FALSE FLAG
With elections looming in the US, Donald Trump has upped his antichina rhetoric. But he needs the country if he’s going to pull the US out of the economic doldrums
British author Norman Angell, in 1909, argued in The Great Illusion that the international commercial entanglements of the 20th century had made war irrational. When World War 1 broke out five years later, he was proven dreadfully wrong.
Today, the rise of China to challenge the US is having an enormous effect not just on the world economy but, in the long run, on global stability. In the past four years, there have been new levels of animosity between the two powers, with the US declaring a trade war and a testy relationship developing between US President Donald Trump and his Chinese counterpart, Xi Jinping.
But the underlying tensions are structural in nature. China and the US have vastly different political systems and, until recently, were at very different stages of development. Since the 1980s, these differences allowed them to co-operate in a partnership that became the engine of the global economy. Both benefited. For the US it meant low-price manufacturing, greater efficiencies, high-growth investments and a major trading partner. In 2018 it imported $539.5bn in goods from China, and exported $180bn.
The US and the West provided China with a market for its products, access to technology and scientific training, and integration into the global economy.
But as multinationals began outsourcing manufacturing to China, the country was accused of taking the jobs of US workers. The trade deficit spoke of an imbalance in the relationship, leading to the US claiming its companies were the victims of unfair competition and accusing Chinese companies of stealing intellectual property (IP).
(This is by no means baseless; corporate cyberwarfare is a significant part of China’s international strategy.)
This growing sense of aggrievement was one of the factors that swept Trump to the presidency in 2016 with his nationalist “America first” slogan.
Four years later, Sino-us relations are part of the backdrop to another US election. This time, in the wake of trade wars, the Covid-19 pandemic and a global economic downturn, the issues
are far starker.
A one-term president?
In the US electoral system, an incumbent president usually has an advantage. But Trump is facing a storm that threatens to derail his campaign. At the time of writing, more than 110,000 Americans had died from Covid-19, millions were unemployed and cities across the country were in the midst of a political rebellion.
Even before the death of George Floyd at the hands of a Minneapolis police officer and the ensuing mass protests, Trump’s numbers were poor. He has seldom polled above 45%, even when the economy was strong. Now, every reputable poll in the past six weeks has put Democratic challenger Joe Biden between five and 14 points ahead.
Biden is also making inroads in the battleground states that will decide the election, as well as some traditionally “red” states.
It is impossible to predict how prolonged protests will affect the election. For now, they have fired up the opposition. Polls show an overwhelming majority of Democrats and independents, as well as a surprising number of Republicans, have sympathy with the protesters’ core grievance: racist policing.
Trump can rely on about 40% of the electorate. This group of mostly white, older, non-college-educated men will support him regardless. His problem is an inability to appeal to anyone outside this base. Trump stands against a progressive alliance of black Americans, Hispanics, women, college graduates and younger Americans.
With a stark partisan divide, the battle is for a relatively small group in the middle. Polling suggests the main concern of these voters is that the chaos of the Trump years comes to an end. The heightened, prolonged instability of 2020 does not bode well for Trump in this regard.
As long as the focus remains on race relations or the handling of the health crisis, Trump is likely to lose the election. Which means changing the focus is a top priority.
We’re already seeing the shift. Trump is beginning to press the case that he is the man to revive the economy, and position himself as a bulwark between the put-upon US worker and an untrustworthy, hostile China.
The protests initially appeared to hand Trump a third point of focus, as the candidate of law and order. But this has been undermined by multiple cases of police brutality captured on video during the protests. Not least of these was footage of security forces teargassing peaceful protesters and firing rubber bullets so Trump could stage a photo-op, Bible in hand, at a church opposite the White House. This leaves Trump to campaign on an economy that’s in its worst shape since the 1930s — and on China.
China as target and foil
China presents a tempting target for Trump. In 2016, his supporters were primed to see it as an enemy after he accused it of stealing jobs. Since then, his “America first” rhetoric has often been stridently anti-chinese, with an occasional whiplash-inducing flip to heap praise on Xi if a trade deal was in the offing.
It’s rhetoric that has troubling echoes in US history. The 1882 Chinese Exclusion Act banned Chinese from immigrating to the US or becoming citizens. It was the first immigration law in the world that excluded an entire ethnic group. Such xenophobia persists today: a Pew survey in April found that two-thirds of Americans hold an unfavourable view of China.
Discrimination against Asian-americans (5% of the US population) has also been on the rise. And since Covid-19 hit, the Antidefamation League has documented multiple attacks on Asian-americans.
It’s unsurprising, given that Trump has repeatedly blamed China for the virus. This is despite the fact that he at first praised the transparency of China’s response and after he apparently sought Xi’s assistance in getting re-elected, according to former national security adviser John Bolton’s memoir of his time in the White House. It was only after the US fumbled its own response to the pandemic that he began referring to the “China virus” or the “Wuhan virus”.
Trump also endorsed the conspiracy theory that the virus was manufactured in a Chinese biological weapons laboratory — despite the idea being debunked by the intelligence community. He ratcheted up the rhetoric by identifying the culprit as the Communist Party — a label with resonance among older Americans.
In terms of Sino-us relations, the best that can be hoped is that China diminishes as an issue in the election campaign amid the sea of other troubles confronting the US.
Geopolitical rivals
Trump’s nationalism is reciprocated by Xi’s own aggressive nationalism. The country has no better image of the US than the US has of China. The highest-grossing movie in Chinese history is 2017’s Wolf Warrior 2, in which heroic Chinese soldiers battle mercenaries led by a racist American.
But China’s issues run deeper than this. Pro-democracy protests in Hong Kong are a clear challenge to Communist Party authority. When they began last year, Beijing appeared nonplussed, unable to figure out how to respond.
There was paranoia that the spirit of the protests might spill over to the mainland.
The victory of Tsai Ing-wen — who takes a hardline stance on Beijing — in Taiwan’s presidential elections in January was a further affront to China’s “one-nation” vision.
As for the coronavirus: once the scale of the problem had been acknowledged, China responded with unmatched efficiency and purpose, and launched an international PR campaign fronted by business leader Jack Ma. But the fact remains that the pandemic began in China — and spread so widely because it was initially covered up.
Now, the Chinese economy has contracted for the first time since the 1970s, so 2020 will be a tough year for a population used to decades of high growth. This makes external threats, real or imagined, prime fodder for leaders looking to deflect attention from domestic worries.
China is, however, still apparently keen to maintain its economic relations with the US. So we can expect to see it moving carefully in critical areas of its
“belt and road initiative” — in Africa,
Central Asia and Europe — and more aggressively in its own neighbourhood.
This approach is already evident. Beijing has moved to charge leaders of the prodemocracy movement and tighten its grip on Hong Kong through a new national security law. At the same time there has been a series of incidents in the strategically important South China Sea; troops have clashed along the disputed Sino-indian border in the Himalayas; and China’s rhetoric against Taiwan has reached a new pitch.
The economic war
Covid-19 exposed the vulnerability of companies around the world to supply-chain shocks, and there is no question now that Washington sees its economic dependence on Beijing as a national security problem.
But this is a concern that didn’t begin with Covid. From the beginning Trump chose a team of hawks to oversee his trade war with China. In an administration racked by almost constant turnover, that team — including trade representative Robert Lighthizer and treasury secretary Steven Mnuchin — has remained remarkably stable, and consistent in looking to roll back US reliance on China.
At first the administration sought to reduce Chinese imports through tariffs, and then by restricting Chinese investment in critical sectors.
The trade war appeared to have been partially resolved by a phase 1 agreement signed in January. Under that, the US agreed to lower tariffs in exchange for Chinese pledges to purchase more US energy, farm products and manufactured goods, and address complaints about IP practices.
But the Trump administration has in recent months taken a number of steps to curtail economic relations. The Federal Retirement Thrift Investment Board, which
sino-american relations manages hundreds of billions of dollars in government retirement savings, has halted investments in Chinese companies. And after new security laws were imposed on Hong Kong, Trump said he would revoke the territory’s special trade privileges.
He’s even hinted at imposing new tariffs on China, which could blow up the trade deal.
Then there’s Huawei. The telecoms company has been central to the construction of high-quality 5G mobile networks around the world. But US intelligence agencies have accused it of being a front for the Chinese government, and operating in concert with the country’s intelligence services and the military.
The fear is that Huawei will use its access to spy on foreign citizens and construct backdoors into critical infrastructure — a charge it has rejected.
Its countercharge is that the US is bullying countries to hobble a competitor.
Washington has indeed pressured other countries to block Huawei. Japan and Australia banned the company from building 5G networks in 2018, and the UK plans to follow suit. Germany has all but excluded Huawei from its 5G networks.
Washington recently upped the ante, bringing in new rules — far more surgical — that prevent Huawei from buying computer chips made or designed with US equipment. Any company that wishes to manufacture computer chips to Huawei’s designs with US tools now needs to apply for a licence.
Analysts have warned that this could trigger a new phase in the struggle for technological supremacy — a tech Cold War.
The diplomatic war
The US is not alone in its unease over the rise of China. Mathias Döpfner, CEO of Axel Springer, a major German media company, recently made the case for Europe to “draw a clear line in the sand” and follow the US lead in rolling back economic relations with China.
But Trump’s almost contemptuous treatment of the US’S long-time European allies has made China’s diplomatic work easier.
Under Trump, the US has withdrawn from the Trans-pacific Partnership, and torn up the Paris climate agreement, the Iran nuclear deal and the international open skies agreement. He’s withdrawn the country from Unesco, belittled Nato and the EU, and threatened to withdraw from the World Trade Organisation.
For China, Trump’s unilateralism has some benefit. His decision last month to withdraw from the World Health Organisation (WHO), accusing it of kowtowing to China, is a case in point. Withholding funding from the world’s premier health body in the middle of a pandemic was not well received in the developing world.
Rather than engaging the WHO to force reform, Trump left the field wide open for China, which stepped up and announced it would contribute $2bn to fight the pandemic.
Competition for Africa
In December 2018 Bolton made a speech that still represents the most comprehensive statement on US policy in Africa by the Trump administration. In it, he painted Africa as an arena of great power competition between the US on the one hand and China and Russia on the other.
This alarmed many because though China’s footprint has been growing in Africa for the last 20 years, eliciting some mild consternation in Washington think-tanks, China and the US have had very different, sometimes complementary, interests on the continent.
China buys a lot of African oil, chiefly from Angola, Algeria, Nigeria and Sudan, which is a big percentage of the ballooning trade figures. The big energy producers in Africa, especially in the deep-water offshore fields and in liquefied natural gas, remain the Western majors. But the US buys very little African oil.
China has undertaken major infrastructure projects, which few American companies have shown an inclination to bid for. And China’s appetite for infrastructure minerals drove the commodities boom which boosted Africa’s high growth during the past two decades.
China has become a significant African creditor — Africa’s Chinese debt now stands at $143bn compared to the US’S less than
$3bn. This gives China additional leverage, though Bolton’s characterisation of China as a loan shark using indebtedness to take over, for instance, key parts of the Zambian economy is overstated.
The reality is co-existence. The US remains allied with or engaged in major African countries such as Ethiopia, Kenya and the DRC, which have significant Chinese investments and where China’s political engagement is actually quite low-key.
But as the world starts to resemble a global chessboard, and in the wake of the economic devastation of the pandemic,
Africa once again could become a pawn in their game as both China and the US have been battling for diplomatic supremacy on the continent.
Debt relief will be a high priority for many African countries, and a strong test of China’s relations with much of the continent. To date, China, along with other G20 countries, has agreed an eight-month suspension of debt repayments to at least 40 African countries. But this does not entail debt forgiveness or even restructuring at this stage.
Frankly, neither China nor the US is going to win a beauty contest, at least as far as African civil society is concerned, thanks to social media’s wide distribution of the videos of the murder of George Floyd in Minneapolis and police brutality at ensuing protests, and the mistreatment of Africans living in the Chinese city of Guangzhou.
But this kind of competition is not the point. African nations, poised for an economic reset, need to pay very close attention to the shifting global financial and trade relations and work on asserting the interests of Africans first.
African leaders need to set the terms for foreign players who want to do business on the continent and not allow Africa to become the site of great power competition. We should not be forced to choose who we do business with.
At the end of the day, competition between China and the US should not be Africa’s problem.
Chained together
How likely is it that the rhetoric between the US and China could develop into something more lethal? For now, Trump and Xi need each other. But keep a close watch — divorce is no longer unthinkable.