and Trump’s latest tariff shenanigans.
This is Manichean thinking, that things have to be black or white.
The fact that the US is predatory and led by idiots and grifters does not make China, by not being the US, virtuous. It does have estimable values that we also once had and have abandoned, such as prizing education, hard work, and aspiring to be a meritocracy.
I do put Russia in a different category, but it has the great advantage of being able to be very close to an autarky.
Sorry, but I have to disagree with you and I can’t quite work out why you think that my thinking is Manichean. I see the world as a continuum of greys slightly darker at one end and slightly lighter on the other.
I see no virtuous countries, I see countries which possess some virtues, some vices, and a helluva lot of mediocrity. I also see a world of vanished kingdoms, some of whom have exercised great power for a short period only to lose and disappear, a few of which might be embodied in myth or discovered in an archaeological dig.
I also see that some countries have a greater capacity for wisdom than others and reason hat there are times when policies of neutral altruism now can lead to mutual benefits in future. I believe this to be a central reason behind China impulse becoming a founding member of BRICS.
I also believe that the West’s predatory approach to the rest of the world is its greatest weakness in the present moment, particularly in view of the exraordinarily low (one might also say negative) quality of its leaders most of whom would have difficulty runnuing water because they cannot understand the significance of turning on the tap.
I suggest you spend a bit of time in this part of the world where you will be disabused of your starry-eyed view of China. Again, I repeat what the anti-US finance-capitalism economist said:
You have illusions about China that the Chinese do not have about themselves.
Yves, please forgive this perhaps ill-informed and frivolous comment. I have no direct experience of SE Asia, but I have read a number of Colin Cotterill’s detective novels, set in Laos (People’s Republic of) and featuring Dr.Siri Phaiboun, coroner and reluctant shaman. Dr
Siri and his friends are a gentle, merry crew, though with memories of harsh years as resistance fighters. Whenever the Chinese make an appearance, they are depicted as ranging from oafish, humorless bureaucrats to sinister and pitiless forces.
Colin Cotterill is British- Australian and lives in Thailand. His political motivations may be suspect — don’t know– but his portrait of the charming and, despite the circumstances, light-hearted Lao predispose me toward your view of the interactions in that part of the world. (Would be predisposed already due to.your long record of accuracy, but the fictional experience has softened me up for it.)
If I may butt in on this – I don’t know those books, and its been 20 years since I visited Laos (it is a very beautiful country with lovely, gentle people), but you will find something like that view of Chinese quite frequently in SE Asian media, from my very occasional dips into those waters. Many years ago, on I think my first visit to Thailand, I bought some of the local English language newspapers, and I was very surprised to see some extremely negative stories about what was then a new wave of Chinese tourists. I had assumed that fellow Asians with money would be more welcome than the scruffy and frequently obnoxious western backpackers that otherwise dominated many tourist areas.
Much of it is simple cultural contrast I think. Much of SE Asia culture (not Vietnamese) is super polite – the blunt and noisy Chinese travellers really grate with locals in a way that westerners don’t for some reason. I’ve seen Thai airport staff going red with barely restrained fury at what they see as extremely rude and arrogant behaviour by Chinese tourist groups (it is extremely rare to see a Thai person get angry or lose control in public). For some reason, rude or disrespectful white people don’t provoke the same reaction so far as I can see – I guess its sort of expected.
More recently of course, politics and a much more aggressive Chinese approach to its neighbours had heightened these issues. If you browse the media there as I occasionally do (google translate app being your friend), you’ll see very frequent reports on clashes over fishing, stories of corruption on Chinese infrastructure projects, stories about Chinese scammer set-ups, and so on.
I haven’t seen any specific figures on this, but my perception is that the older, longer established Chinese communities in the region (who are mostly Min or Cantonese speakers, not mandarin) prefer to keep an arms length from mainland incomers.
More context is needed here, too —
[1] In steel’s case, the UK government had just had an all-night session where they de facto nationalized the last remaining steelmaking plant, British Steel, after reported physical confrontations between British workers there and Chinese managers trying to shut down its furnaces — and effectively terminate the plant’s viability — on the basis that the Chinese owners were running the furnaces at a loss of losses of £700,000 a day.
The UK took on British Steel, despite the losses, expressly to keep some independent steel-making capability in the UK and out of the hands of the Chinese, who were seen — fairly or not — to not have the UK’s best interests at heart when they attempted to shut it down.
https://theconversation.com/what-caused-the-crisis-at-british-steel-254557
Keeping China away from such British-produced steel as remains, then, was already intended UK national strategy before the agreement with Trump.
[2] In 2023, the UK earned £470 billion from services exports, or $628 billion. In the 12 months preceding February 2025, total UK exports of both goods and services was £1,790.5 billion, making the UK the world’s fourth largest exporter.
https://www.statista.com/statistics/1312780/trade-in-services-exports-uk-by-service/
https://www.gov.uk/government/statistics/uk-trade-in-numbers/uk-trade-in-numbers-web-version
Of that, the UK’s services exports to the US were £126.3 billion, or $167.78 billion, making it the UK’s largest export partner for services, and putting UK’s services trade surplus with the US at £68.9 billion, or $91.53 billion
https://assets.publishing.service.gov.uk/media/681343167e56aaab3b5253e5/united-states-trade-and-investment-factsheet-2025-05-02.pdf
In this context, an agreement with the US on UK good exports that distracts Trump’s attention from a UK services exports surplus was a Good Thing.
[3] Conversely, how much are the Chinese actually likely to do in response because they don’t like that agreement. The biggest Chinese embassy in Europe will be here — they’re getting the old Royal Mint building — as are a bunch of Chinese corporation like forex. BYD, who have dealerships all over the country in a way they’re not allowed to in the EU, and also the biggest offshore renminbi trading center outside China.
Will Beijing jeopardize those investments and relationships? Maybe, but the chances are not bad that they won’t much.
[4] Finally, to Michael Hudson’s point that the US will try to use UK agreement with US rules as a battering ram to get the EU. Of course. But this may be seen by some in London to be a feature not a bug because, after all, Britain has had the same foreign policy for at least the last 500 years.
https://www.youtube.com/watch?v=DIiVqiK-Ewg
A lot to process, thank you. And the US carpet-bombed Laos, Cambodia and Vietnam roughly 50 years ago. I can only imagine that cooperating with a former enemy must not sit well in certain circles. Another irony of history I guess. Then again China did invade Vietnam
One of the striking things I’ve found is that the Vietnamese (plus Laotians) are remarkably lacking bitterness towards the US and the west for what was done back then. To an extent, it helps of course if you won the war, its a little easier to get over it. But they tend to see these things as the price for being a small country – getting invaded is just a price you pay, you know its not personal. And a far distant power always can be seen with more equanimity than the one on your doorstep, especially if it has a lot of soft power.
Plus of course there is recency bias. Vietnams issues with China are recent and ongoing. Regular attacks on Vietnamese fishermen are a constant in the local media.
China’s “cutthroat” trade practices in SE Asia to be expected? The largest economy will use it’s bargaining power to further its interests vis a vis the smaller countries. It looks like the smaller countries are getting hammered in the middle of the two great powers involved.
This may be unavoidable, as great power politics appears to be shifting more rapidly, with the DT2 regime expediting the relative decline of US power.
It is increasingly difficult for me to remain objective when observing the DT and his kakistocrat crew: the inconsistency, contradictions, irrationality, ignorance, corruption, conflicts of interest, and outright buffoonery are almost unbelievable. The emperor appears to be progressively losing his cognitive facilities and his public rhetoric is bordering on insanity, but I am definitely no psychologist. Is he just acting, or is his behavior genuine? The Court Sycophants, of course, pretend that he is in control and rational.
The mass media cover for him, and we are not supposed to notice. The behavior of this “administration” does not inspire confidence, to say the least. The “madman” strategy may be just that. No strategy, just the short-term, ham-fisted tactics of a egomaniac narcissist. Who knows, but it seems to be getting worse with time.
Unfortunately, the SE Asian countries, as much of the world, and the domestic US population will suffer the consequences.
Not being educated enough to present any counterarguments, to keep things simple, it seems the Trump Administrations’ ‘plan’ is to isolate China economically via tariff agreements amongst potential trading partners. IMO, this seems like trying to apply sanctions by another name. The problems are: 1) Blowback isn’t factored into the equation – what will be the impact on the US if China resists this idea of domination and 2) It seems that Trump’s usually plays toward a zero sum game. No consideration is given to a Plan B. What if snake eyes are the roll? The jet gift from Qatar provides a good illustration and comparison. No thought as to the ramifications of acquisition: emoulments/Congressional debate and approval, retrofitting cost and time, actual transfer processs, if Qatar gifts to the Federal Government , how then does the Federal Government transfer to a third party. The SOS: Trumps says, I want tariffs, Greenland, Canada, Panama, peace in Ukraine and West Asia. Then devil then shows up in the details.
I can confirm from Serbian example that zero-dollar factories are standard Chinese practice, down to importing their own labour that is housed on factory grounds and has minimal contact with the surrounding community. This also has the “benefit” of keeping the labourers in slave-like conditions, further depressing their income.
I bet that such zero-dollar production by China in Serbia gets to label itself ” made in Serbia” because it ever-so-technically was indeed made “in” Serbia. And if these Chinese zero-dollar companies decided to ship those things to , lets say . America; they would no doubt label it ” Made In Serbia”. Which would be oh-so-exquisitely shyster-true and shyster-legal.
Perhaps a new word should be invented for something made in Serbia BY Serbians. That word and label could be ” Made BY Serbia” as against ” Made In Serbia”. And perhaps that labeling distinction could be used by every country which has both zero-dollar Chinese companies making things and actual by-the-country-involved companies making things.
Back in the day, we used to see labels on products with stuff like “union-made in the USA” with the logo of the union and local. You knew it was made by US union labor, and was usually an indicator of quality. Them days are long gone, although there are a few very small holdouts.
This is exactly what was going on in Cairns and other parts of Australia not too long ago “An example, which is a very sore point, are so-called zero-dollar tours. Low-end tours from China that constitute the bulk of arrivals are perceived to be of no value to Thailand. The busses they travel on are owned and operated by Chinese companies. The tour guides are Chinese (when by law they should be Thais with licenses). The visitors stay at Chinese owned-and-operated hotels. They go to Chinese owned-and-operated restaurants. They are taken to Chinese owned-and-operated retail stores.” and they were even going to build an extravaganza called Aquis https://www.theguardian.com/world/2014/mar/04/chinese-developers-allowed-to-buy-land-for-42bn-casino-resort-near-cairns when Chinese tourism was booming. Has turned out to be even less than a Skase Mirage. There was also a proposal for a big development at Airlie Beach https://www.abc.net.au/news/2016-02-04/whitsunday-council-ends-land-contract-for-chinatown-project/7139022 that also fell through.
Before China it was Japan and its developments during QLD’s Joh Bjelke-Petersen era that came to an end with the real estate crash back home.
I think the ultimate American goal is some kind of enormous Anaconda plan for China. The hard stops are control over Panama and Arctic routes (or the Suez, watch that space). The softer stops are “bi-lateral” agreements with the vassals, starting with the UK. I find it likely the EU will go along as well.
We could be looking at a bifurcation of the world economy, where smaller countries have to make their major trading bloc choices, no more a-la-carte commerce.
Good luck with that. The recent trade spat between the US and China shows the nations are too tightly intertwined. Anything that strangles China will strangle the US as well. While the Chinese population is larger and could be roused to cause their government serious issues, US society is already broken beyond repair and it will take much less effort to cause massive chaos.
An Anaconda plan so enormous that it will include China, and Russia, and most of Asia. :)
What must not be overlooked is that quite a few Postal employees (the majority?) are African American. This drives the Right wing crazy, because it’s a double whammy: black folks, unionized black folks, on the government dime, taking it easy and getting paid too much. The outrage!
I’m wondering why do the host countries allow the Chinese to open these zero dollar factories if they offer very little growth or benefits? Are their leaders all being bribed or possibly intimidated (ex. China threatens to cut imports from those countries etc). Or are they happy with the few crumbs that fall off the table?
I don’t know enough to know, but that is a good question. I don’t think China would threaten to withhold exports, but a combo of your other theories seems plausible..
Keep in mind these are pretty open economies, so what is to stop the Chinese? They buy land and get permits just the way locals would.
This is just standard behaviour for multinational companies. They buy low sell high and make money however they can. It is up to the government of the country they operate in to ensure the wider community benefits.
The difference between Chinese multinationals and US multinationals is a country that does something a US multinational doesn’t like can find the US marines attacking them. Or they might just escape with the CIA organising a coup. As far as I know the Chinese government has never launched a military attack on another country because its government has tried to force a Chinese company to pay reasonable wages or clean up an environmental disaster.
I meant that China refuses to buy stuff from the host country (like refuses to buy durians or pineapples or palm oil etc). Similar to what happen with Australia a few years ago (China refused to buy their seafood, beef and wine).
Mostly it’s just a laissez faire attitude to businesses and localised corruption. Most Chinese businesses will have local connections via Chinese community networks so will know how local political dynamics work and who to keep onside. This can work at all sorts of scales.
https://en.wikipedia.org/wiki/Bamboo_network. What’s not being addressed here is that it’s often Chinese people on both sides of every transaction. Party A is a Chinese from the Mainland while Party B is often a third (or more) generation local Chinese who migrated a long time ago. The later benefits from this arrangement in two ways:
– Access to the Chinese market.
– Providing raw materials, construction services, access to officials, etc. Zero dollar factories still need all of these.
Most big businesses in South East Asia are run by people of Chinese ancestry, Thailand not excepted. Thaksin, Yoovidhya (Red Bull fortune), Chearavanont, and Sirivadhanabhakdi are all Chinese Thais. And speaking of Thailand’s royalty, quoting from Wikipedia: “The present Thai royal family, the Chakri dynasty, was founded by King Rama I who himself was partly Chinese. His predecessor, King Taksin of the Thonburi Kingdom, was the son of a Chinese father from Chaoshan.”
You maybe able to move Chinese people out of China, but you will not be able to move China from Chinese people no matter where they are. I am not saying that all Chinese immigrants in South East Asia are card carrying members of the CPC, but most of them still retain the Chinese identity through some form or another, partly due to political/race persecution.
Help me. This is talking past the documented point of the article, and the complaints in the Thai press, which would never cross the monarchy, of China extractive zero dollar investments. The Thai government is unhappy enough to allow and even promote open complaints about it. And Thailand begin very good at playing one superpower off against another, the intent looks to be to use US pressure about transshipment abuses and Chinese owned companies operating in Thailand to circumvent tariffs on China to try to curb zero dollar investments.
In other words, your rank racist claims in no way disprove the evidence of exploitative practices by Chinese companies.
There are plenty of Chinese Americans on the West Coast and Thai with Chinese ancestry who would dispute your stereotyping. They don’t like being screwed by mainland Chinese either.
Actually I was trying to reply to the following post: “I’m wondering why do the host countries allow the Chinese to open these zero dollar factories if they offer very little growth or benefits?” from Al above, but for some reason this comment showed up on its own “thread”.
My point is that a lot of things that you have pointed out will continue to happen because of the oversized influence of the bamboo network in South East Asia’s economies on top of the incompetence and corruption of most ASEAN governments, and whether you want to believe it or not, race does play a part because the older diaspora who hold most of the power and the money still believe themselves to be Chinese, first and foremost.
And you can tone down the whole “racism” thing. I am an Indonesian Chinese, so I think I know what racism means, with my family having been subjected to multiple waves of race driven violence from 1965 to 1998. I don’t remember the cavalry showing up from Mainland China when things were really bad, but those incidents weren’t exactly really endearing either for people of Chinese ancestry who were already living there. In fact, many left never to return, with the rest continuing to hold tight to their Chinese identities. I know plenty of Malaysian Chinese who feel the same, because of the Bumiputera policies.
Half black Malcolm Gladwell was appalled to find that when he took the Harvard Implicit Bias test (whose results hold upon retaking the test even when you know how it works, it captures reflexive prejudice) that he was biased against blacks. So it is possible to harbor prejudice against your own ethnic group. For instance, it is not hard to find women-hating women.
I also take exception to your generalizations extending to Thais of Chinese descent. Thailand was never colonized, which creates a different dynamic with outside powers than in any other Southeast Asian country.
This article, for instance, described how Thai Chinese have a great deal of pride in their heritage and culture, and also stress the importance of their “Chinese family” which may include relatives in China, but it has surprisingly few mentions of actual cooperation, although other scholarly accounts point out that mainland Chinese do “work” their diaspora connections when doing business outside China. It also includes this:
https://www.davidpublisher.com/Public/uploads/Contribute/6316ed414e227.pdf
Chinese tourism has fallen markedly in Thailand in the last year due to Thailand-specific as well as general China economic conditions.