Clash of titans
As Trump steps up threats, Beijing considers how hard to push back, and it could push much harder than many want to admit.
Greater confrontations between China and a Donald Trump-led United States are possible, as flashpoints could potentially intensify the animosity between the two superpowers, says a China scholar.
North Korea’s nuclear programme, the South China Sea disputes, and possible tensions over the Taiwan Strait heightened by the Tsai Ing-wen presidency could trigger conflicts between China and the US, noted David Shambaugh, professor of political science and international affairs at the Elliot School of International Affairs at George Washington University.
And although the economic interdependence between China and countries in Asia Pacific — and all the way to the US and the European Union — is a “significant stabilising force,” he says it is that economic interdependence between Britain and Germany at the turn of the 20th century did not prevent the outbreak of World War I.
“So economics is not necessarily a guarantor and, sometimes, can be a stimulant to further competition and conflicts. Trump seems to view economics in that way,” he said.
A more confrontational US stance has been reflected in provocative remarks by Mr Trump about a “negotiable one China policy”, labelling Beijing as a “currency manipulator” and threatening to slap 45% import tariffs on Chinese exports. Secretary of State Rex Tillerson has further stirred the pot with threats to block Chinese access to the man-made islands it has built in the South China Sea.
“We are going to see a more confrontational US policy toward China and the Chinese are not just going to sit there and take it,” said Dr Shambaugh. “They will push back and they have the capacity to push back and inflict pain on the US now that they have never been before.”
China has been setting up a “secondary architecture” to counter existing Western-dominated institutions and exert its role in globalisation. This is evident through the establishment of the Asian Infrastructure Investment Bank and the New Development Bank.
“The Chinese are good citizens in the existing post-war [World War II] architecture, but they are frustrated with it and, indeed, the world may have outgrown that architecture. So they are setting up an alternative, parallel architecture that has attracted many other countries to join,” he said.
China-led institutions are deemed as good alternatives amid rising uncertainty over the Trump presidency. To counter discussions of perceived threats from China, the government has also embarked on public relations diplomacy and built “soft power”, focusing on cultural links with regional countries.
“China has been spending somewhere around US$10 billion a year on what they call ‘external propaganda work’, that ranges everything from China Radio International and CCTV to Confucian institutions, placing advertisements in local newspapers, funding for universities, and bringing foreigners to China for conferences,” Dr Shambaugh said.
The Chinese saying, “internal stability, external pressure”, implies that if China is unstable internally then this would invite external pressure, which explains why Chinese authorities have emphasised domestic political stability in order for security to prevail, he said.
China is also using its increasingly powerful economic status as leverage for its own interests. This is reflected through how the world’s second largest economy has established economic links with the 10 Asean member states, so that they depend on China for economic prosperity.
“That is the strongest tool in China’s toolbox: money. And they know how to use money in the way Americans know how to use coercive pressure,” said Dr Shambaugh.
“The massive outflow of investments that we are seeing worldwide primarily [going] into continental Europe followed by North America and East and Southeast Asia. You may think there is a tsunami of Chinese money coming into Thailand, [but] that is nothing compared to what is flowing into the UK, Germany, France and the US at present.”
And while political stability is not expected to “crack up” in the near future, there are challenges ahead, he notes. Among them is the transition at the 19th National Congress of the Communist Party of China, which will take place in the fourth quarter this year, when the majority of the Politburo Standing Committee is poised to retire.
“This is one thing that we are going to have to watch as to whether they all indeed do retire or whether they change the rules,” he said, noting that these high-ranking officials were “incidental” to President Xi Jinping’s authority.
Against the backdrop of the new superpower rivalry between Washington and Beijing, middle powers such as Japan, South Korea, Australia and Asean must learn to speak with one coherent voice and refuse to be manipulated, said Dr Shambaugh.
There is a lot of scepticism about Asean in Washington, but Dr Shambaugh personally believes in the bloc’s ability to promote a development and security agenda as exemplified by how it has been able to defuse inter-state conflicts since the Cambodian-Vietnamese conflict in the 1970s.
But akin to other major powers, Dr Shambaugh said China has also tried to manipulate multilateral organisations for its own gain through active participation, as evident at the Asean summits held in Laos and Cambodia, two states highly vulnerable to Chinese influence.
In Phnom Penh in 2012, Asean foreign ministers for the first time failed the issue a joint communique on the prolonged South China Sea dispute. The failure was blamed on Cambodia’s close relationship with China. The summit in Vientiane last year also failed to mention the international tribunal ruling that rejected China’s claims to most of the contested waters.
Challenges for China loom on the economic front as well, especially if Washington acts on accusations of unfair trade practices through currency manipulation, according to Kasikorn Research Center in Bangkok.
Under the World Trade Organization (WTO) framework, the US could adopt countervailing duties, consisting of import taxes on certain goods aimed at preventing dumping or to counter export subsidies, on Chinese multinationals, said the Kasikornbank affiliate.
In such a scenario, electrical appliances, computers and electronic parts, textiles and apparel would be the likely casualties.
“US trade protectionist measures against China in the short run could incur losses of 2.4%, valued at $55 billion, for Chinese exports,” it noted.
“Policy uncertainties [in the US] could curb foreign direct investment (FDI) going into China, especially from American companies, which has important nearterm implications, as this could cause the Chinese economy to slow down further to between 6% and 6.2% [GDP growth] from 6.4% projected previously.”
“[The Chinese] know how to use money in the way Americans know how to use coercive pressure. ... You may think there is a tsunami of Chinese money coming into Thailand, [but] that is nothing compared to what is flowing into the UK, Germany, France and the US” DAVID SHAMBAUGH George Washington University