Red Elephant in the China Shop

Donald Trump made tough talk against China a signature talking point on the campaign trail, claiming the Chinese would hurt the American economy through unfair trade practices. He promised to label China a currency manipulator on his first day in office and «to use every tool under American and international law to end those abuses immediately», speculating about levying 45% tariffs on Chinese imports to make up the USD 347bn trade deficit with China.

Now in office, Trump has to consider actualities. China, in fact, does not manipulate its currency (anymore), and there is little economic gain to be had for America from a trade war with China. Trump has tuned his rhetoriccorrespondingly. The stakes are higher for China than for the US, as China’s export market is more dependent on US demand than vice versa. Accordingly, Chinese president Xi Jinping’s remark at the World Trade Forum in January 2017 that «no one will emerge as a winner in a trade war», may just as well have been a call out to the (then-absent) Trump administration. When Trump and Xi finally met in person in Florida’s Mar-a-Lago on 6-7 April 2017, Xi further impressed upon Trump that «we have a thousand reasons to handle well the Sino-US relations, and not a single reason to handle them badly.» In the ensuing tough conversation, however, Trump urged the Chinese President to propose a 100-day plan to overhaul the Sino-US trade relationship and demanded «concrete steps to level the playing field for American workers.»

Taiwan, North Korea, South China Sea

Being lectured in such a manner, Xi Jinping might still have had in mind Trump’s phone call with Taiwanese Premier Tsai Ing-wen of last December; a not-so subtle challenge to the «one-China principle», according to which countries should refrain from acts that could be interpreted as giving Taiwan the status of an independent nation. Trump vexed Beijing on purpose. Although he later backed down and subscribed to the «one China principle», Xi got yet another dose of Trump’s impetuous decision-making right at Mar-a-Lago’s dinner table on 7 April when Trump informed him of a unilateral missile strike he had just ordered against the Syrian government.

The parallel to Kim Jong-un’s North Korea, another rogue state and adversary of the US, was not lost on the Chinese. North Korea’s nuclear weapons and intercontinental ballistic missile tests continue unabated, and the US military has expedited deploying the Thaad Antimissile System to South Korea as a reaction (despite Chinese reservations). Trump was also clear to Xi that the US would not solicit Chinese approval before taking military steps on North Korea, if need be.

In early March 2017, Trump stepped up the Navy presence in the South China Sea, another regional hot-spot near the Chinese homelands. China claims historic rights to these waters, which are widely rebutted by the adjacent states. The increased US military presence claims to secure the freedom of passage and to challenge these Chinese claims.

Trump the Plumber

Although tough on the outside, it must come as a relief to China that the Trump administration has largely abandoned the liberal internationalist agendafollowed by Barack Obama and likely to be continued and intensified under a Hillary Clinton presidency. Clinton’s «pivot to Asia» would have further nudged China’s regional neighbours away from China and toward the US, nurturing China’s age-old fears of being encircled and contained by hostile forces.

In contrast, president Donald Trump’s interest-based approach to international relations definitely strikes a chord among Chinese policy makers, and the US retreat from the Trans-Pacific Partnership Agreement (TPP) came as an additional sweetener. TPP ventures to set international trade rules in the Asia-Pacific region for the 21^st century without Chinese participation. TPP’s suspension, for the time being at least, increases the significance of the «Regional Comprehensive Partnership (RCEP)» in international rule making. RCEP is another comprehensive trade agreement between most Asian economies scheduled for conclusion by late 2017. RCEP includes China but not the US, and thus strengthens China’s stance in regional economic rule making, alongside the China-initiated Asian Infrastructure Investment Bank (AIIC) and China’s «one belt one road» 一带一路 yīdài yīlù initiative.

States in the Asian region, including long-standing US allies like Australia, might hesitate to support a bellicose US policy against China. If those two giants pick up a fight, it might well be for them to take the heat, as witnessed currently by South Korea. Also, Trump’s tit-for-tat approach to alliances might not win over many except the most desperate nations, such as Japan. If China adequately plies its economic charms, Asian states might reconsider in which basket to put their eggs. The Philippines’ turnaround away from the US (then still under the Obama administration) and towards China serves as an early and illustrious example.

Conclusion

The first 100 days of the Trump administration have revealed no vision for a China or Asia-Pacific policy beyond safeguarding America’s most elementary security and economic interests. Trump already softened his trade deficit-related demands in exchange for Chinese support in the North Korean issue. If China treads carefully enough, it is presented with a unique window of opportunity to redraft the entire economic and political landscape in the Asia-Pacific region in the slipstream of the attention-absorbing conflicts in the South China Sea and North Korea.