What is China’s Xi game and what about Trump’s?

Interestingly, in the age of Donald Trump some observers see China as the custodian of economic liberal order, though not political liberal order as China is an authoritarian regime. What is your view on this and what do you think Trump wants from China and vice versa? Read few comments.

Harold TannerProfessor of Chinese History, Department of History, University of North Texas

First, I think that it is quite ironic that Xi Jinping is able to portray China as a custodian of the liberal (or neo-liberal) economic world order and defender of free trade. Xi clearly knew exactly what the audience of global elites in Davos wanted to hear, and he played them like a piano. Before we become too impressed with Xi’s words, we should remember that China has high tariffs, that international ownership is prohibited in most sectors of the Chinese economy, that Chinese companies violate intellectual property rights routinely and with impunity, that China imposes harsh restriction on the flow of capital, that Xi’s government openly questions the rule of law, condemns the concept of judicial independence, and systematically impedes the free flow of information. All of these make China a very strange defender of free trade, and point to the inherent contradiction involved in the Chinese Communist Party’s attempt to combine economic and political liberalism. The two can be combined to an extent, but there are points and places (for example, flow of information and judicial independence) at which the two are in fundamental contradiction. China and Xi Jinping do not stand for “free trade”—they stand for trading systems that will work to China’s advantage. They are not alone in this hypocrisy—every country powerful enough to do so has tried (and to a degree succeeded) in structuring trade relationships in such a way as to bring maximum benefit to itself. This goes for Britain in the nineteenth century as well as the United States in the twentieth. Pious declarations of belief in the abstract principles of “free trade,” presented as an unquestionable moral imperative, are ultimately hypocritical and self-serving.

So—what does Donald Trump want from China, and what does China want from Donald Trump? I am not sure that any of us know what Donald Trump wants from China. We can only speculate on the basis of some of the things that he has said (or tweeted) and on the basis of what some of his appointees have said. Let’s begin with the geostrategic issues of the Korean peninsula, Taiwan, and the South China Sea. Trump and his appointees (Peter Navarro, Rex Tillerson, John Bolton) have said or written things that point to the possibility that the United States will question the one China policy, move closer to recognition of Taiwan as an independent country, and challenge China’s expansionist moves in the South China Sea. At the same time, Trump has clearly signaled a willingness to move toward closer relations with Russia, and he has criticized China for not helping the United States on trade issues and on the problem of North Korea. Perhaps Trump and his advisers think that they can “re-triangulate,” that is, realign the United States with Russia in order to counter a rising China, just as Nixon and Kissinger re-aligned the United States with China in order to counter the Soviet Union back in the 1970s. If so, we would see a major realignment of world powers and heightened tension between the US and China for the next four years, eight years of more. There would be risks and costs associated with such a realignment. Both the United States and Russia would suffer economic losses if they positioned themselves as de facto allies, encircling and restricting China. Russia would lose an important business partner, particular in regards to exports of gas and oil. American companies would lose much more. The United States has broad and deep economic ties to China—for example, U.S. exports of goods and services to Russia in 2015 amounted to less than 8% of exports to China. U.S companies have substantial relationships with China, and China has substantial investments in the United States. The Trump administration will come under very strong pressure from American companies not to make any changes that would have negative impact on their business with China. Of course, there is another way to read this: in raising the Taiwan issue and trade issues, perhaps Donald Trump is simply staking out his starting position for negotiation which might lead to a grand bargain in which American and Chinese interests in trade, the Korean peninsula, Taiwan, and the South China Sea are all up for negotiation and will be balanced against each other—and perhaps in all of this, Donald Trump is willing to use Taiwan as a pawn, sacrificing the island or some aspect of US relations (or potential relations) with Taiwan in exchange for Chinese concessions in trade talks or on the Korean peninsula.

Against this, however, we need to balance the ideological commitment of many of Trump’s advisers and appointees. John Bolton has for many years been a strong advocate for a more open American defense commitment to Taiwan. Mike Pillsbury, another Trump advisor, clearly believes that the United States needs to take strong steps to counter an aggressive, expansionist China. Peter Navarro, Trump’s nominee to head a new office of trade and industrial policy is known for his alarmist and grossly exaggerated rhetoric on the dangers posed by an expansionist China, for his advocacy of a stronger, more aggressive American military involvement in East Asia to counterChina, and for his belief that high tariffs on imports from China and other countries will miraculously resurrect the American industrial economy—a belief widely rejected and derided by his fellow economists. Last summer both Peter Navarro and I were members of a delegation of American academics visiting Taiwan at the invitation of the Foreign Ministry of the Republic of China. Over the course of that week of interaction, I found that Professor Navarro’s knowledge about China and Taiwan was extremely superficial and that what he does know is filtered through such a strong and narrow set of ideological prejudices that he is incapable of self-reflection or meaningful dialogue. I have no confidence at all in his ability to manage trade or any other relations with China on any level whatsoever.

What does China want from Donald Trump? That is probably an easier question. China wants continued trade and investment, it wants American respect for China’s core interests, including Chinese influence in the South China Sea and, at the very least, maintenance of the status quo on Taiwan. China probably also wants, as far as possible, to maintain the status quo on the Korean peninsula—a very difficult task even under the best of circumstances. Chinese leaders probably hope that Trump’s bluster is part of a negotiating strategy—and if it is, they will be able to deal with it. If, on the other hand, Trump follows the lead of his hardline advisers and displays an inflexible attitude, raising military tensions and further encircling China with American military force, then the Chinese leaders will be in a very difficult position, knowing that they have no choice but to respond, but knowing also that at the moment, the Chinese military, particularly the PLA Navy, is not a match for the Americans.

Andrew Nathan, Professor of Political Science, Columbia University

We really don’t know at this point what Trump wants from China. One interpretation of the things he and some of his advisors have said is that he is talking tough about Taiwan and the South China Sea in order to create bargaining chips for a negotiation to open the Chinese market more widely to US products and services. It is a consensus among mainstream foreign policy thinkers that China is using various techniques to unfairly bar the Chinese market to foreign investment and foreign products. However, mainstream thinkers would not use strategic and military issues as bargaining chips to try to improve this situation because doing so would be dangerous. But that might be what he is doing.

The other possible interpretation is that he actually wants to “contain” China’s military rise by shifting US policy on Taiwan and the South China Sea. It would seem incoherent to try to do that while at the same time weakening our alliances with Japan and South Korea, but still, that might be what he intends to do.

It’s also possible that he has no coherent plan, listens to clashing viewpoints from different advisors, and does not think longterm about the implications of his statements.

Colin Mackerras, Emeritus Professor, Griffith University

I don’t know the answers, and it is still very early days. Donald Trump is even more unpredictable than most major leaders, in fact much more unpredictable. However, here is some speculation. I’d answer on three levels.

1.  Big-picture strategic level.

Over the last few years, and especially under Xi Jinping, China is beginning to assume it has the right to leadership in the Pacific region, probably not yet beyond, but there is that potential. Trump most certainly does not accept that and wants “to make America great again”. This is a non-trivial issue and could even lead to war unless both sides are very careful.

2.  Taiwan.

China feels very strongly about the Taiwan issue (that Taiwan is part of China). This does not matter at all to Trump, who is even talking about going back on the “one-China policy”. There could be serious trouble ahead if Trump pushes ahead with his policy. On the other hand, the people in Taiwan do not appear to want reunification so if China pushes this too hard, it could lead to serious trouble. War is unlikely but it would be foolish to overlook that potential.

3.  International trade and economy.

For Trump trade with China that benefits China and Chinese much more than the US and Americans is a very big issue. He even talks of China “raping” the US. Trump wants to reverse the globalized international system that has been so central to the last few decades because he thinks it has worked against American interests. Xi Jinping most certainly does not want to reverse this. For him, the One Belt, One Road policy is central. It looks to economic interlocking between China and regions to its west. This could be very important over the next decade and more. In the meantime, the Trans-Pacific Partnership, which excludes China, looks to be in very serious trouble. Trump has expressed himself hostile to it. Japan still wants it and last weekend Japanese PM Abe went to Australia, where the Turnbull government also wants it to go ahead. (However, the Opposition and others look like being able successfully to block it in the Senate).

The net result seems to me to be that American influence over the international economy could wane under Trump, whereas Chinese influence under Xi Jinping is likely to grow. The long-term implications for the world could be very far-reaching.

Kerry BrownProfessor of Chinese Studies and Director of the Lau China Institute, King’s College, London

I think that China is the current custodian of global trade and free trade, because it has the most to lose under the current system if these things slow down or are impeded. But it clearly doesn’t buy into the underpinning values of freedom of expression, freedom of belief, and rule of law – except in as far as they help it outside its borders achieve what it wants, which is producing economic returns for the government back home. China is a self interested actor – but one that needs global rules more than the US seems to think it does currently. The world should not be confused about the reasons for why China is championing these things. But it does need to appreciate that at the moment, it is the one power that is doing these things. And that is a truly extraordinary outcome.

Bernt Berger, Director, Engagement Policy Centre/Centre for Applied Security and Conflict Analysis

During its economic development China has profited from the existing international economic order and its institutions. It has therefore never been an revisionist power. Currently China’s economy is weak and growth has gone down immensely. China relies more than before on outward investments and growth of its international markets. From this standpoint the liberal economic approach is not a contradiction to the lacking political freedoms inside the country.

The incoming president in the US has been described as protectionist and as an opponent of globalization. But that is not necessarily true. It can be expected that Trump will approach the international sphere indeed more like a economic strategist rather than like a statesman. He will try to gain benefit from bilateral negotiations (as China has done it all along) and improving the US position by dividing existing alliances and cooperation. A “divide and benefit” so to speak.

Trump administration will do harm to slowly grown international structures and cooperation. Therefore China might appear as a constructive power. But China has in the past not taken up much responsibility in maintaining regional and global political orders. The question is who can fill that void.

Ramon Pacheco Pardo, Senior Lecturer, King’s College London

With regards to your first question, I think that since the 1990s no country has benefited as much from the current liberal economic order as China. Beijing has been attracting factories and investment from other Asian countries as well as Western ones, has seen tariffs to its exports slashed thanks to the WTO and FTAs, and received advice and loans from the World Bank and other multilateral institutions. Thus, it makes sense for China to be a strong advocate of the current liberal order. Especially as it has started to reform and open up its financial sector to attract more foreign capital and as its companies have stated to invest overseas and need open markets.

As for your second question, I think we can guess that Trump wants more reciprocity, meaning either greater openness of the Chinese market to American goods and capital or more barriers in the US to Chinese exports. In a sense, he was a level playing field. Incidentally, this is nothing new; Obama and Bush wanted exactly the same, but they used negotiations and speeches rather than tweets to make their position clear. As for Beijing, in my view it wants to rock the boat as little as possible. China has been slowly moving towards a more free floating exchange rate, the liberalisation of its economy, and a stronger regulatory framework for the past few years. Thus, it can withstand open criticism and some changes to its economy. However, China will not want the US to become more involved in security issues such as the South China Sea or the One China Policy. Rhetoric from Trump might be OK, but meaningful policy changes would not.

Michael Schaller, Regents Professor of History, University of Arizona

As a Soviet-era historian once explained to me in the 1980s, “history is the art of predicting the past.”  I feel that way about the incoming Trump administration — who knows?  It seems ironic that China is emerging as the defender of a global liberal trade regime, while the U.S. is abandoning its post-1945 role as the avatar of free (r) trade.  I think that at one level, Trump”needs” an enemy or someone to blame for domestic economic trouble.  Most developing countries are too small or insignificant, and Russia’s global economic role, aside from energy, is relatively small.  So China takes pride of place among Trump’s demons.  I suspect that eventually Trump will settle for some small, symbolic change that China makes in its trade policy and then declare victory.   Trump appears to view all human relations — diplomatic, political, economic, etc – as a business negotiation and it is not at all clear to me if he has any core principles.

As for China,  the PRC surely wants a stable trade situation since global exports are the key to its growth, and doesn’t want to see any change in the West’s acceptance of a “1 China policy.”   China also wants the US, Japan, etc to accept its role as hegemon in the sea lanes of the East and South China seas.  I can imagine Trump making a “deal” to accept this.  But who knows?

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