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By Staff | Mar 3, 2017

Candidate Donald Trump promised to label China a currency manipulator on day one of his administration and once elected put China’s one-China policy over Taiwan in play as a bargaining chip. His designated Secretary of State, Rex Tillerson, challenged China’s claim to the South China Sea in his confirmation hearing.

There is no way that we can fully know what has been going on behind the scenes, but Trump’s China policy is evolving in real time. Chinese President Xi Jinping reportedly refused to take a phone call directly from the President until he acknowledged that Taiwan and China were one and the issue was not a bargaining chip.

It may have surprised some people how quickly Donald conceded that demand to Xi after which they talked on the phone. There is no word on the timing of designating China a currency manipulator, but the administration needs its cabinet officials confirmed and at work for such things. The primary reason Trump conceded on Taiwan is that it means nothing … the U.S. will continue to support Taiwan and it was poor timing to antagonize China with North Korea getting a lot better at missile launches.

Other than go to war taking out North Korean missile capacity, the primary leverage with NK will come from Beijing. Trump is going to need Xi on board to take down Kim Jong Un who has to be a huge pain in the derriere to both the U.S. and China.

China is the only country with enough trade with NK to weigh leverage on them. If it cuts off basic commodity needs to North Korea however, it could be swamped with desperate refugees fleeing across the Yalu River.

Defectors say that things are as bad as they have ever been in North Korea and that the Kim regime is vulnerable. Kim had his half-brother killed in Malaysia recently to eliminate another potential family rival.

Trump and Xi are going to have some large accommodations to reach with one another as the crazier Kim becomes, a point is reached where neither country can tolerate it anymore.

Both the U.S. and China have a shared interest for a regime change in North Korea, but Kim is not threatening to shoot missiles at China so our security risk is larger. China can use that to its advantage when Trump starts pushing them on trade.

UN sanctions on North Korea are a joke with China policy being grossly ineffective and Kim has made it clear that he is on a path intending to put a nuke on a missile that can reach the U.S.

This is fast becoming the most serious flash point in the world. Installing a THAAD missile defense system in South Korea or in the Sea of Japan is only as good as the confidence that one has in it and doesn’t negate the threat.

I think that the American people would support just about any decision that Donald would make relative to North Korea. Kim is a boil that needs to be lanced. It is just the size and type of needle that will be used.

What he and his family have done to the Korean people is reprehensible. North Korea is outlined by a void of darkness at night seen between bright lights in SK and China by satellite.

Trump’s public response to the most recent North Korea missile launch was reserved, but I believe they are working on a response that will not be. I would be willing to bet that Trump is in office after Kim is deposed or disposed.

He would get another award for settling this issue once and for all. Trump is going to look at handling North Korea as a challenge that only he can take care of. That may require him to make accommodation with Beijing on trade in the process. That would be a good thing for U.S. soybean producers.

Secretary of State Rex Tillerson asked China to use all available tools to try to get North Korean nut-case Kim Jong Un’s attention to stop his nuclear provocations. China gets it. They don’t want another war on the Korean peninsula and they will trade influence on North Korea expecting a trade concession from the U.S. in return for it.

Beijing stopped all coal shipments coming from North Korea. This coal was real money to the North Korea regime – $1.2 billion, constituting a third of its export income, and will hurt.

I don’t think that you will hear much from Trump about labeling China a currency manipulator as long as they are playing ball with the administration on North Korea. I think that Donald will be extremely less likely to engage U.S. ground forces in foreign wars in a manner such as the Iraq wars.

He will be more apt to go nuclear (threat) sending a different message to the world. That is the signal he wants sent. One could view this cooperation between the U.S. and China with guarded temporary optimism.

I don’t profess to be an expert on government transitions, but it seems very odd and uncomfortable to me to see these tensions rise with serious interaction between the U.S. and China with the designated Ambassador to China still serving as governor in Des Moines, when he should be in Beijing.

Iowa Governor Branstad needs to become Ambassador to China Branstad with all due haste.

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis.

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