It doesn’t ri­val Is­lamic State or abor­tion as an is­sue in the pres­i­den­tial race, but China might be the most com­plex chal­lenge the win­ner will have to deal with.

Bloomberg Businessweek (Asia) - - Politics/ Policy - -Peter Coy, with Michael C. Ben­der, Mark Glass­man, Natalie Kitroeff, Ting Shi, and Joe Sob­cyk

The coun­try, which has the world’s sec­ond-biggest econ­omy① and sec­ond­high­est mil­i­tary spend­ing,② is a fren­emy of the first or­der. It fi­nances Amer­ica’s federal bud­get deficit by buy­ing Trea­sury bonds,③ and it sends more stu­dents to the U.S. than any other na­tion. It’s a nat­u­ral ally on some is­sues (Is­lamic ter­ror­ism) but an im­pla­ca­ble foe on oth­ers (free­dom of nav­i­ga­tion in the South China Sea).

Pres­i­dent Obama will be­queath his suc­ces­sor a string of par­tial suc­cesses. China, the biggest green­house gas pol­luter,④ agreed with the U.S. to curb emis­sions, al­beit

not as fast as the ad­min­is­tra­tion would like. It al­lowed its cur­rency to gain in value, mak­ing its ex­ports less com­pet­i­tive—al­though lately the yuan has fallen again. China didn’t re­tal­i­ate af­ter the U.S. Navy cruised by con­tested is­lands in the South China Sea in Oc­to­ber, but the coun­try’s Min­istry of Na­tional De­fense⑤ didn’t hes­i­tate to ac­cuse Wash­ing­ton of a “se­ri­ous mil­i­tary provo­ca­tion” on Dec. 19, days af­ter a pair of B-52 bombers flew over Chi­nese-built ar­ti­fi­cial is­lands in the same area. The share of Amer­i­cans who re­gard China un­fa­vor­ably⑥ went down slightly in 2015, af­ter tick­ing up for sev­eral years. But China is de­ter­mined to as­sert it­self—and chal­lenge U.S. supremacy—on many fronts over the next four years and be­yond. “Any can­di­date has to treat them with nu­ance, or should,” says Ted Tru­man, a non­res­i­dent se­nior fel­low at the Peter­son In­sti­tute for In­ter­na­tional Eco­nomics.

So far, nu­ance has been miss­ing from the cam­paign. Don­ald Trump, the lead­ing Repub­li­can in the polls, speaks of China pri­mar­ily as a cheater. It’s not a new line of at­tack—2012 Repub­li­can nom­i­nee Mitt Rom­ney, whose Bain Cap­i­tal backed com­pa­nies that helped out­source jobs to China, de­scribed the Chi­nese in the same terms.

Trump’s dark view of China could have some­thing to do with his per­sonal his­tory. In 2005 the Hong Kong ma­jor­ity part­ners in a Trump-branded hous­ing de­vel­op­ment⑦ on New York’s Up­per West Side sold the project with­out his ap­proval, for what he re­garded as too lit­tle money. He sued, and the case was set­tled out of court.

The lead­ing Demo­crat, Hil­lary Clin­ton, sounds nearly as hawk­ish on the sub­ject of Bei­jing. As Obama’s sec­re­tary of state from 2009 to 2013, she in­tro­duced the “pivot to Asia” pol­icy, de­signed in part to pre­vent Chi­nese hege­mony in the re­gion. At a New Hamp­shire event last July, shortly af­ter it was re­vealed that China was be­hind a mas­sive elec­tronic in­tru­sion into U.S. Depart­ment of State personnel records, she ac­cused the coun­try of “try­ing to hack into ev­ery­thing that doesn’t move in Amer­ica.”

Clin­ton has been tough on Chi­nese trade prac­tices as well, go­ing back to her ex­pe­ri­ence as a U.S. sen­a­tor from New York. In 2004 the Chi­nese Min­istry of Com­merce⑧ made a for­mal com­plaint to the World Trade Or­ga­ni­za­tion ac­cus­ing Corn­ing, based in up­state New York, of “dump­ing” op­ti­cal fibers on the Chi­nese mar­ket at be­low cost. Clin­ton in­vited Chi­nese of­fi­cials to her Se­nate of­fice to dis­cuss the mat­ter, and per­son­ally raised the is­sue with the White House. China dropped the case the next year, de­cid­ing in­stead to ex­empt Corn­ing from im­port du­ties. “She tends to be harder on China than her hus­band was,” says Jef­frey Bader, who was chief ad­viser to the Obama ad­min­is­tra­tion on China un­til 2011 and has re­mained close to Hil­lary.

China is a lit­mus test for how the pres­i­den­tial can­di­dates would gov­ern on a broad range of is­sues. Are they iso­la­tion­ists or in­ter­ven­tion­ists? Do they see for­eign pol­icy as a job for the White House or for Congress? How would they strike a bal­ance be­tween con­cern for hu­man rights and the econ­omy? Which con­stituency do they most aim to please—busi­ness, la­bor, re­li­gious groups,

en­vi­ron­men­tal­ists, de­fense hawks?

Hu­man rights, in­ter­est­ingly enough, is an is­sue that cuts across party lines. Clin­ton has re­peat­edly raised con­cerns about China’s record, most vividly in Septem­ber, when she crit­i­cized Pres­i­dent Xi Jin­ping dur­ing a visit to the U.S., which in­cluded a White House state din­ner in his honor. That en­raged the Chi­nese. Repub­li­cans, in­clud­ing Ted Cruz, Marco Ru­bio, and Carly Fio­r­ina, have been no less harsh. In con­trast, Trump and Bernie San­ders, Clin­ton’s chief Demo­cratic ri­val, rarely men­tion Chi­nese hu­man-rights is­sues in their speeches—though San­ders has con­trasted China fa­vor­ably with the U.S. on paid ma­ter­nity leave, a po­si­tion that drew him a re­buke from the ac­tor James Woods, who called the sen­a­tor an “ut­ter moron.”

The ques­tion of how to re­spond to China’s dis­plays of mil­i­tary strength of­fers a clearer pic­ture of what the can­di­dates are about than their grand­stand­ing on what to do in the Mid­dle East. Chris Christie, Fio­r­ina, and Ru­bio have taken a neo­con­ser­va­tive tack on for­eign pol­icy, in­di­cat­ing they’d be more will­ing than oth­ers to use force to de­fend Amer­i­can in­ter­ests and pro­mote West­ern demo­cratic ideals in Asia as well as in the Mid­dle East. John Ka­sich, who de­clared war on Pen­tagon waste while in Congress, has none­the­less fa­vored mil­i­tary spend­ing to counter China. Ben Car­son hasn’t had much to say about China as a strate­gic threat at all, ex­cept to sug­gest it’s played a part in Syria’s civil war.

Rand Paul, a lib­er­tar­ian, is leery of for­eign en­tan­gle­ments. In Syria he op­poses a no-fly zone that could put the U.S. in di­rect con­flict with Rus­sia. On China, he’s adamant that the U.S. should avoid re­spond­ing to its shows of strength with a big mil­i­tary buildup. That veers fairly close to the pol­icy ad­vo­cated by San­ders, who fo­cuses on jobs and lit­tle else when it comes to China. His spin is that “bil­lion­aires” are ship­ping jobs from the U.S. to China to take ad­van­tage of lower wages, at the ex­pense of work­ers in both coun­tries.

If his­tory is a guide, the can­di­date who wins in Novem­ber

is likely to be more mod­er­ate in of­fice than he or she was on the cam­paign trail. “Chin­abash­ing is part of Amer­i­can cam­paign pol­i­tics, and we get that,” says Tao Wen­zhao, se­nior re­searcher at the In­sti­tute of Amer­i­can Stud­ies, part of the Bei­jing-based Chi­nese Acad­emy of So­cial Sciences. Pres­i­dent Richard Nixon, a fierce anti-com­mu­nist, broke the ice with Chair­man Mao Ze­dong by trav­el­ing to Bei­jing in 1972. Pres­i­dents Rea­gan, Clin­ton, and Ge­orge W. Bush also talked tougher on China dur­ing their cam­paigns than they acted once in of­fice.

Jeb Bush, the one­time GOP front-run­ner, is one of the few can­di­dates will­ing to sig­nal a mod­er­ate ap­proach to China. He un­der­stands the im­por­tance to Chi­nese lead­ers of sav­ing face. On a busi­ness trip in 2013, he found him­self hav­ing to explain why they shouldn’t be of­fended that First Lady Michelle Obama had de­cided not to join her hus­band to meet with Pres­i­dent Xi and his wife on their visit to Cal­i­for­nia that year. (The first lady cited the end of her daugh­ters’ school year.) His fa­ther, Ge­orge H.W. Bush, was the U.S. en­voy to China from 1974 to 1975. Brit­ton Hill Hold­ings, ⑨ the pri­vate eq­uity firm Jeb Bush cre­ated in 2013, raised mil­lions from in­vestors in­clud­ing China’s HNA Group, based in the is­land prov­ince of Hainan, and Fin­ergy Cap­i­tal, a Bei­jing-based pri­vate eq­uity fund. (Bush stepped down from his role with Brit­ton Hill when he de­clared his can­di­dacy.)

The U.S. can’t sim­ply tell China what to do, no mat­ter how much any pres­i­dent may want to. “Be tough,” says Bader, the Clin­ton ad­viser. “But China is an in­creas­ingly pow­er­ful coun­try that has its own in­ter­ests,⑩ and it doesn’t lis­ten to us.” With less than a year to go be­fore the elec­tion, China may re­main ob­scured by more vis­ceral is­sues. But count on this: When the next pres­i­dency be­gins, no puz­zle will be more im­por­tant.

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