Tag Archives: Donald Trump

The Sound Of Another Trump Flip-Flop

100 yuan notes

IT IS ALL going rather swimmingly for China with the United States right now. Following the happily smooth summit between President Xi Jinping and US President Donald Trump in Florida last week, the US president has said that China is not manipulating its currency.

During his election campaign last year, Trump had repeatedly accused Beijing of artificially driving down the value of the yuan to increase its export competitiveness, and had said he would label China as a currency manipulator on his first day in office.

His about-turn pre-empts the US Treasury’s forthcoming biannual report to Congress on the foreign-exchange policy of the United States’ principal trading partners: being designated a currency manipulator by the US Treasury legally triggers US Congressional sanctions against the offending country.

In the Obama-era, the Treasury had always found a way to avoid that, but the risk to China once Trump won the election last November was acute.

Trump now accepts that China has not been manipulating its currency for a while. His need to work with Beijing on dealing with North Korea — regardless of his previous comments that the United States would take unilateral action against Pyongyang if China failed to rein in its neighbour as Washington expected — appears to have helped clarify his vision.

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China-America First

US President Donald Trump and China's President Xi Jinping walk in the grounds of Trump's Mar-a-Lago resort in Florida, April 2017.

DONALD TRUMP MARKED his first meeting as US president with the visiting President Xi Jinping with a display of naked American power, Cruise missile strikes against an airfield in Syria in retaliation for the Assad regime’s chemical attack on a hospital. The timing was coincidental, if opportune, but it was an act of defining and defending national interest of which only one of the two superpowers is currently capable, let alone comfortable, in undertaking.

The signalling was palpable. Moreover, it was an action that also had many observers quickly connecting the dots to North Korea, a country Trump had threatened unilateral US action if China did not start to exert the control over its ally that Washington believes it can and should.

Xi’s visit was always going to be scrutinised for the subtle signs of a power play between the two men. The ‘optics’ would be as important as the outcomes. However, it also carried considerable domestic political risk for Xi, making the trip to the United States early in Trump’s presidency (and to a golf course resort, at that) with all the risk of Trump’s unpredictability providing a loss of face for no very certain reward. The deflection of much of the world’s attention elsewhere would not necessarily have been unwelcome.

It is hard, though, to imagine the trip was undertaken without assurances there would be some return. The pre-trip speculation was of an agreement, if longer on affirmation than detail, on a joint reset of tackling North Korea’s nuclear ambition and some public US affirmation to Beijing over arms sales to Taiwan and the ‘one China’ policy.

In the event, the publicly announced outcomes were more modest, though likely of Beijing’s design, a 100-day plan to discuss trade talks directed at boosting US exports and reducing Washington’s trade deficit with China, and an invitation to Trump to make a state visit to China, which the US president accepted for a date to be arranged.

Trade is the lowest-hanging fruit for restoring relations between the two countries to an even keel. The direction of travel favours more US exports to China, especially once the rebalancing of the economy to more domestic consumption takes hold, while the One Belt, One Road initiative, to which the United States has now been asked to join, offers the prospect for more business and investment than China can handle alone.

Difficult issues — North Korea, Taiwan, the South China Sea — offer scant prospect of early harvesting.

The agreement to trade talks is positive, in the sense that it shows Trump can be steered away from his fiery anti-China rhetoric of the campaign trail last year. Further evidence that the reality of office is taking hold over the rhetoric of candidacy is that the Trump administration has so far declined to carry through on pre-election threats to brand China a currency manipulator or impose punitive tariffs on Chinese exports to the United States.

That the US president said that he was willing to further strengthen cooperation with China in economy, military affairs and people-to-people exchanges and support China’s efforts in pursuing corrupt officials who had fled China with ill-gotten gains will all be taken as evidence of success by Xi’s team, whose overarching goal was to restore stability and order to the relationship so they can manage it. Trump’s description of his personal relationship with Xi as “outstanding” will have been a bonus, though Trump will likely find eventually that that friendship will come with trappings.

State media have been quick to present the Florida summit as continuation of policy between the world’s two leading nations. “Expanding win-win cooperation” and “managing differences” and developing “dialogue and cooperation between China and the United States in such areas as diplomacy and security, economy, law enforcement and cyber security, as well as social and people-to-people exchanges” represents a good outcome for Xi, even if it is not the language of concrete gains for American manufacturing workers that reverse trade deficits and job losses that Trump had previously told his blue-collar economic nationalist supporters he laid squarely at China’s door.

The harsh truth is that it is not that group that stands to benefit from growing US trade with China. The winners will be the same ones that were the winners from globalisation.

The longer-term win for Xi is that summit has steered one of the world’s most important relationships, that between China and the United States, further in the direction of an arrangement of international affairs that is based on bilateral relationships between great powers than the post-World War Two system of international rules — something Xi has previously described as “a new model of great power relations” and which aligns with China’s efforts to construct a parallel architecture for global governance with itself in the centre.

The US president, who seems to prefer to focus on winning battles rather than wars, may well not realise what his guest has walked away with.

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Trump Ups The Ante, But What Is The Game?

WHAT HAD SEEMED to be a passing storm in a teacup has blown up into a tempest.

Taking a telephone call from Taiwan’s president, Tsai Ing-wen, was one thing, especially when the US president-elect’s entourage subsequently played down the potential consequences. It did not signal a change of US policy towards China, they insisted.

But then the man himself upped the ante. He suggested that unless Beijing makes concessions on trade, America will consider abandoning the One China policy, the foundation of Sino-American relations since 1979 and which has allowed the world’s sole superpower to develop a working relationship with the world’s aspirant one.

What had been a restrained response on Beijing’s part hitherto, interrupted into anger, albeit channelled through the state-run Global Times, a publication that never misses the opportunity to blow hard about Chinese nationalism.

It has a reason, though, to suspect that there is an organised campaign to restore Taiwan’s a diplomatic status in the United States. Beyond the telephone call from Tsai, John Bolton, likely to be Trump’s assistant Secretary of State, is known as a China hawk, especially over the issue of Taiwan. Our man in New York sends word that Trump and Bolton met shortly before Trump dropped his hint that the One China policy was in jeopardy.

The extent to which Trump understands the ramifications of the United States abandoning the one China policy is unclear. Less so his advisers. They will know that Taiwan is a red line for Beijing. Trump, on the other hand, possibly regards his comments as no more than an opening bid in a trade negotiation.

In this scenario, Taiwan is no more than a bargaining chip. Beijing, however, sees Taiwan as a first domino that must not be allowed to fall.

Its default position is that the Americans are playing a long game, just as it would. If Taiwan goes, then Hong Kong might also be at risk, especially as there would be support from within the former British colony for any advocacy of Hong Kong independence.

More importantly, Tibet might be next; then possibly Xinjiang. America, this theory goes, is trying to pick apart China one province at a time and thus must be resisted from the outset.

What, though, can Beijing do, and especially against a man who isn’t yet president?

Its easiest option would be to stop supporting the yuan, making Chinese imports into the United States cheaper. That would skewer Trump’s accusations that China is a currency manipulator, at least in the eyes of economists, if not, perhaps, in those of the blue-collar Americans who supported him, in large numbers in the rust belt, in the election campaign.

It could also make life a lot harder in China for those American direct investors, particularly high-tech companies, who manufacture there to export back to the United States or to pursue the market share in China itself of which they dream.  China could also go after big-ticket US exporters to China, such as Boeing, by cancelling orders.

The hope that would be on both scores that US companies would apply pressure on Trump at home not to endanger the trade and investment relationship with China by insisting one following the reckless path of abandoning One China policy.

What Beijing has to do first, however, is to figure out Trump’s true intentions. That may be the hardest part of all.

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Donald Trump, Taiwan And Interesting Times

US President-elect Donald Trump. Photo credit: Gage Skidmore. Licenced under Creative Commons

NO ONE CAN accuse the president-elect of United States, Donald Trump (above), of hiding his antagonism towards China when he was on the campaign trail. He bluntly accused Beijing of “stealing” American jobs and manipulating its currency and was critical of it for “militarising” the South China Sea.

His prospective administration is packed with China hawks who believe that the Asia Pivot policy pursued by President Barack Obama has been a failure and prompted Chinese aggression in the East and South China Seas.

However, few expected the first point of confrontation between the forthcoming Trump administration and China to be over to Taiwan. By agreeing to take a telephone call from Taiwan’s president, Tsai Ing-wen, now seen as the result of a well-connected Taiwanese lobbying campaign in Washington, Trump drove a coach and horses through the basic tenant of Sino-American relations since 1979 when the United States broke diplomatic relations with Taiwan and acknowledged ‘One China’.

In doing so, he unexpectedly put Beijing on the back foot. Many had thought Beijing would test the new president once he took office in January. But Trump has struck preemptively.

Beijing has reacted relatively tamely. This may be a sign that it has been discombobulated by the potential for Trump to be unpredictable. It is likely to be deeply distrustful of the Trump administration as a result.

Unpredictability may become a hallmark of the Trump administration, as it was in his campaign. If so, that may prove as big a challenge to Beijing’s sometimes ponderous policymaking as the substance of Trump’s complaints against it.

We do live in interesting times.

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How Much Candidate Trump Will President Trump Contain?

Donald Trump seen in Washington, November 2011. Photo credit: Gage Skidmore. Licenced under Creative Commons

THE U.S.PRESIDENT-ELECT, Donald Trump (above), had few kind words for China during the presidential election campaign. He accused it of stealing millions of American manufacturing jobs and threatened protectionist tariffs against Chinese exports.

Yet to China he was the preferable candidate. His Democratic rival, Hillary Clinton, was seen, on the basis of having been seen at close quarters as U.S. secretary of state, to be no bosom buddy of Beijing.

The maverick nature of Trump’s campaign and his questioning of the basis of the United States’ traditional security alliances had, however, caused some optimism in Beijing that his election would weaken America’s international standing in the region and that his reservations about free-trade agreements would kill the Trans-Pacific Partnership (TPP), the economic prop of Washington’s ‘Asian pivot’.

However, set against that the uncertainty and volatility in regional affairs that a prospective Trump presidency will bring, in particular on the Korean peninsula. Beijing does not like uncertainty, and there less than anywhere.

Worse, long-cultivated contacts with the Washington China-policy and financial elite have been rendered for nought by the imminent arrival of a US president who at 70 has never held elected office and so has no track record, no known team and no known thought-through China strategy. Beijing also has reason to fear that Trump’s victory will put at risk the forces of globalisation that have propelled China’s economic and thus global ascendency.

It is unrealistic to expect that a Trump administration can repatriate low-wage manufacturing jobs. Those that automation and technology have not rendered redundant are already going to Vietnam and elsewhere in Southeast Asia if they are going anywhere as China ‘rebalances’. Moreover, China is only one aspect of the economic trends that are transforming the US economy in a way that leaves so many Americans, especially older, white ones, feeling left behind, a sentiment Trump so expertly tapped during his election campaign.

That is not to say that Beijing will not try to score points against electoral democracy, though it will not want to examine too closely the insurgence of rank-and-file voters against a ruling political class. Beijing is also unlikely to pass the opportunity to take an early measure of the next US president, probably by being more assertive in the South China Sea.

That, though, is a double-edged sword. It risks prodding Trump in the direction of politicising the issue rather than contesting it on legalistic grounds — such as through asserting freedom of navigation rights and using the UN Convention on the Law of the Sea. That approach, adopted by the Obama administration, has given Beijing scope to build its presence in the South China Sea with a lessened risk of direct US military confrontation.

Beijing’s scope for action now will also be tempered by the reactions of other regional nations to Trump’s election victory. Japan, for one, may see an opportunity to fill a potential vacuum both by building up its military capabilities and by being more active with its development aid and investment in the region. The Asian Development Bank, which falls under its sway, easily outguns the Beijing-created Asian Infrastructure Investment Bank.

South Korea, too, may end up with nuclear weapons from a Trump administration, a development that would be unwelcome in Beijing, not least because it ups the nuclear stakes on the peninsula, elevating the risk of instability that Beijing so abhors.

Further south, the Philippines, Malaysia, Thailand and Indonesia are all calculating where their strategic interests lie between China and the United States.

There has been a quiet (pace the Philippines new president Rodrigo Duterte) shift of emphasis towards developing stronger economic links with China while retaining Washington’s security umbrella. That shift will be being recalibrated in the light of candidate Trump’s criticism that US security partners are ‘free-loading’.

He is not the first US president to have made that complaint, but few have suggested that the US will take its umbrella away if its regional allies do not contribute their fair share to the costs.

Whether President Trump will take the same view as candidate Trump on this and all the other issues that touch on China is probably as much of a guess in Beijing as it is in the rest of the region, and even possibly, at this point, in Washington.

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