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The Progressive Policy Think Tank

Trump, Xi and China

The president-elect’s pledges to recast the US-China relationship are about to have some bruising encounters with a complex reality, writes Kerry Brown. Yet he steps into the Oval Office just as Beijing’s hand is weakened in terms of trade. Might the Donald actually deliver on his bluster?

The relationship between the US and China is the most important bilateral nation state connection in the world. Last year alone US$600 billion of trade was transacted between the world’s first- and second-largest powers. This left the second–biggest commercial relationship, that between the EU and the People’s Republic, in the shade; it came in about $150 billion smaller.

And it’s not just solely about raw volumes of goods and services passing from one to the other. The last meeting of the high level US-China Strategic and Economic Dialogue in 2016 testified to the complexity, depth and comprehensive nature of this relationship. Over 80 dialogues took place, covering areas from cyber-security to forestry, tariffs, education, law and culture. There is a reason why US embassies in China house hundreds of diplomats, and why the Chinese ambassador to the US is such a high-profile and important figure. What goes on between these two powers fundamentally matters to the wider world. Tensions between them send ripples across the Asia-Pacific territory. A trade war would impact on everyone else, not just the citizens of the two countries involved. In a global age, they are the two most global powers. What sane leader would try to undermine or challenge this sort of relationship?

TRUMP ON TAIWAN

Despite all this, Donald Trump, during his divisive and brutal election campaign, did question the relationship. Among the innumerable contradictory comments he made, those on China stood out as largely clear and consistent. It was a place that had used global trade and business to steal a march on America, using unfair trade practices, stealing jobs through cheap labour and manufacturing, and reinforcing this advantage with a deliberately depressed currency.

As president-elect, Trump has moved from rhetoric to action, taking the unprecedented step of taking a phone call from Tsai Ing-wen, the president of the Republic of China on Taiwan last December. This was the first such contact at this level since 1979. To add insult to China’s sense of injury, he tweeted about the one-China policy, raising questions about it and wondering if it should be abandoned. As on the campaign trail, ‘the Donald’s’ ability to locate and then exploit the weak spots of others has so far proved infallible.

There is a big problem with this approach, however – and Trump’s advisors, once he becomes president proper, may have the nous to grasp this even if he doesn’t. China is not an opponent on the campaign trail. Rather, it is a nation of 1.4 billion people with a massive economy, and with a major role in the world. It is, whatever else one might say about it, a complex place. Treating it as somewhere that can be dismissed in a 140-character tweet is not just preposterous. It is dangerous.

One simple illustration of this is the idea that Taiwan’s status is an issue that can be used as a negotiating tactic for the US as it strives to get a better economic deal from China and curb its aspirations and expectations in the region. First, there is the issue of Beijing’s attitude. Do they really think that Taiwan is a negotiable issue? Perhaps in the past – a long time ago – there were moments at which they could have simply abandoned the complex set of ideas that strenuously maintained, against much historic ambiguity and blurred evidence, that the island was an irrefutable part of the mainland’s territory. Under Mao, after all, Taiwan did not seem a major issue. He himself said that the country could wait 10,000 years to resolve it. Only in recent years has it grown to become a massive symbolic and political issue, one that Beijing uses to derive legitimacy from, claiming that the Communist party’ vision for China has reunification right at their heart. With nationalist sentiment in China so high these days, it would be next to impossible for the leadership around Xi to downgrade and then walk away from their so-called historic claims on, and vision of, ultimate reunification. The issue just has to be kept on the priorities list, even if nothing can be done about it at the moment. Beijing therefore cannot negotiate on this issue. It can only assert its demands.

And on the other side of the Taiwan Strait, there is the complicating factor (in an already complicated context) that after 68 years of self-rule, and having only been formally part of a united greater China for four of the last 125 years, Taiwan has a strong identity. Ninety per cent of people on the island now regard themselves as Taiwanese, not Chinese Taiwanese or purely Chinese. They have their own national anthem, currency, democratically elected government and military. Can the fate of 23 million people, living in a vibrant and functioning democracy, really be the subject of deals between two other powers that do not ultimately consult them?

TRADE AND SECURITY: DELICATE BALANCES

Taiwan is just one of the many issues that Trump will need to contemplate when he settles down to the business of actually trying to govern rather than posturing and pontificating. Even the simplest of his loud and brutally delivered demands – that Beijing be named as a currency manipulator because of the low rate set by the government rather than the market for the Chinese yuan – would prove easy to implement, and almost utterly pointless once done. Naming China in this way is a matter of the US treasury issuing a notice stating the fact; after that, everything would carry on the same. The one thing America could do to change the situation would be to convince China that lowering its rate would be in its long-term interests – the age-old work of diplomacy across almost all areas. Berating and bullying, by contrast, are unlikely to get very far. Again, the consequences for China were such a move to go wrong would be too serious to contemplate, even at the US’s behest.

Where Trump might be on more solid ground is the hunt for a new economic relationship with China. Few would dispute that over the last four decades, through integration with the outside world, and deeper finance, trade and commercial links, China has benefitted massively from the US-led, rules-based order. It joined the World Trade Organisation (WTO) in 2001 after 14 years of painstaking negotiations. At the time, initial appraisals argued that China would be hard-pressed to fulfil the requirements of WTO membership. These proved overly pessimistic. As scholars including political economist Andrew Walter have shown, complying with the WTO was of enormous utility to China in creating a framework whereby the government was able to use external pressure to forge domestic change. State and non-state companies operated in a more competitive environment, and, by default, became more competitive themselves.

WTO was just one example of how well China worked with the global order for its own ends. Its principle objective has been to serve its national interests. In that global context, it could be construed as a freeloader. It has enjoyed a benign regional and international environment (experiencing no major conflicts since 1979) in which to build itself back up. That environment has been underpinned by the US who, through their naval assets, their treaty system, and the immense superiority of their military, have provided the ultimate public good in Asia – security. It is a security framework that China has picked at, and sometimes contested, but which broadly suits it.

In his habitual blunt, crude and inelegant way, Trump has honed in on this fact. Security in Asia, and the provision of that security, serves US interests because of the extent of its trading connections in the region, and because of its being as much a Pacific as an Atlantic power. In the 21st century, as the centres for growth shift quickly from Europe to Asia, it is not surprising that the Pacific-facing element of American power is coming back to the fore. Recognition of that through the so-called ‘pivot’ or rebalancing under Obama was one of his main achievements, even if it was contested and controversial.

One of the first issues that Trump, with his position demanding greater contributions from Asian partners, will run up against is the impact these demands will have on the delicate calculations that are ongoing in the region about where allegiances lie. Broadly, across Asia, countries look to the US for security partnerships, and to China for economic links, that benefit them. A more isolationist, less committed US will mean that many may will simply follow their material interests, and look to the US less and less. This will open up a space that China will be more than happy to fill. The most pressing regional security issue – that of the status of North Korea – will also demand immediate attention. Pyongyang has a habit of greeting new leaders in the US with nasty surprises, though they might be more careful in view of Trump’s capriciousness and the difficulty of predicting his response. The one thing he did say on the campaign about this issue was categorical enough – that it was China’s main responsibility to deal with it.

Trump, as a businessman who has never held any government executive or administrative position in the US, has so far simply focused on the bottom line – the financial cost to the US of its Asian security commitments. For him, America’s partners need to contribute more, even though it is clear that Japan, South Korea and other allies are already significantly committed – materially, economically and politically – to this regional project of security.

China cannot be a security partner of the US in any straightforward sense. It has a different political and cultural tradition. While there is currently no cold war as there was with the USSR, China could never be a treaty ally of America. However, it feels that it now has the opportunity to realise its aspiration of being a regional power. With the South and East China Sea disputes mapping out maritime territory deep into the southeast Asian region, it has the instruments by which to do this, slowly annexing space and creating new facts on the ground that give it greater reach. China as a naval rather than a land power is a new phenomenon, and one that the US has so far shown caution and suspicion towards.

A PROPITIOUS MOMENT FOR THE DONALD?

China has only been able to acquire this new, more assertive profile through the improvement of its economic strength and the clout this now gives it. But, as Trump seems to have worked out, a great deal of that has come through its links with the US. It grew to become the world’s second-largest importer and largest exporter, and the world’s greatest manufacturer, largely through its ability to sell goods into the US market and those of its allies. This has often seemed an asymmetrical relationship: China has been accused of being mercantilist, and of having access to other markets while granting little in return.

For Trump and his economic advisors, the mission will be to get a better deal with China. That will resolve around having fairer and freer access to the growing services market within China, and the ability to sell and compete with Chinese companies on a level playing-field – something lacking at the moment. While Alibaba and Sina are able to operate in the US, for instance, Facebook, Google and others remain barred from China. There are plenty of other areas in which the US could focus on getting a better reciprocal deal.

This might be possible, although China has never been an easy partner with which to do any kind of trade deal that does not result in its gaining more than others. There is a simple reason for this: it has been a source of high growth, and in order to get access to that growth others have been eager to have any deal rather than none.

With lower growth and more perplexing economic indicators for China, things may have changed. It might need to become more equitable in its dealings with the outside world in terms of trade. If Trump’s bluster works out, Beijing will do deals with Washington in new ways. The US will be allowed to trade more openly, and get better returns and more job-creating opportunities.

This will take time. However, the mood in the US seems impatient and angry. It was this mood that lay behind Trump’s electoral success. The question for him is not so much whether he can change things with China economically – he probably can – but whether by doing so he can deliver the dynamic changes in the domestic economy that the American public now expects. Once China is cut down to size, if that ever happens, it might become abundantly clear that the problem was never really outside the US, but within it. Trump will then be in the firing line from his own people. He might find that power is a fun thing to play with when you don’t actually hold it, but a truly terrifying thing when you have it, and have to face the displeasure, fury and upset of a people who feel let down by your earlier, empty rhetoric and now seek retribution.

Kerry Brown is professor of Chinese studies and director of the Lau China Institute, King’s College London. His latest book is CEO, China: The Rise of Xi Jinping (I.B. Tauris, 2016).


Juncture, IPPR's quarterly journal of politics and ideas, is published in print and online by Wiley.