from Asia Unbound

Trump and Xi Agree: Short-Term Gain for Long-Term Pain

Soybeans being sorted according to their weight and density on a gravity sorter machine at Peterson Farms Seed facility in Fargo, North Dakota, U.S., December 6, 2017. REUTERS/Dan Koeck/File Photo

Perhaps President Trump will succeed in reducing the bilateral trade deficit with China simply by reducing bilateral trade.

April 4, 2018

Soybeans being sorted according to their weight and density on a gravity sorter machine at Peterson Farms Seed facility in Fargo, North Dakota, U.S., December 6, 2017. REUTERS/Dan Koeck/File Photo
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China

Xi Jinping

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U.S. Trade Deficit

For a brief moment, the Trump administration knocked China’s policymaking community off-balance. This was not an easy feat. Most Chinese officials and think tank analysts have been around the block many times, have seen U.S. presidents come and go, and believe that they can outwait any early disturbance to the equilibrium. The Obama pivot was an unwelcome surprise, for example, but eventually Beijing countered with One Belt, One Road; and the advent of the Trump administration neutered the concept anyway. Yet, several days of meetings in late March with Chinese think tank and other experts in Beijing suggest that they are much less sanguine about their ability to understand and manage the bilateral relationship.

President Trump has introduced something new: not only unpredictability but also a complete lack of regard for the established rules of the game. And it is not simply one unpredictable move; it is one after another. To begin with, there is the Trump administration’s penchant to play hardball on the economic front. President Trump brought the Comprehensive Economic Dialogue to a screeching halt; has levied a series of increasingly punitive tariffs on a range of Chinese goods; and is encouraging reform of the foreign investment screening process in order to limit China’s opportunity to gobble up U.S. strategic assets. China sent its most well-liked (at least by the community of American economists and businesspeople) envoy, Liu He, to try to smooth the waters, but he was sent packing. After all, talking but not doing is page one of the Chinese playbook; and the Trump administration was determined not to fall into that trap. Make no mistake, however, the Chinese have quickly regained their footing. After a brief period of restraint, Beijing has responded with its own sets of tariffs. Now the two countries are in a race to the bottom with no end in sight. Perhaps President Trump will succeed in reducing the bilateral trade deficit simply by reducing bilateral trade.

President Trump’s decision to meet with DPRK leader Kim Jong-un was also a source of great consternation in Beijing. There was little understanding of why the president had decided to accept Kim’s invitation and not a little worry over whether China was being marginalized in the process. Yet China quickly figured out that the next best move was simply one in kind—a surprise meeting between Kim and Xi in Beijing. No matter that the meeting did nothing to promote the process of denuclearization and, in fact, undercut U.S. leverage in any future summit between Trump and Kim; Xi’s personal prestige mattered more.

Then there is the issue of the Free and Open Indo-Pacific and the revitalization of the Quad (an informal strategic dialogue among the United States, Australia, India, and Japan). Chinese scholars are bewildered by the concept—what geographic area does the Free and Open Indo-Pacific include? What is the content? Who is managing it within the U.S. bureaucracy? (Of course, while many American China analysts are fans in principle, we, too, are bewildered.) Until there is real substance to the initiative, Beijing doesn’t need to develop a counter. Thus far, China seems content to put a public happy face on relations with the other members of the Quad, despite the fact that those relationships are in a place that is somewhere between bad and really bad.

From a zero-sum perspective, some Chinese analysts see a bright side to the Trump revolution. They understand that the current U.S. leadership is failing to lead globally, failing to invest in the  technological future of the United States, and is incompetent in its leadership style. They follow the tweets and revolving White House door with a type of glee. There was much amusement, for example, surrounding the president’s mistake in saying that he wanted to reduce the bilateral trade deficit by $1 billion instead of $100 billion. From their perspective, the United States is leaving the field wide open for Chinese leadership. And while some Chinese may say that they do not want or are not ready for global leadership, what they really mean is that they are prepared to lead whenever it suits their purpose and are happy that the United States has made it so easy.

But there is another truth that is less palatable to many Chinese. While President Xi presents himself as more mature than President Trump—there is no impulsive tweeting of every dark thought and he is smart enough to realize that at least a pretense of caring about the rest of the world stands him in better stead than overtly stomping on others for some illusory win—really he is not. At heart, both are bullies, deploying threats and intimidation to terrorize others into doing their bidding. Xi’s response to Trump’s initiatives has not been a creative “win-win” solution but rather a “lose-lose” proposition. The relationship is spiraling downwards, and the risk of a miscalculation or accident is only increasing. The problem for both China and the United States, as well as the rest of the world, is that there is no adult who can give them a time out to reconsider their actions and learn how to reconcile their differences constructively. Instead, we may have to wait until they are so bruised and battered that we can throw them both out of the sandbox.

More on:

China

Xi Jinping

Donald Trump

Trade

U.S. Trade Deficit

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