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Back To The Future | What China can learn from Trump, the Soviets and Kublai Khan

If the US president can make good on his promises to greatly increase defence spending and cut corporate taxes, he will create headaches for Beijing. Fortunately, China can still find relief using history as its guide

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US Navy ground personnel watch as a F18 fighter jet takes off on aircraft carrier USS Carl Vinson during a routine exercise in the South China Sea. Photo: Reuters

If there is a number coming out of Donald Trump’s White House that should get Beijing worried, it is not the 10 per cent growth in the military budget. It is the promised 20 per cent corporate tax cut.

The US president signalled two weeks ago that he intended to propose a “historic increase” in military spending to US$603 billion – up 10 per cent from a year ago. The eye-watering number immediately grabbed headlines around the world. In China, which was about to release its own defence budget the following week, the news attracted even more attention.

US President Donald Trump has promised to reduce the corporate tax rate 20 per cent. Photo: Bloomberg
US President Donald Trump has promised to reduce the corporate tax rate 20 per cent. Photo: Bloomberg

Some in the Chinese military argued that Beijing should respond with a double-digit defence budget expansion. Although Trump never explicitly mentioned China as the reason for the hike, Beijing is the elephant in the room. Some experts worried that the US would step up its military deployment in Asia, increase missions in the South China Sea and widen the already-significant technological gaps between the two sides.

Military delegates arrive at the National People's Congress in the Great Hall of the People in Beijing. Photo: AFP
Military delegates arrive at the National People's Congress in the Great Hall of the People in Beijing. Photo: AFP

When Beijing announced its defence budget earlier this week at the annual parliamentary sessions (“Two Sessions”), it was a moderate 7 per cent growth – one of the lowest in years. Accepting that the actual amount could be bigger, the figure is still a disappointment to many hot-blooded nationalists in China. This is maybe why the Ministry of Finance chose not to include the figure in its annual budget report – the first time in decades. It was considered “too sensitive”.

Chow Chung-yan began his journalistic career at the South China Morning Post and rose to become Executive Editor in 2015, following stints at the City, China and Business desks. As the SCMP’s second-in-command, he is in charge of the China and US bureaus as well as the political economy, culture, print and digital teams. He has been running the SCMP’s day-to-day operations since 2011. He led the newsroom’s organisational restructuring, streamlined its production workflows and set up dedicated teams for both the print and digital products to facilitate the newspaper’s digital transformation. He also assembled an award-winning infographics desk and spearheaded the redesign of the newspaper. To strengthen the paper’s international coverage, he established the SCMP’s US operations in 2017 with bureaus in New York and Washington, and subsequently set up offices in Brussels and Nairobi. He has been directing the SCMP’s China coverage since 2007 to build the newspaper into one of the most important sources of information on China for global readers.
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