Trump’s “China Syndrome” and Prospect of China-US Relations
Director of the Institute of the USA and Canadian Studies of the Russian Academy of Sciences
In today’s multi-polar world, the emergence of a new geo-political power center is exerting impact on the existed world order. The rise of major powers is an important factor affecting current international pattern. These emerging countries have experienced many tribulations and major tests in history, yet they are still capable of developing and building. China is a typical representative of them. In recent years, China has actively changed its concept of development and continuously improved its comprehensive national strength, resulting in an impact on the existing world order dominated by the US. As the world number one power, the US believes that the rising of China poses a threat to it by compressing its living space and weakening its international influence. With this strategic misjudgment, the Trump administration has taken a negative attitude towards China-US relationship and suffers from “China Syndrome”.
“Symbiosis” of Economic Complementarity and Intense Competition
China, as the most populous country in the world, has a history of thousands of years full of great achievements. Yet it has also experienced many setbacks and roundabouts. After 40 years of grand reform, China has made tremendous progress in various fields including economy, society, culture, science and technology, and education. Its GDP ranks the second in the world. As the biggest exporter, creditor and raw material demander, China is now among the leading industrial and financial countries. Its foreign exchange reserves stay first in the world.
Nowadays, China’s influence on international pattern and world order is increasingly deepening. China is already the biggest holder of US Treasuries and is playing a leading role in total private economic investment in the US. It is an extremely important trade partner of the US. The interdependent bilateral relations make China an indispensable part of the US and even the global economy.
The China-US cooperation developed in the past 40 years is based on a “symbiosis” model, namely economic complementarity and intense competition. On the one hand, the US has a huge investment in China, and a large number of US enterprises invest in factories in China for large-scale production. At the same time, China’s large-scale purchase of US Treasuries and big enterprise shares together with its exports have also greatly met the demand of the consumer market in the US. On the other hand, China and the US squeeze into each other’s market space, creating friction and estrangement as a result of the trade war initiated by the US and the adoption of protectionist policies by the US. This “symbiosis” endows the relations between China and the US a multi-faceted nature that is both interdependent and contending.
The US used to be one of the boosters of China’s development at the very beginning, regarding China only as a regional rival with a significant impact on the US economy and security. This recognition was reflected in the 2012 US Defense Strategy Report four years before Trump was elected president. With the development of globalization, China’s reform and opening-up has continued to increase. Moreover, with the diligence of and great efforts made by the Chinese people and the enthusiastic participation of foreign investors, China has continuously created new economic miracles. The rapidly rising China has changed US view of it as a regional power.
Shocked by the fact that the US global leadership is threatened, the Trump administration started to suffer from “China Syndrome”, which is manifested in the imbalance of mentality, the sharp rise in anxiety and antagonistic thinking. As a result, the Trump administration adopted a negative reaction, doing whatever it can to maintain its position as a “global leader” and thus embarking on the path of curbing the “imaginary foe” of China.
Although Trump has been cracking down on a rapidly growing China to make the US “great again”, in fact, China’s influence on the US is multifaceted, not as negative as Trump has stressed. Over the past decades, the Chinese economy has been an organic complement to the US economy. According to Chinese official statistics, the volume of merchandise trade between the two countries increased about 232 times from US$2.5 billion in 1979 to US$583.7 billion in 2017. The service trade volume in 2016 has surpassed US$100 billion. Meanwhile, the bilateral investment between the two countries has grown rapidly, with over US$170 billion at the end of 2016. China has been one of the fastexpanding commodity export markets for the US in the past decade. Total US exports to China have grown steadily at an average annual rate of 11%. China is the largest buyer of Boeing aircrafts and US soybeans, accounting for 26% and 56% of their respective exports. China is also the second largest importer of US agricultural products, automobiles and integrated circuits. China’s trade and investment have created a large number of jobs in the US. At present, the investment market between China and the US is growing fast, with Chinese funds in all states of the US, creating over 100 thousand jobs for the US. The importation of goods and services from China has allowed the US to maintain 2 mil
lion jobs, while exports to China have created another 1 million jobs in the US. At the same time, the US is also one of the biggest investors in China. The US has already implemented about 70 thousand investment projects in China, involving up to US$80 billion, which has helped promote China’s economic growth.
China has the dual status of an important economic and trade partner and a competitor of the US, which forces the US to maintain a relationship as both an enemy and a friend of the increasing powerful country. In the past decade, the complex economic relationship between China and the US has made China a country with distinctive geopolitical functions, with a growing influence in both Asia and the world at large. The overall stable political relationship and expanding economic and trade exchanges between China and the US have benefited both countries.
US-Initiated Trade War Goes against China, US and World Economy
The trade war initiated by Trump Administration is an important manifestation of the US curbing and weakening China. The past decades have witnessed the deepening economic and trade cooperation between China and the US as well as accumulation of many major differences. Trump has expressed strong dissatisfaction with some of China’s trade policies. He believes that China restricts the import of raw materials, adopts administrative instead of market means to support the operation of Chinese enterprises in the US, deliberately holds down the exchange rate of RMB against the US dollar, creates favorable conditions for Chinese manufacturers, attempts to prevent the US from reducing its adverse trade balance with China, takes restrictive measures against foreign investment, damages intellectual property rights and so on. Meanwhile, China also has a package of demands from the US, such as that the US should lift the ban on the export of high-tech products to China, stop federal court investigations into China’s foreign trade policy and create favorable conditions for Chinese investment in the US. The Trump administration has openly adopted a large-scale trade protectionist policy towards China, which undermines the traditional China-US dialogue mechanism and results in a “shock” in bilateral trade relationship between the two countries and even in the international trading system as a whole. In 2018, more than half of the bilateral trade volume was involved in the US tariffs rising alone and in China’s corresponding measures. However, experts at the UN Conference on Trade and Development believe that despite the massive scale of the trade war between China and the US, the US may fail to effectively safeguard the interests of its own producers through the trade war. Along with bilateral trade between China and the US being curbed for a long time, a third country will be active and a new trade partner will occupy the vacant domestic market in the US, which can also pose a huge threat of competition to US enterprises. Moreover, the trade war with China initiated by Trump also has an obvious negative impact on US own enterprises while hindering China’s economic growth. The mature industrial chain that the US manufacturers have been painstakingly developing for many years has broken, while agricultural enterprises are worried about the complete loss of a carefully-nurtured export market. According to the Foreign Policy, the Trump administration’s move to raise tariffs on China in 2018 caused US$68.8 billion extra expenditure for US producers and consumers, while its real revenue fell by US$7.8 billion. The trade war initiated by the Trump administration has proved to be detrimental to world econmy yet not benefiting the US itself at all.
Prospect of China-US Trade War Is Controllable
Historically, a battle between two major competitors for raw material sources and sales markets, national security and global influence is likely to lead to armed conflict and bloodshed. At present, the strategic circles in the US and even around the world are concerned about the massive trade conflict between China and the US, which has triggered a global economic upheaval. Will it intensify and eventually evolve into an open and irreconcilable armed conflict between the nuclear powers? However, China’s diplomatic actions at this stage and its consistent diplomatic position show that China opposes the concept of victory over the other and the zero-sum game, and does not want to see the “Thucydides Trap”. China still maintains the necessary calmness and restraint in the trade war, and tries its best to avoid the escalation of conflicts so as to prevent the contradictions from going beyond the scope of rational and peaceful dialogue. China’s position has won broad applaud. In addition, as the two largest economies in the world, China and the US have unprecedented close economic and trade ties, and their unique interest integration and binding have also helped to ease tensions between both sides in the field of military and strategic confrontation, and kept the trade war within a controllable frame.
The trade war initiated by the Trump administration has proved to be detrimental to world econmy yet not benefiting the US itself at all.