CTH holds a fundamentally different view of China and North Korea than most. Our position is based on independent research and a lengthy following of patterns between the two which show predictable cause and effect outcomes.
It is our position that while the DPRK is technically an independent nation; in reality, and in quintessential economic terms, North-Korea is more accurately defined as a province of China, and not an independent nation. What China authorizes Kim Jong-un (North Korea) to do, Kim Jong-un does. “Dear Leader” Kim Jong-un is better described as a provincial governor, who serves a specific function as a tool against the West.
History will observe the key date for President Trump’s strategic victory over North Korea was achieved on August 5th, 2017. That’s the original date when Russia and China agreed to the U.N. Security Council’s economic sanctions against North Korea. That first, historic, Russia and China U.N. Security Council vote against North Korea came as a result of eight months of assembled economic leverage created by President Donald Trump.
As a result of President Trump’s strategy, every time North Korea’s Kim Jong-un takes an action, President Trump hits China’s Xi Jinping with an additional economic action. As Beijing feels the squeeze, they tell Kim Jong-un to act. Every time Kim Jong-un acts, President Trump squeezes Beijing with more economic pressure. Wash-Rinse-Repeat.
Communist Beijing has boxed themselves into this inescapable cycle. The reason they keep authorizing Kim Jong-un to take action is simply because China has no alternative leverage to use against President Trump. China has nothing in their economic arsenal they can use to hit back against President Trump, so Beijing keeps using North Korea in an attempt to create leverage.
However, President Trump doesn’t play along with the bluff, he knows every card China is holding. Trump knows China has no substantive economic leverage against the U.S., and Trump also knows China has boxed themselves into this cycle. It’s a ridiculous three step process.
¹China tells DPRK to do stupid thing. ²DPRK does stupid thing. ³Trump hits China with economic punishment for stupid thing.
This cycle has been ongoing for months now, yet the media apparently doesn’t notice it. Each time Kim Jong-un does a stupid, Donald Trump slaps Xi Jinping. Today:
Stop trade with China.
Even more brilliant thermonuclear economic leverage.
The only way out of this cycle is for Beijing to concede and lay the DPRK defeat at the feet of Kim Jong-un. The conceding will evidence itself when Beijing inevitably calls for ‘Six Party Talks‘. However, China is not a culture that concedes. China is an ancient culture that does not have any frame of reference for concession of terms.
China has no cultural or political space between peace and war; they are a historic nation based on two points of polarity. They see peace and war as coexisting with each other. China accepts and believes opposite or contrary forces may actually be complementary, interconnected, and interdependent in the natural world, and they may give rise to each other as they interrelate to one another. Flowing between these polar states is a natural dynamic to be used -with serious contemplation- in advancing objectives as needed.
The Chinese objective is to win, to dominate, using economic power.
Peace or war. Win or lose. Yin and Yang. Culturally there is no middle position in dealings with China; they are not constitutionally capable of understanding or valuing the western philosophy of mutual benefit where concession of terms gains a larger outcome. If it does not benefit China, it is not done. The outlook is simply, a polarity of peace or war. In politics or economics the same perspective is true. It is a zero-sum outlook.
This is the appropriate frame of reference for China to continue telling North Korea to do stupid things in an effort to create leverage against the U.S. Quite simply, China has no alternative – they have ZERO economic leverage against the U.S. – they are trying to create economic leverage.
China’s approach at creating leverage doesn’t work. Each time China/N-Korea do something stupid, Trump hits China in the economy. Previously:
President Trump is putting on a MASSIVE economic squeeze.
♦Squeeze #1. Trump and Mnuchin sanctioned Venezuela and cut off their access to expanded state owned oil revenue. Venezuela now needs more money. China and Russia are already leveraged to the gills in Venezuela and hold 49% of Citgo as collateral for loans outstanding. Now China and Russia will need to loan more, directly.
♦Squeeze #2. China’s geopolitical ally, Russia, is already squeezed with losses in energy revenue because of President Trump’s approach toward oil, LNG and coal. Trump, through allies including Saudi Arabia, EU, France (North Africa energy), and domestic production has driven down energy prices. Meanwhile Russia is bleeding out financially in Syria. Iran is the financial reserve, but they too are energy price dependent.
♦Squeeze #3. Trump and Tillerson just put Pakistan on notice they need to get involved in bringing their enabled tribal “extremists” (Taliban) to the table in Afghanistan. Pakistan’s primary investor and economic partner is China. If U.S. pulls or reduces financial support to pressure Pakistan toward a political solution in Afghanistan, China has to fill void.
♦Squeeze #4. China’s primary economic threat (competition) is next door in India. President Trump has just embraced India as leverage over China in trade and pledged ongoing favorable trade deals. The play is MFN (Most Favored Nation) trade status might flip from China to India. That’s a big play.
♦Squeeze #5. President Trump has launched a USTR Section 301 Trade Investigation into China’s theft of intellectual property. This encompasses every U.S. entity that does manufacturing business with China, particularly aeronautics and technology, and also reaches into the financial services sector.
♦Squeeze #6. President Trump, Secretary Ross, Secretary Mnuchin and USTR Robert Lighthizer are renegotiating NAFTA. One of the primary objectives of team U.S.A. is to close the 3rd party loopholes, including dumping and origination, that China uses to gain backdoor access to the U.S. market and avoid trade/tariff restrictions. [China sends parts to Mexico and Canada for assembly and then back-door entry into the U.S. via NAFTA.]
♦Squeeze #7. President Trump has been open, visible and vocal about his intention to shift to bilateral trade renegotiation with China and Southeast Asia immediately after Team U.S.A. conclude with NAFTA renegotiation.
♦Squeeze #8. President Trump has positioned ASEAN (Association of Southeast Asian Nations) as trade benefactors for assistance with North Korea. The relationship between ASEAN nations and the Trump administration is very strong, and getting stronger. Which leads to…
♦Squeeze #9. President Trump has formed an economic and national security alliance with Shinzo Abe of Japan. It is not accidental that North Korea’s Kim Jong-un fired a missile over the Northern part of Japan. Quite simply, Beijing told him to.
The reason this Trump economic approach is so effective is because there’s an endless supply of economic things President Trump can do to punish China (closer economic ties and better trade deals w/ India; removal of China’s MFN trade status; recognition of Taiwan; increased economic relations with ASEAN, etc.), and yet virtually nothing China can do economically in return.
Communist China’s geopolitical economic relationship with the U.S. can be replaced with Democratic India and/or a host of ASEAN allies (S-Korea, Japan, etc.)
Remember, China is seeking conquest through economic power. China must be confronted economically. China must be defeated economically. The moment China sees economic defeat, it will act differently. China will call for six party talks.
President Trump can play out this action/response dynamic as long as it takes to reach economic victory. There is no substantive downside in the economic battle for the U.S.
Beijing is referencing what has worked for them in the past without realizing they are not up against the same adversary. The resulting economic damage in this cycle hurts China more each time by weakening Beijing’s economy.
See how this is working: