Three issues that define US-China relations under Trump
Of the meetings Donald Trump has held with foreign leaders since becoming America’s president, his first tête-à-tête with Chinese leader Xi Jinping at his Mar-a-Lago resort in Florida on April 6-7 is undoubtedly the most important – and challenging.
It comes at a time when the Trump White House and the Chinese government are fundamentally at odds with each other on a wide range of issues. Prominent among these are America’s trade imbalance with China, North Korea’s missile and nuclear program and Beijing’s activity in the South China Sea.
Without doubt, they will dominate the discussions between the world’s most powerful leaders. What is more, the way they deal with these pressing matters will shape not only the course of the relationship between the world’s two biggest economies and largest military spenders but also the international relations of the Asia-Pacific region in the years, or even the decades, to come.
These are the areas on which Trump is not only strongly critical of Beijing, but his criticism is consistent, though he has flip-flopped on many other domestic and foreign policies.
Of these three, American’s trade deficit features most in Trump’s public comments and criticisms.
On his campaign trail, Trump accused China of “raping” America with its unfair trade and monetary policies. For the former business mogul and his top advisers, Beijing has introduced zero-sum, mercantilist trade and investment policies that are harming US commercial and economic interests.
Two of his senior advisers, Peter Navarro and Wilbur Ross, called the most populous country on earth “the biggest trade cheater in the world.” Navarro now leads the White House’s newly created National Trade Council while Ross serves as US secretary of commerce.
In their views, Beijing’s trade abuses are the main reason for America’s trade deficit with China and job losses, with Trump pointing out his country has “lost 60,000 factories since China joined the World Trade Organization in 2001.”
In two tweets late last Thursday, just hours after his face-to-face with his Chinese counterpart was confirmed, the businessman-turned president, said the meeting “will be a very difficult one in that we can no longer have massive trade deficits … and job losses. American companies must be prepared to look at other alternatives.”
By these comments, not only did the 70-year-old set out his priorities – and the tone – for the landmark summit, but also signaled that he would adopt a tough posture toward the Asian power on trade.
This is backed up by the two executive orders he signed a day later. The first commissions a study on trade practices that contribute to America’s trade deficit with major economies, while the second seeks better collection of anti-dumping and countervailing duties.
Though they target several countries, these orders are mostly aimed at China.
In 2016, US exports to China were only US$116 billion, while its imports stood at US$463 billion. This means the US trade deficit with the world’s largest exporter was US$347 billion, accounting for almost 70% of America’s total trade deficit last year.
Both Ross and Navarro, two prominent China hawks, regarded steel dumping as an issue affecting America’s trade deficit and named China as a primary source of steel dumping in their country.
Beijing has always rejected such criticisms and warned against stoking trade tension between the two world powers. Xi cautioned, “No one will emerge as a winner in a trade war.” Premier Li Keqiang, went further, arguing that it would be America that would bear the brunt should a trade war break out.
Despite China’s warnings, Trump’s latest Twitter comments and executive orders were indicative of his determination to follow through on his campaign rhetoric.
Judging by America’s massive trade imbalance with its biggest economic and geopolitical rival, it is not surprising that the Trump administration is adopting an aggressive posture toward China and aiming at reaching “a level playing field” on trade.
The question is whether Xi Jinping will make any major concession on this issue to make the bilateral economic relationship more reciprocal and balanced.
The second – and equally important – topic of the Trump-Xi summit is North Korea. In 2016, China’s communist neighbor conducted two nuclear tests and 24 missile tests. In 2017, it has already fired five ballistic missiles, with four successful launches last month.
From the Trump administration’s perspective, as it is Pyongyang’s remaining major ally and key provider of finance, food and fuel supplies, Beijing can rein in Kim Jong-un. However, on several occasions, Trump has said China has done very little.
Last month, just hours before his secretary of state, Rex Tillerson, left South Korea for his first trip to Beijing as the top US diplomat, Trump tweeted, “North Korea is behaving very badly. They have been ‘playing’ the United States for years. China has done little to help!”
Speaking just days before his face-to-face encounter with his Chinese counterpart, Trump sent out an ultimatum that his country is prepared to act alone if China does not take a tougher stand against the secretive regime’s provocative ballistic missiles and nuclear weapons.
In an exclusive interview for the UK’s Financial Times on Monday, he said, “China has great influence over North Korea. And China will either decide to help us with North Korea, or they won’t” and if “China is not going to solve North Korea, we will.”
Coupled with Tillerson’s comments in Tokyo that the diplomatic and other efforts to disarm Pyongyang over the past 20 years had failed and, in Seoul, that the US would consider “all options” to counter its nuclear and missile threat, Trump’s latest remarks clearly indicate that Washington is ready to confront North Korea, with or without Beijing’s help.
Again, the question is whether Xi and his communist comrades in Beijing are willing to go further to put pressure on Kim Jong-un. The 33-year-old dictator’s behavior has already irritated Beijing, leading it to cut off a vital economic lifeline for the isolated country by suspending imports of its coal.
However, it is very tricky for Beijing to go the extra mile by fully cracking down on Pyongyang. Should it do so, the hereditary regime could collapse and this would damage Beijing’s long-term strategic interests. For all its flaws, North Korea serves as China’s buffer state. Beijing fears that the downfall of its communist neighbor will result in the rise of a unified Korean Peninsula under a pro-US government.
The South China Sea is another major geopolitical issue over which the Trump administration and the Chinese government are at loggerheads, though, due to the current calm in this strategic water, it may not feature as prominently as the North Korea problem does.
Trump and some of his senior advisers have vehemently criticized China’s massive land reclamation and militarization of the disputed areas of the sea. They have also blamed the Obama administration for allowing Beijing to expand its territorial and military presence in one of the world’s most strategic waters.
As previously noted, the South China Sea is one of a few policy issues, on which Trump’s views are justified and supported. Still, it remains unclear whether he can do better than his predecessor did or whether he and Xi make any breakthroughs on the problematic issue.
What is certain is that any agreement the two leaders reach on this issue, as well as North Korea, will hugely impact not only US-China ties but also the wider region’s strategic landscape because both issues involve many other regional countries.
In his interview with the Financial Times, America’s president said, he “would not be at all surprised if [during their summit, he and Xi] did something that would be very dramatic and good for both countries and I hope so.”
Such a “dramatic and good” deal on the South China Sea would affect other disputed countries, such as the Philippines and Vietnam. Similarly, any agreement between Washington and Beijing on North Korea would have significant and long-standing impacts on Japan and South Korea, America’s two regional key allies.
That is why many countries in East and Southeast Asia will watch closely for any signal and agreement coming out of this summit.
What America’s allies and partners in the region worry about most is that, Trump, who prides himself as a dealmaker and whose foreign policy puts America first, would strike a grand bargain with Beijing at their expense.