China-us Re­la­tion­ship:

Trad­ing Blows

NewsChina - - CONTENTS - By An Ran

Apart from a short respite dur­ing US Pres­i­dent Don­ald Trump's visit to China in Novem­ber, 2018, the bi­lat­eral re­la­tion­ship be­tween the world's two largest economies has rapidly de­te­ri­o­rated. The US la­beled China a top se­cu­rity threat and a “re­vi­sion­ist” power, and the Trump ad­min­is­tra­tion has an­nounced tar­iff in­creases on an es­ti­mated US$50 bil­lion worth of Chi­nese im­ports for 2018. China re­sponded by is­su­ing its own list of US prod­ucts of com­pa­ra­ble value that would be sub­ject to in­creased tar­iffs should the US fol­low through with trade sanc­tions. With the in­creas­ing risk of a trade war be­tween the two coun­tries, Newschina in­ter­viewed Li Cheng, di­rec­tor and se­nior fel­low of the Wash­ing­ton-based John L. Thornton China Cen­ter at the Brook­ings In­sti­tu­tion, on the fu­ture of the Sino-us re­la­tion­ship. Li, who grew up in China and moved to the US in 1985, is an ex­pert on Chi­nese pol­i­tics and the Sino-us re­la­tion­ship, and is a pro­lific writer. He is also a di­rec­tor of the Na­tional Com­mit­tee on United States-china Re­la­tions.

Newschina: It has been more than a year since Don­ald Trump was sworn in. What do you think of his ap­proach to for­eign pol­icy? Do you note any clar­ity or con­sis­tency, par­tic­u­larly to­ward China?

Li Cheng: I don't think Trump has for­mu­lated a clear and con­sis­tent for­eign pol­icy. One rea­son is that Trump is still un­der in­tense do­mes­tic scru­tiny re­sult­ing from the in­ves­ti­ga­tion over his al­leged col­lu­sion with Rus­sia, and un­cer­tainty about the re­sult of the in­ves­ti­ga­tion has had a great im­pact on Trump's for­eign pol­icy. An­other rea­son is that many of the key posts within the White House, es­pe­cially those re­lat­ing to for­eign pol­icy, are ei­ther un­staffed or have a high turnover rate, which has had a ma­jor im­pact on the con­sis­tency of Trump's pol­icy. The in­con­sis­tency is par­tic­u­larly salient in Trump's pol­icy to­ward China. Dur­ing his visit to China last Novem­ber, Trump called Chi­nese Pres­i­dent Xi Jin­ping a “good friend,” but now, China is be­ing la­beled Amer­ica's top strate­gic ad­ver­sary. To a large ex­tent, US pol­icy to­ward China is now driven by in­di­vid­ual is­sues on an ad hoc ba­sis, not by a holis­tic long-term strat­egy.

The US is used to hav­ing for­eign pol­icy mas­ter­minds such as George Ken­nan, A. Doak Bar­nett, Zbig­niew Brzezin­ski, Henry Kissinger, Robert Zoel­lick and Richard Haas. How­ever, none of the of­fi­cials cur­rently in­volved in mak­ing for­eign pol­icy in the Trump

ad­min­is­tra­tion could be de­scribed as a mas­ter of grand strat­egy.

NC: How does the Trump ad­min­is­tra­tion's ‘Indo-pa­cific strat­egy' com­pare to the Obama ad­min­is­tra­tion's ‘Pivot to Asia'?

LC: The Indo-pa­cific strat­egy is sim­i­lar to the Pivot to Asia strat­egy in that both re­main con­cep­tual strate­gies that have not ac­tu­ally been im­ple­mented, and both lack bud­get sup­port from the US Congress.

The dif­fer­ence is that un­der the Trump ad­min­is­tra­tion there has been a sharp de­cline in US soft power. Also dis­tinct from the Obama ad­min­is­tra­tion is the com­po­si­tion of Trump's team. Whereas the Obama ad­min­is­tra­tion was mostly staffed by pro­fes­sional diplo­mats and ad­min­is­tra­tive of­fi­cials, many of the key posts in the Trump ad­min­is­tra­tion are staffed by busi­ness ex­ec­u­tives, re­tired mil­i­tary gen­er­als and me­dia com­men­ta­tors. Of­fi­cials with a mil­i­tary back­ground, for ex­am­ple, are not nec­es­sar­ily more war-prone, but they do have a dif­fer­ent lead­er­ship style and may adopt a dif­fer­ent ap­proach to for­eign pol­icy.

Com­pounded by Trump's un­pre­dictable per­sonal style and ap­par­ent in­fight­ing within the White House, these chal­lenges have pre­vented Trump's se­cu­rity strat­egy from pro­gress­ing past the con­cep­tual stage. More­over, for any se­cu­rity strat­egy to work, there needs to be flex­i­bil­ity and pri­or­i­ties. But Trump's strat­egy ap­pears to lack a strate­gic pri­or­ity. On the con­trary, Trump seems to be mak­ing an en­emy out of ev­ery­body, in­clud­ing some US al­lies.

NC: Com­pared to Pres­i­dent Trump's rather am­i­ca­ble rhetoric to­wards China dur­ing his visit to Bei­jing last Novem­ber, Wash­ing­ton's at­ti­tude to China has hard­ened more re­cently. Why do you think that is?

LC: In­deed, in the past few months there ap­pears to have been an abrupt change in Wash­ing­ton's rhetoric to­ward China. The na­tional se­cu­rity strat­egy re­port lists China as a top se­cu­rity threat to the US, even ahead of Rus­sia. There has been se­ri­ous con­cern over China's grow­ing in­flu­ence, re­ferred to as China's ‘sharp power,' across the West­ern world. The rea­sons are com­plex. First, the rise of China, com­pared to the rel­a­tive de­cline of the US (es­pe­cially the de­cline of its soft power) in re­cent years, has cre­ated anx­i­ety among the Amer­i­can elite and the pub­lic just as pre­vi­ous con­cerns over the ‘col­lapse of China' have now given way to fears that China will re­place the US to be­come the world's leader.

Se­condly, the ar­rival of a Trump pres­i­dency has fur­ther ex­ac­er­bated such con­cerns. Trump is by no means a con­ven­tional politi­cian. The main­stream me­dia and po­lit­i­cal es­tab­lish­ment have re­sisted his rise to the pres­i­dency, as many crit­ics con­sider Trump him­self to be a threat to Amer­i­can in­ter­ests. As these two fears re­in­force each other, there has been a re­sult­ing surge in calls to de­fend West­ern val­ues.

This sen­ti­ment may be a tem­po­rary one, and may not last in the long term. Af­ter all, sev­er­ing re­la­tions with China will harm Amer­i­can in­ter­ests. I think pol­i­cy­mak­ers on both sides should re­main calm and ra­tio­nal in this dif­fi­cult time. More­over, they should re­frain from hos­til­ity and ex­treme mea­sures to re­solve dis­putes be­tween the two coun­tries.

NC: How do you per­ceive the on­go­ing trade war be­tween the two coun­tries? How will it af­fect the long-term prospects of the Sino-us re­la­tion­ship?

LC: Nei­ther the US nor China will ben­e­fit from a trade war. I think the re­cent an­nounce­ment of higher tar­iffs on cer­tain im­ports is just test­ing the wa­ters. If Wash­ing­ton de­cides to fully im­ple­ment the res­o­lu­tion of the Sec­tion 301 in­ves­ti­ga­tion against China, that will be the start of a real trade war. How the trade war will evolve in the long term will de­pend on how its fall­out is felt and as­sessed at the cor­po­rate, state, and na­tional lev­els.

At the cor­po­rate level, many Amer­i­can multi­na­tional com­pa­nies (MNCS) can no longer ob­tain the ex­tra­or­di­nary prof­its in the Chi­nese mar­ket that they of­ten did in the 1990s when many of China's mar­ket sec­tors were first opened. There are com­plex rea­sons for this change, in­clud­ing the higher non-tar­iff trade bar­ri­ers in China's ser­vice sec­tor, tougher reg­u­la­tions (in­clud­ing around en­vi­ron­men­tal pro­tec­tion), in­creas­ing com­pet­i­tive­ness of Chi­nese do­mes­tic com­pa­nies, and ris­ing la­bor costs. The re­sult is that many Amer­i­can MNCS have been lob­by­ing the US gov­ern­ment to pres­sure China to fur­ther open its mar­ket and in­crease pro­tec­tion of US in­tel­lec­tual prop­erty. But that does not mean these cor­po­ra­tions would like to see a trade war be­tween the two coun­tries, as it will only lead to a lose-lose sit­u­a­tion. In the short term, Chi­nese com­pa­nies may be hit harder. But in the long term, the Amer­i­can econ­omy will prob­a­bly suf­fer even more.

At the state level, many states dif­fer with the Trump ad­min­is­tra­tion on its per­spec­tive re­gard­ing a trade war with China. Over the past sev­eral weeks, many state gov­ern­ments, in­clud­ing Cal­i­for­nia, Michi­gan, Kansas and Idaho, have made it clear that they want to con­tinue their co­op­er­a­tion with China.

At the na­tional level, the eco­nomic de­vel­op­ment and land­scape be­tween the US and China re­mains com­ple­men­tary. For ex­am­ple, if Trump wants to de­liver on his cam­paign prom­ise of re­build­ing US in­fra­struc­ture, he will need to co­op­er­ate with China. China's re­cent em­pha­sis on do­mes­tic con­sump­tion, ser­vice sec­tor growth, en­vi­ron­men­tal pro­tec­tion and the open­ing-up of some fi­nan­cial busi­nesses are in the best in­ter­ests of the US econ­omy. If the com­ple­men­tary na­ture of the two economies can be more ad­e­quately rec­og­nized at the three lev­els, the trade re­la­tion­ship may re­turn to the right track. We must un­der­stand the im­por­tance of trade is­sues to the Sino-us re­la­tion­ship from a broader per­spec­tive. As Jack Ma, founder of the Alibaba Group, has warned, ‘When trade stops, war starts.'

NC: The North Korean nu­clear cri­sis has been a key source of fric­tion. North Korean leader Kim Jong-un vis­ited China re­cently af­ter agree­ing to meet with Trump. Go­ing for­ward, how will this af­fect the over­all bi­lat­eral re­la­tion­ship be­tween the US and China?

LC: A fun­da­men­tal change in China's pol­icy to­ward North Korea over the past few years is that it now con­sid­ers de­nu­cle­ariza­tion of the Korean Penin­sula as its top pri­or­ity. In the past, en­sur­ing re­gional sta­bil­ity was the num­ber one pri­or­ity. China's pol­icy change is more a re­sult of a re­assess­ing its own in­ter­ests in the re­gion than of diplo­matic pres­sure from Wash­ing­ton. While the US and China con­tinue

to com­pete for lever­age and in­flu­ence with re­gard to North Korea, China's pol­icy change no doubt is in line with US in­ter­ests. But if the US chooses to iden­tify China as its en­emy, it will be no sur­prise that China changes its po­si­tion on re­la­tions with North Korea again.

China has long seen the North Korea is­sue dif­fer­ently from the US. While Wash­ing­ton at­tributes North Korea's de­fi­ance to Bei­jing's fail­ure to im­pose a to­tal em­bargo against Py­ongyang, China does not see eco­nomic sanc­tions as the so­lu­tion. For China, the ques­tion is: why should it im­pose a to­tal em­bargo against North Korea when such an act could lead Py­ongyang to see China as a greater en­emy than the US? Such a men­tal­ity is fur­ther com­pounded by the per­cep­tion that the US is es­tab­lish­ing an anti-china bloc in the re­gion along with Ja­pan and South Korea.

If a cou­ple of months ago there ap­peared room for full co­op­er­a­tion be­tween China and the US on North Korea, that no longer seems the case now that Wash­ing­ton's pol­icy to­ward China has turned hos­tile. The dra­matic, warm re­cep­tion for Kim's visit in Bei­jing seems to re­flect that change. The price of a de­te­ri­o­rat­ing China-us re­la­tion­ship will be very high in this re­gard, and I do hope that the two coun­tries can con­tinue co­op­er­at­ing to find a way to achieve de­nu­cle­ariza­tion of the Korean Penin­sula.

NC: Turn­ing to long-term prospects for the bi­lat­eral re­la­tion­ship, what are the pit­falls lead­ers on both sides should avoid in or­der to steer the China-us re­la­tion­ship away from all-out con­fronta­tion?

LC: There are four pit­falls to which lead­ers of the two coun­tries should pay at­ten­tion. First, the China-us re­la­tion­ship is vul­ner­a­ble to the in­flu­ence of do­mes­tic pol­i­tics. Cur­rently, na­tion­al­ist sen­ti­ment is on the rise in both coun­tries, and both lead­er­ships are sub­ject to the in­flu­ence of in­ter­est groups at home, which may hi­jack na­tional for­eign pol­icy.

Sec­ond, there has been an in­creas­ing ten­dency among pol­icy mak­ers and an­a­lysts to per­ceive the bi­lat­eral re­la­tion­ship from a ‘zero-sum' per­spec­tive, which is it­self a threat. Un­der the Obama ad­min­is­tra­tion, [then-us Sec­re­tary of State] Hil­lary Clin­ton said that ‘the US and China can ben­e­fit from and con­trib­ute to each other's suc­cess.' In con­trast, the pre­vail­ing men­tal­ity among de­ci­sion-mak­ers to­day ap­pears to be that one can only ben­e­fit from the other's fail­ure. This is a very dan­ger­ous prism through which to view the bi­lat­eral re­la­tion­ship.

Third, there is a risk that the two coun­tries' for­eign poli­cies could be hi­jacked by a so-called third party – an­other coun­try that in­tends to ad­vance its own in­ter­est – at the ex­pense of ei­ther the US or China.

Fi­nally and most im­por­tantly, a Cold War men­tal­ity ap­pears to be re-emerg­ing in re­cent months – a trend that could haunt the bi­lat­eral re­la­tion­ship. Wash­ing­ton has be­come in­creas­ingly ac­tive in push­ing other coun­tries to “choose a side.” For­mer Sec­re­tary of State Rex Tiller­son openly called on Latin Amer­i­can coun­tries, for ex­am­ple, to re­sist China's in­flu­ence. If the trend con­tin­ues and fer­ments, the bi­lat­eral re­la­tion­ship be­tween the US and China could en­ter a ma­jor cri­sis.

Li Cheng

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