House of Mahjong

The new season of House of Cards is out later this month in a bundle of 13 Netflix nourishing episodes. To be frank, the best part of the show are the plot lines relating to the US/China feud for us Sinologists. It’s clear that the TV script writers have obviously done their research by integrating current US/China tensions into the House of Cards world. From memory the last series saw a Chinese cyber-theft, a trade dispute involving rare-earth minerals and the escalating tensions between China and Japan in the East China Sea, all stories that could ring true with the shows Asian and American audiences.
 As we left Frank at the end of season 2, he’d just become the 46th US President. Tellingly, his first action as U.S President was to contact Beijing (this was I add before that ‘big red button’ critical security briefing). An hour later, Underwood claims that he had had a productive talk with his Chinese counterpart. Not bad going for what is considered the most important bilateral relationship in world history.
 Frank’s assession marks a critical period in the US/China relationship; frictious trade wars, an unbalancing of power in Asia-Pacific as well as China’s continued investment in the US, will have put even the unflappable Frank on the back foot. This article will look at the background of the US/China relationship, the initial overlaps with the show and  the real life US Congress recommended response.
 

 Frank when growing up in North Carolina may have seen Richard Nixon become the first US President to visit the PRC in 1972. This visit marked the first real step towards a normalization of trade relations between the two countries, unless you include the US team ping-pong tour the year before. Both sides viewed bilateral trade as another area from which mutual benefit could be derived,  agreed that economic relations based on equality and mutual benefit are in the interest of the peoples of the two countries. They agreed to facilitate the progressive development of trade between their two countries.
 The Nixon-Mao meet up marked an end of a period of Chinese Self Reliance in the global economy. China imported foreign technology and whole industrial plants to catch up with the globalisation trend. China trade liberalization was lured on by the WTO that pushed on reforms. They applied for membership in 1986, in order to achieve membership they had to lower tariffs, ensure a fixed exchange rate and become an open state to foreign firms. China agreed to the normalization of trade, and the accession to the WTO was guaranteed in 2001, and proved the catalyst to an extroadinary export-of-goods oriented economic growth. As of 2014, the US trade deficit to China is the largest in the world, standing at $318.4 billion and increasing by 4.1% year-on-year. That means that for every $4 exported to the US, China imports $1 of US goods and services. China exports computers, telecommunication and apparel, and in return would import oil seeds, waste and aircrafts. The latter perhaps not for long as China seeks to develop its first passenger aircraft. Furthermore China’s investment into the US in 2014 for the first time exceeded the US investment into China. Cause for concern, perhaps if the state-owned CNOOC rejected takeover of the US Unocal Oil company in 2006 that upset China is anything to go by. The US has grievances with China in its trade relations. It has affected their domestic production, 29% of manufacturing jobs have been lost. Furthermore China’s import duties on agricultural goods remains at a highish 15%, while the US’s is at 4%. China has slowed on its promise of reforms and the countries continued desire to earmark strategic industries leaves China to be more closed off than the US would like. For instance: China has imposed unlawful export restrictions on rare earths (to the dismay of Raymond Tusk). Also China’s undervaluation of its currency functions as a de facto subsidy for its exports. 2014 also saw 5 Chinese PLA officials accused of engaging in state-sponsored, cyber-enabled theft of commercial property from US based-corporations where they worked. Cyber terrorism that the TV series did well to pick up on caused China to retaliate in real-life by putting sanctions on US based software and hardware firms.China today is the largest producer of pharmaceutical products, but the American-based Food and Drug Administration has found fault with some of their sub-standard drugs. Furthermore loopholes in China’s Intellectual Property laws allows for local drug makers to reproduce US patented drugs prematurely.
 As well as the trade issues, Frank Underwood upon taking office has to now make further decisive actions to do with maintaining international relations within East Asian which is fast becoming China’s sphere of influence. The US has to keep tabs on China’s military modernisation, North Korea’s nuclear program and China’s influence in China-tending countries like South Korea and Australia. China has had a 27% increase in trade with Taiwan since 2008 prompting a more coefficient relationship. Hong Kong has seen the standards of its Basic Law signed in 1984 challenged and its press freedom imfringed upon after Beijing’s intoventions. Subsequently the US Congress has recently released its report on US/China economic and security 2014 review. Some of the actions they’ve recommended Congress take are: ·      Fund US Navy shipbuilding to increase efforts in the Asia-Pacifict o achieve a 60% ownership of ports by 2020.
·      Source an outside company to source the Sino/America military balance, and to rectify if too inadequate.
·      Investigate the economic impact of China moving to a freely floating currency
·      Review the effectiveness of US/China joint trade, to question if China are honouring their commitment.
·      Task the FDA with establishing a regulatory regime with China’s pharmaceuticals, allowing the producer to be made available and to make unannounced visits to manufacturers plants.
·      Allow Hong Kong to keep elections for the HK Chief Executive by universal suffrage.
 Frank Underwood has crucial decisions to make. To rectify the trade deficit, the US has to seek a more balanced deal. China is still developing, (its GDP per capita is $6000, to the US $52,000), and will therefore protect industries it feels are not ready for the globalisation intrusion. What universal terms will the US as the WTO chief body impose to open up China without causing substantial friction? Guess we’ll have to wait for Season 3.