Most Americans are watching out for how President-elect Trump proposes to govern at home and what he intends to do. The rest of us, while considering that, are also paying attention to what his presidency might mean for international relations and foreign policy – nowhere more so than with regard to China.
If his rhetoric in the presidential campaign is to be believed, US-China relations are about to go downhill very fast under a shadow of possible trade wars and military tension.
But what should we believe?
We should remember how American and Asian leaders and thinkers have coalesced around the view of Asia’s significance in the global system.
In 1944, as the tide in the Pacific War turned in favour of the United States, Nicholas John Spykman, a US geographer and strategist, wrote The Geography of Peace. In it, he emphasised the strategic and maritime significance to the US of what he called the “rimland”: a vital part of which stretches from the Indian Ocean, across to the South China Sea and up to Japan and the north-west of China.
Spykman said that whoever controlled rimland would rule Eurasia, and guide the world’s destiny.
China knows this instinctively. Deng Xiaoping told Indian Prime Minister Rajiv Gandhi in 1988 that the next century would be the century of Asia and the Pacific.
China’s more recent foreign policy initiatives in Asia, naval build-up in and on islands in the South and East China Seas, and sponsorship of the Asian Infrastructure Investment Bank and One Belt One Road (OBOR) strategy – a sort of political and commercial renaissance of the old Silk Road – constitute further evidence of its designs as a regional hegemon.
President Obama’s “pivot to Asia” and the military’s view about future strategic challenges emanating largely out of the Pacific region and the littorals of the Indian Ocean corroborated Spykman’s judgement in the face of a rising China.
The Trans Pacific Partnership (TPP) trade agreement, which excluded China, was at the heart of the pivot. Unsurprisingly, even though the US and China have a mutually high level of economic, financial and commercial interaction, relations turned frosty as a result.
Now, on the face of it, Trump is about to pivot back to America.
He said he wants to abandon or change America’s trade agreements so as to protect US employment, and is opposed to the TPP.
More specifically, he has stated that China should be labelled a currency manipulator, which would then give his administration the authority to investigate the case for imposing tariffs on Chinese exports to the US.
During the campaign, he and his advisors referred to a 45 per cent tariff. This stems from the belief Trump and his team have that China, as well some others, “cheat” when it comes to trade – not only by maintaining undervalued currencies and covert export subsidies, but also with their looser labour and environmental standards that help to keep export prices low.
Last year, the US ran a trade deficit of around $370 billion with China, which is roughly 70 per cent of their total trade deficit.
Further, if the US lurched to a more overtly protectionist stance under the banner of America First and “national security”, it is highly likely they would also want to expand the remit of the Committee on Foreign Investment in the US to block or be more selective regarding the purchases of US companies and assets by Chinese companies.
But in acting like this, the US would be walking away from the liberal and relatively open global trade and investment system, for which it has stood since the end of the Second World War. The current stall in globalisation would quickly become a punishing reverse, and damage both the US and China in the process.
Such an anti-trade strategy combined with disengagement from Asia would hurt the US economy, and affect a part of China’s economy – the export sector – which is already stagnating.
China would not be happy if the US were to charge it with currency manipulation, but punitive tariffs – even if imposed at low rates and on specific sectors – would have a more dramatic impact. China would probably retaliate, or threaten to take the US to the WTO, risking a trade war that would completely sour relations between the two countries.
These developments would almost certainly reflect badly in China on President Xi Jinping, whose accumulation of authority and control leaves him vulnerable to major policy setbacks. All the more so as he prepares China for the important 19th Party Congress in a year’s time, where he hopes to push back opponents and get his own people to fill vacancies on the Politburo and the Standing Committee.
But US withdrawal would also open the way for China to fill the vacuum in Asia, by pressing harder for bilateral trade and security arrangements elsewhere in the region.
For example, with Malaysia and the Philippines and for ASEAN’s own, rather less sophisticated version of TPP called the Regional Comprehensive Economic Partnership. This would dovetail in several ways with China’s broader OBOR international relations strategy.
So the question is, would an American president make his country turn its back on Asia, given the great cost?
Perhaps it all depends on whether Trump turns out to be an isolationist, as his campaigning suggested, or a unilateralist, who is prone to follow his instincts in a bilateral, if random, manner with some determination.
His post-election contact with South Korean President Park Geun-hye, and his agreement to meet Japanese Prime Minister Shinzo Abe in New York today – his first face-to-face with a foreign leader – hint that he might yet acknowledge some basis for continued US engagement with Asia.
A summit with Xi Jinping in the first 100 days would also support that contention. It might, after all, be possible for Trump to threaten tariffs as a negotiating tool with China to lower the trade deficit, and to reach some sort of mutually chilly modus vivendi that could be packaged to US voters as a “win”.
No one knows yet what sort of president Trump will turn out to be, which, from an international relations standpoint makes his election all the stranger. And until we find out, the US-China relationship is hanging in the balance.