‘China will try to avoid trade war with US but will retaliate if it must’
So says Robert Lawrence Kuhn, a long-time adviser to Chinese leaders and global corporations who adds that Beijing views Japan as the moving force behind the ‘quadrilateral’ strategy against China
This year’s National People’s Congress (NPC), which got underway in Beijing on March 5, is a policy crucible that may spur a host of developments likely to impact China both domestically and internationally for years to come. Dominating the agenda: President Xi Jinping’s bid for an indefinite term and the threat of a trade war with the US.
Robert Lawrence Kuhn, a long-time adviser to Chinese leaders and multinational corporations, says China will do everything possible to avoid a trade war and will even “ratchet down” its responses. But he cautions that China will retaliate if the US gives it no other choice. He also says Beijing is focusing on Japan, not the US, as the “energetic driver” of a quadrilateral strategy to contain China in the region.
The host of ‘Closer to China with R.L. Kuhn,‘ on the China Global Television Network (CGTN), adds that Xi wants absolute authority to realize his vision of making China “a great modernized, socialist country” by 2050. To succeed, Xi believes power is necessary to control financial risk, overcome various interest groups inside China and execute extensive reforms.
“There is now no point in waiting for the next leader,” he noted.
Kuhn shared his takes on Xi and the state of China’s relations with the outside world in an interview with Asia Times.
What is Xi trying to achieve by doing away with term limits in the constitution at the NPC?
Xi seeks the absolute authority and power to bring about “the great rejuvenation of the Chinese people” by mid-century, 2050 (2049 being the 100th anniversary of the People’s Republic of China). Xi’s grand vision is for China to become “a great modernized, socialist country” that is “prosperous, strong, democratic, culturally advanced, harmonious and beautiful.”
Significantly, Xi also has short-term “battles” — controlling financial risk at the top of the list — and he needs the power to overcome various interest groups in order to pursue extensive reform.
Does this strengthen or weaken Xi’s systemic hold on power in China?
Xi continuing for the foreseeable future as China’s overarching leader strengthens his systemic power, but reforming term-limits for the presidency is not as crucial as some of his earlier moves. Although abolishing the two-term limit for China’s presidency captures headlines, it is more a symbolic, final step in ratifying Xi’s almost absolute power than being a big breakthrough in itself.
Xi’s prior designation as “core” of the Communist Party of China (CPC) in October 2016 and the inscribing of “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era” into the CPC’s Constitution in October 2017, were, in the Chinese system, much more meaningful.
There was an international outcry about Xi’s term limits move. Does this weaken his standing in the West and does it matter?
The Western reaction was more negative than expected, but it is not, over time, very meaningful. Xi is certainly respected as the leader of the world’s second-largest economy, with increasing diplomatic engagement and military capabilities. It gives him more standing in the sense that there is now no point in waiting for the next leader.
Will Xi propose new upbeat foreign investment rules for China to push back against tariffs, protectionism?
China already has plans to open financial services, in most categories, going immediately to 51% foreign ownership and after three years to 100% foreign ownership. I suspect there will be more areas — it is a primary carrot that China can offer. However, it is important to stress that these kinds of market openings are especially good for China and the Chinese consumer in that they introduce more competition into the market.
Is there a chance that China will engage in a trade war with the US?
The Chinese will do everything possible not to have a trade war, but they must retaliate to preserve their international credibility and standing with their own people. I would expect China’s responses will be in proportion, actually slightly less than equal, in order to signal a desire to ratchet down, not up.
How does China intend to sustain its 6.5% annual growth target?
This is an “about” target. China is committed to continue its growth in this range, to sustain employment, enable other goals. They will use pro-active fiscal policy and prudent monetary policy.
How is the White House’s pursuit of a “quadrilateral” or Indo-Pacific regional policy affecting Sino-US relations?
China recognizes these neo-containment moves, specially the so-called “Quadrilateral Security Dialogue,” among the US, Japan, India and Australia. The US is encouraging, but Japan is more the energetic driver, and India sees long-term necessities in countering China in the Indian Ocean. This is a big deal, long-term, but not especially due to the US.
Western news reports say there’s rising concern about China’s economic clout in Europe. Is this complicating China’s plans to win allies for its Belt and Road Initiative?
There is growing pushback against China from various countries and in various areas. China must respond in astute, sophisticated ways. For example, China is engaging Eastern Europe under its “16+1” initiative, which has benefits and liabilities. China must balance its external economic interests with the opening of its markets. This will be a continuing issue.