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To Reset Relations With China, We Must Ignore The Stock Market


Consider that every time America attempts a hardline stance on China, equity markets drop. While a simple war of words can cause algorithms to spew sell orders, a disruptive reboot of the complicated bilateral relationship will spell nothing but trouble for share prices. Decades of globalism have made American companies, from Disney to General Motors massively dependent on China for growth. Without that growth, earnings suffer. And when earnings suffer, so goes the market.

To tackle such a complicated revamp, America needs to think long term. China does it, looking decades into the future to implement initiatives intended to benefit the country’s 1.4 billion citizens for generations to come. Such planning often creates short-term pain, but the Chinese Communist Party doesn’t care. They play the long game. If the United States plans to fix the imbalances in the Sino-American relationship, we must as well.

That means we have to ignore quarterly earnings reports and millisecond computer trading decisions, as well as demonstrate firm resolve beyond our two- and four-year election cycles. If the CCP can wait it out, Americans must have the steadfast determination to fight a drawn-out battle too—no matter how long it takes.

I don’t see the pursuit of this necessary realignment with China as a war, nor do I want one. In fact, my mission is to promote the benefits of continuing bilateral commercial and cultural exchange, albeit with significant rebalancing.

The U.S. Needs a War Footing Against China

But for the mega-hawks out there, let’s pretend an economic war is at hand. And if it is, let’s look back to World War II for reference. From the time Japan first attacked our nation to April 28, 1942, equity markets plummeted, eventually hitting what investment strategist Barton Biggs referred to as the “bottom of the ages.”

But did that deter America’s resolve to engage for as long as it took to win? Not at all. In fact, it was hardly one month later that the U.S. won the Battle of Midway, turning the tide in the Pacific.

I was in China co-hosting a delegation of U.S. Congressional Members on Aug. 23, 2019, when President Trump tweeted, “American companies are hereby ordered to immediately start looking for an alternative to China.” Our Chinese hosts shook their heads at the harshness of his directive. Not me. Steadfastly nonpartisan with my work in the U.S.-China space, I silently supported the core principle buried beneath the bluster: American companies should look to alternatives that prioritize the economic health and security of the nation that nurtured them.

U.S. markets disagreed, and the Dow Jones industrial average dropped 624 points that day. That weekend, supporters of unrestricted globalism and reckless free trade policy—influenced more by the violent fall of equities than the long-term pro-America benefits associated with the tweet’s underlying theme—pressed the administration to calm down its hawkishness. The lobbying globalists won the argument. America backed down, and the markets rewarded misguided short-term thinking by rising 270 points the following Monday. Our Chinese hosts smiled for the remainder of the visit.

And that’s my point. If our great nation wants to tackle this challenge—one that will be a drawn-out battle of wills between the world’s two superpowers—the U.S. needs to assume a war footing. We must forget about stock markets, short-term pain, and all-too-regular election cycles. We must start thinking about the long game. This is exactly what I’ll discuss with Steve Bannon on his “War Room Show” Friday. 

But how do Americans stay both inspired and determined to see it through to victory? Let’s look again to World War II. Inspiration came from consistent, tangible battle victories. Every journalistic platform proudly reported each notch of good news, amplifying the courage coursing through the veins of Americans. It started with Midway, then on to Milne Bay, then Buna-Gona, and later by Guadalcanal. Patriotic fortitude crescendoed into D-Day and the Axis Surrender, finally peaking with the white flag of Japan.

Only stock traders watched the markets from the attack of Pearl Harbor to the war’s eventual end. The rest of America concentrated on inspirational achievements, buttressing our nation’s resolve through each visible step of success.

America Needs a New Scoring System

Applying such a strong lesson today requires news platforms—whether digital, print, or televised—to stop updating Americans incessantly on stock markets. That scoreboard is no longer relevant and ultimately hinders our mission. Wall Street’s indexes are not real-time indicators of Main Street’s fitness, a reality only magnified during the recent stock market surge in the face of Depression-era unemployment and bankruptcies. Nor do they indicate a proper score of our nation’s long-term health and security. America’s goal to rebalance the bilateral relationship involves an immense and protracted challenge. We must demand relevant measurements capable of inspiring us through the undertaking.

Therefore, let’s institute a truly pro-America scoring system showcasing victories that:

  1. Repatriate manufacturing
  2. End quotas and tariffs
  3. Halt technology transfers
  4. Extinguish joint venture mandates
  5. Rebalance lopsided revenue splits
  6. Prohibit cross-border censorship
  7. Create domestic jobs
  8. Increase per capita income
  9. Secure vital supply chains
  10. Eliminate pirated products
  11. Prevent fraudulent companies U.S. capital market access
  12. Benefit the long-term health and national security interests of our nation

As each battle is won, score it! Recently, American company Phlow returned the manufacturing of $354 million in pharmaceuticals from China. Score that! Phlow’s actions will create 350 middle-class jobs. Chalk up that win too! Announcing these triumphs and all others will solidify our nation’s collective determination to see the bilateral reset through to the very end.

When the reset is complete, equity markets will have adjusted too. Even better, they will start to rise at some point during the fight. They did so when America turned the tide in World War II, and history will repeat. Eventually, both Wall Street and Main Street will walk in lockstep, both heathier and more sound, celebrating a Sino-American trade balance that works for all Americans.

As for the world, the two superpowers will have undergone a necessary venting and readjustment. With frustrations mitigated and understandings heightened, a sounder bilateral connection grounded on a fair and level playing field becomes the new reality. America and China will settle into a more agreeable normal as two strategic competitors, creating a better foundation for peace and prosperity across the globe.