On September 26, Donald Trump delivered what we called “his crowning achievement in abject absurdity.”
That was a bold characterization, to be sure. After all, the president has a habit of one-upping himself when it comes to bombast. But against all odds, the infamous “George Washington” press conference has stood the test of time. It is still one of the most eye-popping spectacles of the Trump presidency.
During that wild September exchange with reporters, President Trump said, among other things, that Democrats wouldn’t allow George Washington on the Supreme Court. The point of that assertion, as far as anyone could tell anyway, was to defend Brett Kavanaugh, whose nomination to the bench was plagued by allegations of misconduct from his college years.
Most people remember that press conference for Trump’s exchange with CNBC’s Eamon Javers, who asked the president if the White House had any evidence to support claims of Chinese cyber intrusion. That back-and-forth produced the infamous “Mr. Pillsbury” quote. Here it is:
That was the moment when the president described Michael Pillsbury as “the leading authority on China”, on the way to explicitly tying Pillsbury to his (Trump’s) “very, very large ahhh-brain”.
Pillsbury is Senior Fellow and Director for Chinese Strategy at the Hudson Institute. Formerly, he was Special Assistant for Asian Affairs under President George H. W. Bush and Assistant Under Secretary of Defense for Policy Planning under President Reagan. He is the author of The Hundred-Year Marathon, a tome on “China’s secret strategy to replace America as the global superpower.”
One imagines Pillsbury was at least a little bit sympathetic to news outlets (including CNBC) who penned sarcastic headlines based on Trump’s “brain” quote. It was, after all, extremely funny, and the humor wasn’t completely lost on Trump himself, who was visibly amused. CNBC’s own account of Javers’s exchange with Trump carried the headline “President Trump cites China’s respect for his ‘very, very large brain'”.
For the record, Pillsbury didn’t say “very, very large ahhh-brain”. What he actually said, during an interview with Fox, was this:
It’s refreshing to see this level of respect for the United States, I haven’t seen it in 40 years. Usually the Chinese look down on us as not being very bright.
He also told the network that Trump is “so smart” and that the US president is “playing three-dimensional chess.” Hours after Trump’s September press conference, Pillsbury tweeted a Photoshopped version of the president’s infamous “taco bowls” picture, the Mexican fare replaced by a 3D chess board.
Late last year, a White House official said of Pillsbury “He’s informed a lot of our thinking early in the administration and as we’ve pursued those policies, he’s been a validator”.
That’s according to a somewhat unflattering psuedo-profile of Pillsbury that ran in Politico back in November (the title of this post borrows from Politico’s headline). Politico describes Pillsbury as “a starchy academic” who “has spent decades in the cold, dismissed by critics as a mix of conspiratorial and self-promoting.”
Pillsbury maintains multiple social media accounts and a website featuring links to videos and his voluminous writings. He lists his contributions to Foreign Policy (e.g., here) as “journal articles”, a debatable characterization, depending on how he’s using the world “journal”. There are also links to a pair of congressional testimonies and other resources. The site’s banner is a picture of him sitting opposite Trump, superimposed with a copy-pasted screengrab of a Bloomberg headline from an article written following the president’s September press conference.
According to the Politico piece, Pillsbury once referred an unfavorable review of The Hundred-Year Marathon, penned by a China expert at the University of California San Diego, to a lawyer for a possible defamation suit. The review called the book “replete with errors”. Pillsbury’s history with the president dates back some seven years. Politico describes a 2016 meeting he had with Trump’s top advisors including Kushner, Bannon and, naturally, Peter Navarro.
In the most recent edition of Goldman’s “Top Of Mind” series, the bank’s Allison Nathan interviews Pillsbury about the state of the trade war.
As a reminder, the bank’s TOM notes are expansive takes on whatever the market topic du jour happens to be. They combine interviews with Goldman’s own employees and also with outside sources in an effort to provide a balanced and comprehensive assessment on whatever seems to be the most important question on market participants’ minds (hence “Top of Mind”). Nathan conducts the interviews and generally collates all the information.
After describing his conception of China’s “strategy” to supplant the US as the global superpower, Pillsbury tells Nathan he wasn’t surprised by the recent breakdown of talks between the two sides.
“The negotiations face great challenges”, he says, on the way to noting that “cyber intrusions into US business networks have helped Chinese companies gain advantages in key high-tech areas, which they are loathe to give up [while] anything that touches on state-owned enterprises is a non-starter for Beijing given their critical economic and political role in China.” Additionally, he says China’s “long history” of not following through on their commitments to the West requires the creation of trenchant enforcement mechanisms, “but the Chinese balk at this given their view that such mechanisms imply a lack of respect.”
Bob Lighthizer has repeatedly cited the difficultly of creating an effective enforcement regime as one of the more vexing problems in getting a deal across the finish line.
Asked by Nathan what the US side’s biggest miscalculation is, Pillsbury (predictably) says it’s the influence of China’s hardliners. This is a persistent theme for him.
“It’s clear that the US has assumed that Chinese reformers–those who in the ‘80s argued for a truly free market–are still in charge [and] one of China’s lead negotiators in these talks, Liu He, is a well-known reformer”, Pillsbury says. He then cautions that almost none of the reforms outlined in a decade-old document Liu helped craft have been implemented. That, Pillsbury says, is because hardliners in China oppose the reforms on the grounds that “America’s master plan is to block China’s rise and overthrow the Communist Party.”
He proceeds to highlight something that grabbed headlines last month as evidence of the hardliners’ influence. “After trade talks broke down in early May, the American side was told by the Chinese side to no longer refer to Liu He as the Special Envoy of President Xi Jinping [which] puts into doubt who Liu He really represents now”, Pillsbury says.
Pillsbury does strike a balanced tone during some parts of the interview. For instance, he seems to implicitly suggest that the US would have been better off not trumpeting the fledgling agreement as a wholesale victory over the Chinese side – or at least not until the deal was done.
“The Chinese, and especially the hardliners, are not happy with the way Americans have implied that the US has bested China in this deal, that China has surrendered, and the terms are very much in favor of the Americans”, he tells Goldman, adding that “even if much of this impression came from US accounts of developments in the negotiations that were more unscrupulous ‘spin’ than fact, it fed into the hardliners’ conspiratorial view of American politics.”
Pillsbury then weighs in on the much ballyhooed 150-page draft that China reportedly took a red marker to, prompting Trump’s May 5 Twitter broadside. “It seems there was no Mandarin version of it until very recently, which potentially explains why these objections came so late in the game”, he remarks.
Notably, Pillsbury suggests the move to blacklist Huawei likely “fed into the conspiratorial theories of [China’s] hardliners.”
Finally, towards the end of the interview, Pillsbury weighs in on the political calculus in the US. After noting the obvious (i.e., that if the trade war really starts to bite for farmers, US corporates and the stock market, it would make for “bad press”), he reminds you that Democrats could potentially seize on a deal that’s seen as not tough enough.
“I think the president and his staffers are concerned that if he gets a bad trade deal and the Democrats then accuse him of selling out to the Chinese because of his friends on Wall Street, that would be a nightmare [and] in a way, this may be a bigger danger to the President’s 2020 race than no trade deal at all”, he warns, in the process bringing up the support Trump has received from Schumer, Pelosi and Bernie Sanders in terms of getting a deal with China that benefits American workers.
“If I was President’s Trump campaign manager I would be worried if I saw Democrats agreeing that President Trump didn’t take on China in a serious way”, Pillsbury concludes. “That is the concern I hear.”
You mean this is all about politics on both sides? There’s a surprise.
I agree with this Mr. Pillsbury, Its only a matter of time as to when China over takes the USA. It will not happen “overnight”, but their 5,000 year old culture will make this happen.
China is already a major competitor of ours, in many areas. Is trade a zero sum game…..
can’t we both thrive?
At most…. toughening up our trade policies will only delay the inevitable. Why not come up with
policies that are beneficial for both of us and take advantage of one of the biggest and fastest growing markets in the history of the world?