FOUR FLASH POINTS FOR TRUMP AND CHINA
Many controversies lie ahead
When Donald Trump accepted a phone call from Taiwan’s president, he signaled to China that he is prepared not only to break with longtime U.S. policy but also to launch U.S.-Chinese relations on a more confrontational course.
The conversation with President Tsai Ing-wen was the first by a U.S. president or president-elect since 1979, when Jimmy Carter ended official relations with Taiwan after recognizing Beijing ’s communist government as the only representative of China. Beijing considers Taiwan a breakaway province that it plans someday to unify with the mainland.
Beyond upsetting Beijing with his call, Trump has accused China of unfair trade and exerting new military muscle in Asia.
Here are four issues on which Trump may confront China:
TAIWAN
Trump’s conversation with Taiwan’s democratically elected president is too important for China’s communist leaders to ignore, said Michael Auslin, author of the soon-to-be published book The End of the Asian Century.
China’s “One China” policy is “all about separatism,” Auslin said. If Taiwan can move toward independence, as many on the island want, then so can Tibet and Xinjiang, he said of Tibetan- and Muslim-majority regions in China with separatist movements.
China can show its displeasure with the United States in areas such as economics, anti-terrorism and North Korea’s nuclear program, said Cheng Li, director of the China program at the Brookings Institution, a Washington think-tank. China can ratchet up military activities in the South China Sea, where the United States seeks to maintain freedom of navigation for commercial and Navy ships. China’s neighbors resist its territorial claims, as well.
Bonnie Glaser, a China expert at the Center for Strategic and International Studies in Washington, said Trump’s advisers are trying “to show China that things won’t be conducted business as usual. ... Trump seems to have bought into this.”
After his phone call with Taiwan’s leader, Trump tweeted, “Did China ask us if it was OK to devalue their currency (making it hard for our companies to compete), heavily tax our products going into ... their country (the U.S. doesn’t tax them) or to build a massive military complex in the middle of the South China Sea? I don’t think so!”
SOUTH CHINA SEA
Trump’s tweet links separate areas of conflict with China in a new way, but China can play that game, too.
In the South China Sea, China has built islands on atolls and rocks and added hardened aircraft hangars and shipping piers. U.S. allies in the area have protested, and the United States has used its ships and military aircraft to enforce free access for all.
“Until now, (the Chinese) have said these aren’t military bases,” Auslin said. “To show Trump he’s going down the wrong road, I wouldn’t be surprised if they say these are bases and base fighter planes on them.”
China could deploy radar and anti-ship and anti-aircraft missiles, demand that foreign aircraft and vessels identify themselves in the area and bar access to military craft and ships from the USA and other nations.
“Are these small countries going to risk an encounter with Chinese fighter jets?” Auslin said. “It makes China the regional (superpower) and forces the U.S. to decide whether they’re going to challenge China.”
NORTH KOREA
China signed on to international sanctions imposed by the United Nations Security Council last week in response to North Korea’s nuclear weapons tests, but it could walk away from them, Auslin said. It could boost economic and military aid to North Korea, an ally wholly dependent on China, and declare an end to international talks to end the North’s nuclear program. “They could use it as a stick to beat Trump with,” Auslin said.
Trump could respond by ramping up pressure with more sanctions on Chinese companies that support North Korea and its nuclear activities. President Obama issued the first such sanctions in September. “Trump could do more,” Glaser said.
TRADE
Trump says China dumps steel and other imports at low prices to put competitors out of business, violates intellectual property rights and manipulates its currency to lower the cost of its products and make U.S. goods more expensive in China.
This is one area where the Chinese “are more vulnerable than we are,” Auslin said. “We can find other markets. They are less able to find other markets the size of the USA.”
Trump has threatened to declare China a currency manipulator. That determination could result in tariffs on Chinese imports and a trade war, Auslin said.
China’s economy would suffer, and the cost of goods would go up for U.S. consumers. China could respond by refusing to buy U.S. Treasury bonds. That would hike U.S. government borrowing costs, raise interest rates on U.S. consumers and businesses and spook the stock market.
University of Maryland economist Phillip Swagel sees a trade war and a currency war with China on the horizon because China’s currency will continue to fall, while Trump’s plan to cut taxes and increase spending will make the dollar stronger.
Swagel said that would open opportunities for Trump to expand trade elsewhere in Asia. “I wonder if the China bashing produces gains in other places,” he said. “He could portray it as shoring up Japan against China.”