"Face" By Walrus.

My Father traded in Asia from 1935 to 1942 and then from about 1953 to 1990. I was privy to many discussions and engagements with our customers over the years as well my transactions in my own right. I don't think the Washington decision makers, as opposed to perhaps career Sinologists in the State Department, quite understand the dynamics of the Trump Administrations relationship with China and the risks America appears to be running. The bit that seems to be missing is a realistic appreciation of "Face".

A quick search of the internet reveals scholarly definitions of  "Face" together with the description of it in socio - cultural terms that in my opinion do not do it justice. Couple that with Western insensitivity, NeoCon hubris and Trumps preference for believing everything is a negotiable transaction and we are set up for a monumental falling out with China that has lethal consequences for America.

I will give a few examples of Face, you can find plenty more on your own.  Did you know it is an insult to request a Chinese to sign a written contract? If he has agreed to the terms and said as much in front of other Chinese then that is enough. "Face" does the rest. Did you know that in certain circumstances "Face" requires you to lie to, or ignore, authorities in support of family and friends? This last, in my opinion, is the reason for the current Chinese attempt at omnipresent surveillance; "we tremble at the power of the Emperor in Peking, but the mountains are high".

Col. Lang makes the point that the Japanese went to war to dispel the threatened perception that "they weren't the men they thought they were". Well with "Face' in China its more than that, you are your "Face". To  damage someones "Face" is to create a lifelong mortal, implacable enemy. There is no way, short of death, to recover once you have given offense. Against that standard Trump, Bolton and Pompeo are playing with fire. "Just kidding" doesn't cut it.

It may surprise some of you to know that the West was trading with China right through the cold war - in US dollars only. Nixon didn't discover China either. It also may surprise some that China is perfectly capable of making very high quality reasonably priced sophisticated goods, and always has been. The reason that Walmart sells cheap Chinese schlock is because that's what they asked China to supply. As for "stealing intellectual property", don't make me laugh. We all do it and China has plenty of very smart people that create first rate IP of their own.

I make the case that China is a sophisticated and capable economy, with its own amour propre, not some third world hole populated by leaders that can be bought or threatened, and Trump risks forgetting this at our peril.

To this end I note that the trade war is not going to Americas advantage, China has vast holdings of American debt, China buys Iranian oil,  judging by reports of Sochi discussions, Russia AND China are likely to support Iran and both Korea and Taiwan are vulnerable. In my opinion President Trump has a very small window left in which to fire Bolton and perhaps Pompeo and embark on a more conciliatory line, before China becomes an irreversible, implacable enemy.

What says the Committee?

Comments

[Johnb]

Agreed, there is a very fine line being walked here in heavy footwear. China has patience and quite naturally plays the long game which of its own gives an advantage. Any ruler of China knows their Confucius — 'The green reed which bends in the wind is stronger than the mighty oak which breaks in a storm. It has not been hard to see China as the green reed bending to the wind for some time now which has made it difficult for Western policy makers, they push, the reed bends, they turn and the reed springs back. The Chinese I have spoken too within the anonymity of travel when the conversation has turned in that direction have all indicated a willingness to accept, indeed an expectation of war with America and have no illusions as to its potential cost to them. A cost that is deemed acceptable ( preserving Face) whereas they voice scepticism of Americans willingness to accept that cost, such a war will not be distant from the Continental USA. You can but hope that a great Presidential administration comes along to navigate these increasingly troubled waters.

[jdledell]

My son, Jason, is fluent in both Mandarin and Cantonese was headquarered in Hong Kong for years but now works out of Tokyo but spends a great deal of time in China conducting business. He would probably argue that, if anything, Walrus is understating the importance of Face in China. There are numerous rituals associated with interacting with Chinese that must be observed in order for communication and agreement to flow properly.

I think many in America, maybe even Trump, have an image of China as a backward country full of uneducated dumb people. Nothing could be further from the truth as a large segment of the population is not only eductated but intellectually the equal of Americans.

As far as handling the trade war between China and the U.S., I think in some ways China has an advantage in it's government directed relationship with business. It allows China to react quickly to adverse conditions, faster and with more cohesiveness than our capitalist system. Watch for China to move it's manufactured products through numerous other countries to avoid some of the impact of tariffs.

China is also not as responsive to consumer complaints as the U.S. democracy. As soon as Trump's base starts complaining about the higher prices at Walmart etc. Congress and Trump's re-election campaign officials will start to make China tariffs seem intolerable.

[EEngineer]

I would think the Chinese see Trump as something to be persevered for a few years regardless of who he surrounds himself with at this point. I wonder if they have a term for "face incapable" as a parallel concept to the Russian "agreement incapable"? As such they probably see his administration as a no more sophisticated than a hornets nest, to be avoided if possible and swatted if necessary.

[Eric Newhill]

Well, America has "Face" too, in addition to real economic interests.

A compromise will have to be reached in which both countries get what they need (if not what they want) and each country's face is preserved.

I think Bolton types disregard the concept of "face". They need to go. IMO, Trump gets it and would be fine in negotiating sans neocons.

[ted richard]

i think those in washington never learned or have forgotten the utterly degrading loss of face china was forced to endure at the hands of the british and americans in the opium war of the early 19th century.

imo this is part of all the calculations the chinese people and the chinese government make when dealing with washington.

we may think holding a grudge this long is absurd, i doubt the chinese feel or think that is the case.

we can only hope in the west that china treats us better as we collapse than we did to them.

[Fred]

What about America's face? "President Trump has a very small window left in which to fire Bolton and perhaps Pompeo and embark on a more conciliatory line, before China becomes an irreversible, implacable enemy." Well, I guess our "face" doesn't matter as long as we do as the foreigner tells us. I'm sure if you watch CNN/MSNBC/etc you'll figure your golden to denegrate the US. Just ask your recently returned American educated Chinese employee, he learned the same thing here. Dare I ask where all those great Chinese Universities went that turned out all those great leaders who make all that great IP you spoke of? Perhaps they had a cultural revolution like the one we are going through. My understanding of history is a bit hazy, feel free to educate me on that.

"both Korea and Taiwan are vulnerable." That's why Trump is trying to negotiate an end to North Korea's nuclear program. John Bolton did no one on Earth any favors with his sabotage of that effort. At the same time Xi Jinping has plenty of candidates for "John Bolton of China" he has to deal with, or didn't that thought occur to anyone? As to Taiwan, just what the hell have they done for the USA in the last 50 years?

[ponderer]

It has always seemed to me that "Face" is the distant inferior cousin of Honor and a much closer sibling to Pride or even Hubris. That is, the Asian concept of Face has everything to do with how you are perceived and almost none with how you "are". Honor, meanwhile, demands a rigorous adherence to a code of conduct and force of will that places less emphasis on perception and more on "being". Westerners (myself included) tend to get those two confused.

If the Chinese were bound by the authors concept of Face, China must be a paradise without corruption. Instead of polluted water land and air, wizened elders concerned over their stewardship and the lose of face from an environmental catastrophe, would provide a harmonious balance between man and nature. Instead, its a paradise and a ghetto where passerby's walk nonchalantly around the dieing. Where companies reluctantly provide netting to slow the steady suicide of their workers. They do tend to plan for the long term, and they can certainly hold a grudge I would agree. How far are you willing to bend-knee for someone else's concept of pride though? Tariffs, which have been around since antiquity, seem like a small infraction for all this talk of life-long mortal, implacable enemies. Yesterday I saw a Chinese TV program that roughly translated said Donald Trump was literally in the White House crying over soybean prices. POTUS literally crying over the Chinese governments response to our rising tariffs after decades of unfair trade practices that benefited the Chinese (elites anyway). So you shouldn't think that saving Face is a two way street or will result in a mutually beneficial deal.

[blue peacock]

Walrus,

IMO, China has been "an irreversible, implacable enemy" for decades now. It just so happens that our own fifth column in the Party of Davos have aided and abetted this implacable enemy while making sure that we voluntarily disarmed and did not fight back a war that they are fully engaged in. The consequence has been that we are paying for our own destruction. China is more authoritarian & militaristic today than it was three decades ago and there are several people who believe they currently pose an existential threat to the US & the West in general.

https://www.washingtonpost.com/opinions/steve-bannon-were-in-an-economic-war-with-china-its-futile-to-compromise/2019/05/06/0055af36-7014-11e9-9eb4-0828f5389013_story.html

While tariffs may not be the best strategy, we have to admire Trump's courage and determination to finally fight back in the face of massive internal opposition from our fifth column. When you look at the sheer scale at which the Chinese are buying think-tanks, academics, media, K-Street lobbyists & political influence it is staggering and only the Israeli influence operation is bigger in depth & breadth. Ever since Bill Clinton gave China Most Favored Nation status and the Party of Davos furthering their own narrow short-term financial interests, we have directly financed and transferred technology to China and dismantled our industrial base. China joined the WTO but has thumbed their noses at every adverse WTO ruling that showed they play not by the rules but are predatory.

You dismiss the scale of IP theft, forced technology transfer, product dumping, state subsidies and industrial espionage as everyone does it. That's typical of the China apologists in the West.

I think you over-estimate China's financial strength. There are several macro analysts with excellent long-term analytical track records who believe that China is desperately short USD. This theme that you note that China can crash the UST market is already proven to be false. China in fact sold hundreds of billions of UST in 2014-2016 with no perturbation in the UST market.

https://www.bloomberg.com/news/articles/2016-06-15/china-dumping-more-than-treasuries-as-u-s-stocks-join-fire-sale

On the contrary the financial pressure on China is increasing as their debt-fueled malinvestments grow. I'm willing to bet you that we'll see this pressure manifest in a devaluation of the RMB.

https://www.valuewalk.com/2019/02/kyle-bass-china-paper-tiger/

I will leave you with a speech from your fellow countryman, John Garnaut. Chilling!!

https://sinocism.com/p/engineers-of-the-soul-ideology-in

[Harlan Easley]

I don't care one iota about their "Face". Not at the expense of deindustrializing large sections of the American Heartland. Which has already happened. Our trade relationship with China has been a disaster. The only people to benefit are large shareholders.

As for them holding our debt it's threat is non-existent. Let them sell all of the bonds. China currently owns $1.13 trillion in Treasurys, a fraction of the total $22 trillion in U.S. debt. The Federal Reserve if need be can buy them all up but even that won't be necessary due to insatiable demand for the bonds even at these ridiculous low interest rates.

In fact their obsession with "Face" indicates a psychopath. Defines as no sense of right and wrong and is generally bolder, more manipulative, and more self-centered than a sociopath. That sums up their dealings with us the last 25 years.

Only a fool continues to play this game of theirs. Stealing our technology at will, forced 50/50 partnerships, currency manipulation, dumping into our country to destroy industries, etc. etc. etc.

Plus they are expanding geographically now due to us making them rich. They are 1.3 million homogeneous Han for the most part. Especially compared to our country. I have to say their government has definitely improved the lives of their citizens as a whole and I respect that. But enough of our weak kneed leaders giving away the store.

I personally am being hurt by the tariffs due to many LVP flooring products I sell are sourced from China. I have no problem taking a hit for the greater good and have been working on sourcing from different locations.

[Robert L Groves]

Excellent analysis by Chas Freeman on US/China relations.
https://chasfreeman.net/on-hostile-coexistence-with-china/

[Dave Schuler]

Something to which not enough consideration is given is that China has a considerable volume of foreign loans, those are increasing, they are denominated in dollars (particularly since the yuan is not convertible), and must be serviced in dollars. That means that China needs a lot of dollars which it obtains via selling goods to the United States.

Said another way, China cannot reduce the amount it sells to the U. S. or buy more from the U. S. without a convertible currency or reducing its level of foreign debt.

[MP98]

"Did you know it is an insult to request a Chinese to sign a written contract?"
So, assume that they are dishonest negotiators, as they just showed by walking away from 6 months of negotiations that they "agreed to?"

[Stueeeee]

Your commentary exudes the naivety that the Chinese have preyed on for the past 50 years. Their meekish and subservient mannerisms hide a ruthless and immoral inner nature. They would still be a backward country if not for our elite's insatiable greed. What have they produced organically that wasn't ripped off from developed countries? What do they offer cultural other than a social credit system with improved state surveillance techniques? They treat their own people like dogs and they still have dog eating festivals. China offers a way of life that is an antithesis of the West, so it is inevitable that there will be a clash. The question isn't if but when. The longer we delude ourselves into thinking that economics will change China, the more blood will be shed when the reckoning occurs.

[VietnamVet]

Chinese chauvinism puts American exceptionalism to shame. They’ve been the Celestial Empire thousands of years longer than the upstart Anglo-American Empire. In last 30 years the Western Elite dumped “noblesse oblige” for “get it while you can”. China’s entry into the WTO directly hallowed out manufacturing in the Mid-West ultimately resulting to Donald Trump’s trade war. This was a result of CEOs and Wall Street Raiders moving manufacturing to low wage, no environmental regulation, nations to make a quick buck. China was a willing partner in the con in order to modernize. China’s retail sales are now greater than America’s. Since the US declared an economic war, GM will have to drop Buick and Cadillac brands and market their cars in China as Chinese. But “Face” likely will make that ploy unsuccessful.

[Harlan Easley]

I always enjoy your comments due to your experience. Do you see nothing threatening about China expanding into the South China Sea?

Do you agree there has been significant sections of the country devastated by deindustrialization?

"I think in some ways China has an advantage in it's government directed relationship with business. It allows China to react quickly to adverse conditions, faster and with more cohesiveness than our capitalist system."

I couldn't agree more and by implication of this statement China will never deal fairly with us unless we change our system via abandoning Capitalism(AOC) or via Protectionism which was originally how we established our industrial powerhouse.

Let's say they react against Apple. Apple shareholders may be upset but the average deplorable I promise you won't give two cents. And yes I agree prices will go up at Walmart. I recently had to replace a HVAC unit and paid more than $400 more than 3 years ago due to the price of steel rising. Probably due to tariffs or maybe I just got ripped off. I didn't mind spending more if more steel jobs are created in the US. Also the old saying the cure to high pricing is high pricing. The market will quickly settle this out. Companies and consumers will adjust.

Why can't most of the low value added manufacturing be transferred from China to Mexico and Central America to help stem the immigration from these countries?

No doubt China is full of intelligent people. Why should we continue to give away our prosperity to a 1.3 billion people superpower? Even Thomas Friedman says American Business in China no longer believes in the dream of endless China sales. Serves the fools right. Major shareholders may disagree but my perception is the base of Trump will support him to the hilt on this. Or simply put Rural America will.

[Harlan Easley]

So unless we economically surrender to them expect war? How are they going to dodge the overwhelming superiority we have in nuclear armed submarines? Are they going to walk on water like Christ to deliver the goods they must via sea?

A war with China is Armageddon and nobody wants it especially them.

[Jack]

China has been emboldened as the west moved their manufacturing base there and transferred their technology. They've been taking the next steps directly influencing our politics.

https://www.nzherald.co.nz/nz/news/article.cfm

Huawei while it claims it is an employee owned company is controlled by the CCP as many "private" companies in China. The west would be foolish to not put an end to Chinese subterfuge that undermines their economy and national security.

https://uk.mobile.reuters.com/article/amp/idUKKCN1SM0VC

[catherine]

I say if Face is important, respect their Face. After all written agreements are broken all the time so what difference does it really make.

[Jack]

Kyle Bass on why China has to sell its US Treasury holdings. Twin deficits.

https://twitter.com/Jkylebass/status/1129022386228146176

[Ryan]

I don't buy it at all. As others have pointed out China requires access to American markets to 1) make their dollar denominated loan payments and 2) keep foreign manufacturing located in the country. The cost of tariffs to the United States is finding alternative sources in supply chains and higher end cost to consumers. We're insanely rich, we can afford that without issue. The cost of tariffs to China, in the ultimate analysis, is foreign companies moving their manufacturing out of the country, which would utterly devastate them.

So far as I understand the Trump administration is demanding nothing more than China play by the rules of the game as written. If they're not willing to do so, **** 'em.

[Fred]

"Watch for China to move it's manufactured products through numerous other countries to avoid some of the impact of tariffs."

They've been doing that for years.

[turcopolier]

Catherine

A well written contract contains enforceable penalties for non-performance with the money often held in escrow. That's the way I write them. Trump is using the balance of US/China trade to penalize the Chinese for reneging on the verbal and draft agreements they made with us.

[walrus]

Not surrender, recognise.

[walrus]

The Chinese didn’t make you buy.

[walrus]

America doesn’t have Face. It isn’t Chinese. You are not dealing with people who subscribe to Judeo Christian ethics.

As for Universities, you’ll find out when the Chinese start luring the best and brightest talent to China. What are you going to do then? Take their passports?