Trump in the China Shop

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Inflatable roosters, modeled on President Trump for the Year of the Rooster, Jiaxing, China, January 2017

The arrival of Donald Trump in the White House threatens a significant acceleration in the rivalry between the US and China. The deliberate but careful attempts of the Obama administration to push back against Chinese ambitions in the Asia-Pacific region are likely to be replaced by a new Trump approach that is much more openly confrontational, and more impulsive in style. Even before taking office, the new US president demonstrated his willingness to antagonize Beijing—by speaking directly to the president of Taiwan, something that all US presidents have refused to do since the normalization of relations between the United States and China in the 1970s.

If a direct military conflict between China and the United States does break out during the Trump years, the likeliest arena for a clash is the South China Sea. In his confirmation hearings before the US Senate, Rex Tillerson, Trump’s new secretary of state, signaled a significant hardening in the American attitude to the artificial islands that China has been building in the South China Sea. Tillerson likened the island building to Russia’s illegal annexation of Crimea and said that the Trump administration intended to let Beijing know that “your access to those islands is not going to be allowed.”

Taken at face value, that sounded like a threat to blockade the islands, on which China has been constructing military installations. China would almost certainly attempt to break such a blockade by sea or air. The stage would be set for a modern version of the Cuba missile crisis. The Chinese government’s official reaction to the Tillerson statement was restrained. But China’s state-controlled media was ferocious. The Global Times, a nationalist paper, warned of the possibility of a “large-scale war” between the United States and China, while the China Daily spoke of a “devastating confrontation between China and the U.S.” Independent observers had come to similar conclusions. Speaking to me in Davos a couple of days after Tillerson’s statement, Vivian Balakrishnan, the foreign minister of Singapore, warned that any effort at a US blockade in the South China Sea would lead to a war between the United States and China. The Singaporeans, who maintain close ties to both Washington and Beijing and whose natural style is cautious and technocratic, are not given to hysteria.

In an effort to calm the rising anxieties in Asia, expressed by the likes of Balakrishnan, James Mattis, Trump’s new defense secretary, used his first trip to the region in early February to reassure allies that the US is not planning any “dramatic military moves” in the South China Sea. But there are other influential voices in the new administration who clearly believe that a war with China is both inevitable and necessary. Stephen K. Bannon, chief strategist in the Trump White House, told a radio show in early 2016, “We’re going to war in the South China Sea in five to ten years. There is no doubt about that.”

A decision by President Trump to confront China over its territorial claims would represent a new development in the president’s thinking, for Trump’s most longstanding and profound concerns about Asia are economic. Conventional economic theory has long held that the growing wealth of Asian nations is a good thing for the United States, since it creates larger markets for American companies and cheaper goods for American consumers. But Trump and his advisers emphatically reject this idea. They blame the stagnation of the living standards of American workers on “globalism”—otherwise known as international trade and investment. Bannon argues that “the globalists gutted the American working-class and created a middle-class in Asia.” In his view, the increasing wealth of Asia, far from being a mutually advantageous process, has impoverished the United States.

During the election campaign, Trump was visceral in his denunciations of China, proclaiming that, “We have a $500 billion deficit with China…We can’t continue to allow China to rape our country…It’s the greatest theft in the history of the world.” Those who hoped that Trump would abandon protectionism after winning office were quickly disappointed. On the contrary, the new president placed protectionists in top positions in his administration. Peter Navarro, author of a book and film called Death By China, was appointed to head a new National Trade Council, based in the White House. Navarro’s intellectual ally and sometime coauthor, Wilbur Ross, was made Commerce Secretary. Robert Lighthizer, another noted protectionist, was given the job of chief trade negotiator.

Navarro’s film begins by urging viewers, “Don’t buy Made in China.” It points out the considerable loss in US manufacturing jobs since China joined the World Trade Organization in 2001, and blames this on a range of “unfair” Chinese trading practices, including lax environmental standards, currency manipulation, intellectual property theft, and illegal export subsidies. Some of the ills that Navarro highlights, such as commercial espionage, are real enough. Other complaints, such as the charge of currency manipulation, are outdated.

The broader difficulty with the Trump–Navarro analysis is that its promise to bring back manufacturing jobs to the United States is misleading. Advances in robotics and artificial intelligence mean that modern factories employ relatively few workers, compared to the past. Manufacturing employment is now leveling off, even in China, as robots replace people on the production line and the really low-skilled jobs migrate to poorer countries in South Asia or Africa. A protectionist drive by the Trump administration is likely to raise living costs in the United States without doing much to boost employment.

China would see the partial closure of American markets as a hostile act that threatened the health of its economy and thus its internal political stability. Overt American protectionism aimed at China would also mark a fundamental break with the strategy that the United States has adopted over many decades, based around the assumption that burgeoning trade with China would ultimately bolster America’s global leadership by creating a Chinese interest in the maintenance of a global order, designed and maintained in Washington.

A tilt toward protectionism under the Trump administration would also mean that the most important field of US-Chinese cooperation—trade and investment—would turn into an area of rivalry. With both strategic and economic competition mounting, the United States and China would be locked into an increasingly overt struggle for power in the Pacific.

The threat to Chinese interests posed by Donald Trump came as an unpleasant surprise to the government in Beijing. On a trip to China in September 2016, I found that officials there were adopting a position of studied indifference to the outcome of the US presidential election, which was then just six weeks away. (This made a strong contrast with the obvious Russian support for Trump.) Just beneath the surface, however, it was possible to detect a certain Chinese excitement at the idea of a Trump presidency. In part, this reflected official hostility to Hillary Clinton, whom the Chinese government blamed for the American effort to push back against Chinese power in the Pacific. Trump’s skeptical comments about America’s alliances with Japan and South Korea had also been noted with interest. Some in China wondered whether this meant that Trump’s America would be less interested in playing the role of “global policeman”—and would gracefully cede a “sphere of influence” in East Asia to China.

Most experts in Beijing dismissed Trump’s protectionism as mere election rhetoric. The Chinese also seemed curiously unconcerned by the Trump campaign’s commitment to build a 350-ship US Navy —a significant increase from the 270 ships of the Obama-era navy. And yet the most plausible reason for such a large increase in the American fleet is to give the United States an increased capacity to challenge China’s maritime claims in the South China Sea. In the days after Trump’s unexpected victory, Eric Li, a well-connected Chinese commentator, published a column in The New York Times headlined “How Trump Is Good For China.” Li confidently asserted that “Beijing is looking forward to change in Washington…The Chinese prefer a relationship with a United States that does not try to remake the world.”

But Chinese complacency about Trump lasted less than a month. On December 2, Trump had a ten-minute phone conversation with President Tsai Ing-wen of Taiwan—a call that reversed almost forty years of precedent. The US president-elect’s decision to speak to the leader of an island that China deems a mere “rebel province” came as a thunderbolt in Beijing. Chinese leaders, who had fondly imagined that Trump might tacitly acquiesce to China’s territorial claims in the South China Sea, found instead that America’s new leader had challenged them on an even more sensitive issue: the status of Taiwan. Behind the scenes, American and Chinese officials have openly discussed the possibility that their two countries might one day go to war over Taiwan. Much Chinese military spending—in particular investments in submarines and missiles—has been designed to prepare China for a possible invasion of Taiwan.

China's Foreign Minister Wang Yi and US Secretary of State Rex Tillerson, Bonn, Germany, February 17, 2017
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China’s Foreign Minister Wang Yi and US Secretary of State Rex Tillerson, Bonn, Germany, February 17, 2017

It is entirely possible that Trump was largely ignorant of the implications of accepting President Tsai’s call. An understanding of the importance of Taiwan to the Chinese government requires some knowledge of modern Asian history. When the Chinese Communist Party came to power in 1949, after securing victory in a civil war, the defeated Nationalists fled to Taiwan. Ever since, Beijing has seen Taipei as a rival center of authority—and has sought to isolate the government there. When the United States and China restored diplomatic relations in 1979, Beijing successfully insisted that Washington break formal diplomatic ties with Taipei.

In recent decades, the nature of Beijing’s anxiety about Taiwan has changed. Rather than worrying that the government in Taipei is plotting to regain authority in mainland China, the Communist Party has fretted that Taiwan might instead declare independence from China. This would contradict the official doctrine that there is only “one China.” The “loss” of Taiwan to pro-independence forces would profoundly undermine this official story. It would be a humiliation for the Chinese Communist Party that could well pose a threat to its continued rule.

The fact that China bitterly denounces any American contacts with Taiwan does not mean, in itself, that such contacts are wrong. The pretense that Taiwan is just a province of mainland China is increasingly absurd. The island has been governed separately since 1949—and has thrived economically. Modern Taiwan has an open and democratic culture that makes a pleasant contrast with the one-party state in mainland China. There is also a respectable argument that US presidents should not allow foreign governments to dictate whom they can speak to. As President Obama noted, just after the Trump–Tsai call, there is nothing intrinsically wrong with “taking another look” at US policy to Taiwan. But as the outgoing president also pointed out, “The status quo, although not completely satisfactory to any of the parties involved, has kept the peace… If you are going to upend this understanding, you have to have thought through the consequences.”

The suggestion that Trump had little understanding of the implications of his chat with the Taiwanese president was bolstered by his subsequent, humbling volte-face. On February 9, Trump endorsed the “one China” policy—something the Chinese government had insisted on before agreeing to a phone call between President Xi and President Trump. But that may not be the end of the matter. Tensions between Taiwan and China have increased following President Tsai’s election—and influential members of the new US administration are known to favor a much closer US embrace of Taiwan. In a little-noticed article published in July 2016, Peter Navarro argued that the United States should sell Taiwan submarines to counter China’s naval buildup, adding that, “We need to stop sacrificing friends like Taiwan to placate what is increasingly morphing from a trading partner and strategic rival, into a hostile enemy.”

This view of China as a “hostile enemy” is not one that Trump has explicitly endorsed. But Trump’s characteristic reaction to being challenged is increased belligerence. So when China complained about the Trump-Tsai call, the president-elect’s tweeted response was, “Did China ask if was OK to devalue their currency …heavily tax our producers …or to build a massive military complex in the middle of the South China Sea?”

Trump’s response was interesting—both for its belligerence and for its willingness to mingle security and economic issues. Traditionally, the US approach to Asia had maintained a rigid division between military and economic affairs. So America’s military commitment to Japan was never used as leverage in trade disputes between the two countries. Trump’s instinct seems to be very different. He sees military and security commitments as part of a connected set of issues that can be used as bargaining chips in a broad-ranging negotiation.

The implications for allies such as Japan—and for the Taiwanese—of this new Trump doctrine are disturbing, since it implies that their security could be traded away as part of a broader negotiation. The understandable euphoria among pro-independence forces in Taiwan that followed the Tsai–Trump call was mixed with apprehension about the future. What if Trump’s new approach provoked a military response from China? And what was to prevent the new American president from one day trading his support for Taiwan in return for concessions on trade by China?

If Taiwan becomes the trigger for a sharp downturn in US-Chinese relations, it will in many ways be an avoidable crisis. By contrast, a crisis over North Korea during Trump’s presidency may be unavoidable. The Kim Jong-un regime has staged a number of nuclear-weapons tests and is now estimated (by the South Koreans) to have an arsenal of up to twenty nuclear weapons. At the same time, the North Koreans have an active ballistic missile program. By the end of the Obama years, concerns were mounting in the White House that North Korea is getting dangerously close to being able to fit a nuclear warhead onto a ballistic missile that could hit the west coast of the United States. The usual estimate given was that North Korea was two years away from establishing this capability.

No combination of economic sanctions or diplomatic pressure has so far been able to deflect or destroy the North Korean nuclear program. There is, of course, a military option. The United States could bomb North Korea’s nuclear facilities. But, as Evan Medeiros, who ran Asia policy in the Obama White House, explains, any such action “risks the outbreak of all-out war on the Korean peninsula.” Seoul, the capital of South Korea, is within easy range of North Korea’s conventional artillery. And the last time that war broke out on the Korean peninsula, in the 1950s, it led to direct military conflict between China and America, as China fought to sustain its North Korean ally.

The growing urgency of the situation ensured that North Korea was one of three major topics discussed by Obama and Trump in their first meeting at the White House following Trump’s election. Trump’s initial comments on the subject suggest that he believes that increased pressure from China could force the North Koreans to abandon their nuclear program. It is certainly true that North Korea is desperately poor and hugely dependent on its wealthy Chinese neighbor. Yet the Chinese have always denied that they have the leverage to “deliver” North Korea. The real truth may be that they are loath to provoke a crisis in a dangerous and unstable neighbor—which also remains an ally, albeit an infuriating one.

The increasing dangers of the North Korean situation—and Trump’s own temperament—suggest that his administration may be much more inclined to try to force China’s hand over North Korea. That would be difficult under any circumstances. But gaining Beijing’s cooperation on North Korea could become impossible if the crisis on the Korean peninsula plays out against a backdrop of US–Chinese rows over trade, Taiwan, and the South China Sea. Faced with frustration over North Korea, Trump may be tempted to revisit some of the military options that were discarded by President Obama as too dangerous.

Trump’s unpredictability is a profound worry for America’s closest allies in East Asia: Japan and South Korea. Both countries know that they would be on the front line if a war were ever to break out on the Korean peninsula or in the South China Sea. So it was a considerable diplomatic achievement for Shinzo Abe, the prime minister of Japan, to be the first foreign leader to secure a meeting with Trump after the US presidential election. Abe was also at Trump’s side in Florida in early February, when news came through of another North Korean nuclear test.

While Trump was perfectly happy to pose for a reassuring photo-op with Abe at Trump Tower in November—and to play golf with him at Mar-a-Lago–his actual policies are considerably less comforting for Japan. Just four days after the November meeting with the Japanese prime minister, Trump announced that he intended to renounce the Trans-Pacific Partnership on his first day in office. The TPP is a painstakingly negotiated trade deal between twelve countries—with Japan and the United States as the two most important signatories. Abe had expended enormous political capital both to negotiate the TPP and to force it through parliament in Tokyo. For the Japanese prime minister, the significance of the TPP was as much strategic as economic. Like President Obama, he saw the negotiation of a giant new trade deal that included Japan and the United States—but very pointedly did not include China— as a way of heading off Chinese dominance of the Asia-Pacific region.

The Japanese government, like the Obama administration, understands that the likeliest route to a China-dominated Asia is commerce rather than conflict. Twenty years ago, America was the most significant market for all the major Asian economies, and Japanese multinationals were the largest foreign investors across Southeast Asia. But those days have gone. Now China is the most important trading partner for South Korea, Japan, Australia and most of the nations of Southeast Asia. Chinese investment is also increasingly important and attractive to neighboring countries in Asia. The “One Belt, One Road” policy promoted from Beijing—essentially an effort to promote Chinese investment in infrastructure across Asia — has further increased Beijing’s economic clout. As Abe and Obama both realized, the growing importance of Chinese trade and investment across the world has considerable geopolitical significance. Asian countries will be much less willing to confront China—or side with the United States or Japan in a territorial dispute—if their economic futures depend on goodwill from Beijing. 

Given the difficulties that many foreign companies still experience in China, it is still a slight stretch to describe the Chinese government as the world’s leading advocate of free trade. But it is certainly true that China moved smartly to take advantage of Trump’s torpedoing of the TPP. Within days, Beijing was energetically pushing a rival China-centered free-trade area for the Asia-Pacific region. Countries such as Australia, which had signed the TPP only to be jilted by the United States, were swift to express interest in the new Chinese initiative.

Trade is not the only area in which Trump’s “America First” policies offer China an opportunity to try on the robes of global leadership. When Trump threatened to pull America out of the Paris climate-change accords, the Chinese government was swift to warn the United States against this kind of unilateral action. China’s emergence as a more enthusiastic champion of global action on climate change than the United States would be a striking reversal of the pattern of the Obama years. It would also provide the government in Beijing with significant opportunities to forge international partnerships and to portray the United States as an irresponsible global power.

During the Obama years, the United States sometimes suggested that China was an irresponsible international actor whose actions on the climate, or the South China Sea, threatened the international order. Trump has presented Beijing with an opportunity to turn the tables. Now it is the United States that can be presented as an unstable and dangerous player, while China plays the role of the supporter of international norms and agreements.


Adapted from the preface to the American edition of Gideon Rachman’s Easternization – Asia’s Rise and America’s Decline: From Obama to Trump and Beyond, which will be published by Other Press on April 4. Text copyright 2017 Gideon Rachman.