China has been playing the international influence game for years, but only recently have we seen how deadly the consequences can be. It’s clear that China treats the World Health Organization (WHO) as its own tool for “managing” whatever crisis situation arises. Is the U.N. Educational, Scientific and Cultural Organization (UNESCO) destined to join China’s foreign policy tool belt? In July 2004, when I was U.S. ambassador to UNESCO, I participated in a cultural excursion to a scenic village near Suzhou, China. The excursion was part of a UNESCO World Heritage Committee meeting. Having missed the official bus, I had to reach the village by taxi ? which increased the distress I’d already caused my Chinese “chaperone” by switching hotels without informing my Chinese hosts. We were invited to walk along the clean, relatively empty streets to canals where small boats decorated with flowers, and guided by smiling Chinese, serenely floated past us. Where were all the village residents? That mystery was solved when I peered in the window of a nearby house and saw a roomful of people crammed inside. It seemed that residents were to be kept out of sight. China knows that World Heritage sites have enormous economic and cultural value, which is why it now has 55 such sites ? more than any other country. These sites are invaluable for promoting China’s own version of its history and culture to tourists, being catalysts for regional economic developments, and enabling it to host the UNESCO-affiliated International Centre on Space Technologies for Cultural and Natural Heritage in Beijing.

Economists are having fits about President Trump’s trade and immigration policies. For good reason: The profession is ignoring what the textbooks say about open commerce and migration. The theory of comparative advantage demonstrates free trade encourages specialization - America designs iPhones, China assembles them - and should raise living standards but is built on a pyramid of assumptions often not met in the real world. Comparative advantage assumes balanced trade and full employment, but under the trade deals Mr. Trump inherited America has a huge deficit. Unemployment is at 3.8 percent. Comparative advantage assumes all countries and businesses are equally endowed with technology. Hence, it ignores the principal source of American advantage - intellectual property - and Beijing’s requirements that foreign firms locate in China and transfer technology to domestic joint venture partners to make sales there. The trade deficit with China alone comes to $350 billion a year and falls most heavily on manufacturing and technology-oriented services. If we sliced the trade deficit in half, domestic GDP growth would be lifted from the 3 percent accomplished by Mr. Trump to 4 percent to 5 percent a year, more or less permanently. Finally, in the modern economic theory of comparative advantage trade and immigration are substitutes, not complements - yet look at what globalization has wrought. Neither the European Union nor America can control the flood of immigrants, and many are not employable in the skills categories advanced industrialized economies need most. The hard reality is that most economists are ignorant and ought to be hoisted from their cossetted lives.

Consequently, Mr. Kim has decided to implement his version of regime change by doing all he can to highlight the lack of progress between the U.S. and North Korea in recent months in order to enhance the election possibilities of former Vice President Joe Biden. Mr. Kim knows Mr. Biden will be more susceptible to manipulation. And that is why it is more important than ever to keep President Trump sitting across the table from Mr. Kim. It’s time for the president to set the conditions for his ultimate cooperation. First, the president should tighten the grip on Mr. Kim beyond sanctions, including any leakage of financial support from China to the Hermit Kingdom. Second, the United States should make clear that it has no intention of reducing its force structure in the region, indeed that we will increase it, not only to contest a belligerent North Korea, but to counter China’s hegemonic goals throughout the region. Both objectives are symbiotic. Third, the president should consider extending an olive branch in the form of an expanded demilitarized zone between the two Koreas. Currently, North Korea has thousands of cannons and rocket launchers sheltered in reinforced artillery sights near the DMZ that can range Seoul, the capital of South Korea. In reality, that conventional threat could devastate South Korea in a barrage of destruction. Expanding the DMZ, in both directions, could be used to reduce this threat by limiting the number and type of military units permitted in it. Finally, the president should make clear that once North Korea’s nuclear arsenal is eliminated ? completely ? and verified with onsite inspections, the United States will lift punishing sanctions and agree to a nuclear-free Korean peninsula.

Take North Korea’s latest fulmination that it has “no choice” but to “counter nuclear with nuclear” over the “hostile policy” of the United States, a policy Pyongyang claims is the reason bilateral talks failed. Despite their arguments, they do have a choice. They can influence the outcome of an American election. North Korea is doing what it has always done. Bait and switch, lie about their intentions and seek to gain advantage wherever they can to preserve the criminal cartel that is their form of government. In this sense, the health of leader Kim Jong-un, the petulant enfant terrible that heads the North Korean mafia, is not a factor. If he were to disappear tomorrow, his successor would save the dictatorship and preserve the Kim dynasty over it. Mr. Kim’s young and cunning sister, the minister of propaganda Kim Yo-jong, waits in the wings. But succession is not the issue here. Survival is, and Kim Jong-un is moving to reestablish a dominant place at the negotiating table. Chief among his goals is to end U.S. sanctions that have crippled his treasury while preserving the nuclear arsenal that he considers vital to his longevity. Why has Mr. Kim chosen now to escalate tensions? It’s about President Donald J. Trump. The president had been a thorn in the side of the Korean dictator since he rebuffed staid diplomacy to engage Mr. Kim directly over nuclear disarmament. It was a bold and promising move. It hasn’t worked out well. Nevertheless, if the president is reelected, Mr. Kim knows that President Trump will relentlessly reengage him over the issue, holding firmly to sanctions and insisting that if North Korea wants war, it will end very badly for Mr. Kim. That has been the policy up until now. The president should sustain it until North Korea denuclearizes.

And the prices of supplies will be reduced as worldwide demand falls for metals and other building materials. But domestic suppliers of building materials will be squeezed by the worldwide price drops. There is likely to be a new round of mortgage refinancing as mortgage rates fall again. This is a two-edged sword. Lower interest rates are great for those who are buying homes or have mortgages, but hell for those who are living off interest payments on their savings. What should the United States do to stop a coronavirus recession? As noted, the Fed (in terms of monetary policy) has few tools left. It can drop interest rates a little - and inject more liquidity in the economy - through more government bond purchases as needed. The Trump administration’s efforts to reduce regulatory drag was successful in spurring economic growth, but there is much more that needs to be done - and a renewed effort needs to be undertaken. State governments and local governments are the sources of many counterproductive regulations, so governors and mayors, etc. need to be encouraged to be more pro-active in the deregulation effort. Politicians - mainly Democrats, but also a significant number of Republicans and the economically ignorant members of the mainstream media - will call for massive government spending increases which, as always, will be counterproductive. Remember how President Obama’s trillion-dollar “shovel-ready” spending package in 2009 fell flat and actually slowed down the recovery? A properly structured tax cut could mitigate much of the fall in income. Cutting everyone’s marginal rate would be the most sound policy,

The sharp contraction in the Chinese economy and the freezing up in credit markets will eventually hit every economy in the world, directly or indirectly, thus likely leading to a global recession because of the high level of interdependence among all of the major economies. The major central banks of the world, including the U.S. Federal Reserve, are about out of ammunition. Many of their balance sheets have record-high levels of government debt, and interest rates in Europe and elsewhere are near, and in some cases below, zero. The U.S. Fed still has a little room left, but not much, to cut interest rates. At this level, interest rate cuts may not do much to stimulate borrowing. Certain sectors of the U.S. economy are already being hit. Those companies that have a large exposure to the Chinese market (many high-tech and automobile companies, for example) are going to see a significant drop in sales. Companies that source raw materials and component parts in China are likely to suffer some supply disruptions. The tourist industry is taking a major hit as people cancel both business and international pleasure travel. U.S. domestic travel may pick up some, but that will be offset by the reduced numbers of foreign visitors. Airlines, hotel chains, cruise ship operators and others will see both profit and sales declines. To protect their bottom lines as much as possible, they will cease hiring new workers and lay off some of their existing workforces. There are some bright spots. Homebuilding has been very strong, and further reductions in interest rates will be beneficial.

China’s economic virus is likely to be much more dangerous to the world than the COVID-19 virus. We know from history that the consequences of recessions tend to cost many more lives than disease epidemics. Yes, there will be a tragedy of many thousands dying prematurely from the coronavirus; but it will largely disappear by itself, and a vaccine will be developed. A severe economic virus, resulting in a global recession, will affect almost everyone to some degree and last much longer. The Chinese economy was already slowing and facing a major debt crisis well before the outbreak of the coronavirus. Government, business and household debt burdens have been growing in many countries to worrisome levels but nowhere more than in China, the world’s second-largest economy. The temporary economic shutdown of major areas within China and many businesses is likely to cause a severe deterioration in credit conditions, which were already weakening. Asset and property values will fall, causing defaults on corporate and personal loans. These failures will cascade through the banking system, causing credit markets to freeze up, which will, in turn, cause businesses and households to slash spending. Demand for goods and services will fall sharply, hurting both domestic and foreign suppliers. The Unitd States has far less exposure in terms of investment in and foreign trade with China than most Asian countries. Also, many Asian and African countries have become addicted to Chinese investment, in part, because of the Chinese Belt and Road Initiative projects. Thus, the consequences of a Chinese recession will be later and less damaging to the United States than to many other countries.

For over a decade, China has conducted a broad campaign to reshape the international system into a new, post-American global order. In this effort, it is essential that China project an image of being supremely capable and powerful, thereby demonstrating that China ― not Europe or the United States ― is the best model for governance and economic development. The coronavirus pandemic undermines this carefully-constructed image, because Beijing’s response to the disease enabled its spread, to the detriment of public health and economies throughout the world. This directly threatens China’s long-term goal, so Beijing is desperately trying to reshape perceptions of the situation to its advantage. The World Health Organization (WHO) and its director general, Tedros Adhanom Ghebreyesus, appear to have been willing pawns in Beijing’s gambit. We now know that Chinese travelers spread the disease to other countries. WHO might have known this earlier, but chose to ignore warnings from Taiwan “about the human-to-human transmission of the Wuhan coronavirus (COVID-19) in December of last year.” However, much evidence suggests that China has underreported its COVID-19 deaths and is manipulating public data by excluding a large number of asymptomatic individuals who have tested positive. In recent weeks, Beijing has engaged in a widespread propaganda and disinformation campaign to exculpate itself from its fatal mishandling of the coronavirus outbreak. The truth is that China had an opportunity early on to forestall the spread of COVID-19 and alert the world about the threat and chose, instead, to try to protect its reputation ― with a shameful assist from Mr. Tedros.

This was a major initiative between the two Koreas and the economic value to the North was significant. So, from North Korea’s perspective, South Korea couldn’t or wouldn’t produce, which angered Kim Jong-un and probably motivated him to designate his sister, Kim Yo-jong, as the new senior official responsible for relations with the South. And Kim Yo-jong’s message is clear: South Korea is weak and can’t be trusted. Given these events, and the vitriol from Kim Yo-jong, the sister and likely heir apparent to Kim Jong-un, it’s possible the North will reintroduce the North Korean military into those sections of the DMZ that were demilitarized in 2018 - after President Moon Jae-in and leader Kim Jong-un, in April 2018, signed the Panmunjom Declaration, committing both sides to peace, prosperity and reconciliation on the Korean Peninsula. The situation on the Korean Peninsula is tense and the North, unhappy with the United States, is holding the South responsible for not doing more to provide some sanctions relief, especially at a time when there’s considerable malnourishment and possibly some starvation in the North, likely exacerbated by cases of COVID-19, despite the North’s protestations that they have no cases of COVID-19. It’s likely North Korea will continue to put pressure on South Korea and escalate tension with the United States, with additional missile launches and the threat of another nuclear test, expecting the United States and South Korea eventually to relent and provide North Korea with some form of sanctions relief or a promise of relief if the North agreed to resume negotiations with the United States. This has been the North’s playbook: When unhappy, escalate tension and the United States and South Korea eventually will accommodate.

On June 16, 2020, North Korea announced that it demolished the Joint Liaison Office with South Korea, located in Kaesong, North Korea. This development shouldn’t come as too much of a surprise since Kim Yo-jong, the sister of North Korean leader Kim Jong-un, announced recently that North Korea was ceasing all dialogue with the South and would abolish the Joint Liaison Office, noting that she was deferring to the North Korean military. Kim Yo-jong said that this was in response to the propaganda balloons being sent into North Korea from those North Korean defectors now living in South Korea. She said North Korea was holding South Korea and the government of Moon Jae-in responsible for these provocative acts from the South. The balloons are, in my view, a cover for North Korea’s overall unhappiness with South Korea. The failure of the Hanoi Summit in February 2019 between President Trump and leader Kim Jong-un, when the North apparently expected the United States to agree to the lifting of sanctions for a halt to activities at Yongbyon, is an event that obviously continues to anger Kim Jong-un. Thus South Korea’s continued inability to get some form of sanctions relief for the North, either by pressuring the United States to lift some sanctions or to defy the United States and independently provide some relief, like with the resumption of South Korean visits to Mount Kumgang, or reuniting separated families from the Korean War or reopening sections of the Kaesong Industrial Park, and presenting it as a humanitarian gesture due to the COVID-19 pandemic, probably motivated Kim Jung-un to make the decision to cease all contact with the South. The symbolism and economic value of the Kaesong Industrial Park, should not be underestimated.