Tag Archives: Donald Trump

Xi And Trump Provide Temporary Relief

Chinese President Xi Jinping (R) meets with his U.S. counterpart Donald Trump in Buenos Aires, Argentina, Dec. 1, 2018.

CHINA HAS BOUGHT itself some time in its trade dispute with the United States, paying in farm goods, energy products and other industrial imports.

After a two and a half hour meeting over a steak dinner at the G20 summit in Buenos Aires, President Xi Jinping and US President Donald Trump called a time-out in the two countries’ tariff war. The United States agreed to suspend for 90 days the hike in tariffs to 25% from 10% on $200 billion of Chinese imports due to take effect on January 1 and not to introduce any new ones in return for purchases of unspecified but ‘substantial’ value of the above-mentioned goods.

Beijing and Washington will also step up talks on addressing broader structural issues the Trump administration has with China’s economy and body politic, although on those, Foreign Minister Wang Yi was somewhat ambiguous when he said these would cover ‘legitimate’ US concerns, leaving open a vast definitional loophole of what would count under that term.

It also looks as if Beijing has agreed to reverse its regulatory blocking of a proposed $44 billion takeover bid by Qualcomm, the US semiconductor manufacturer that is the world’s largest, for the Netherlands’ NXP Semiconductors that torpedoed the deal. However, Qualcomm has since said the proposed merger is dead.

Perhaps the most impactful part of the deal will be China’s agreement to designate Fentanyl as a controlled substance. The Chinese-made pain-killer is behind much of the opioid crisis in the United States, and one that disproportionately affectsTrump supporters.

In hailing the agreement as ‘incredible’, regardless of the fact that China had given up little if anything, Trump highlighted the positive impact it would have on US farmers, pointing up the most acute political pain point he is feeling at home from his tariffs.

But in truth, he is providing only temporary relief.

Ninety days is not much time to make any progress even on talks about talks on the intellectual property and market access issues. And all the time the threat of a re-escalation of the tensions will hang over discussions.

There might be some opportunity to revive (and rebrand) the agreement Xi struck with President Barack Obama that China would refrain from commercial cyber-espionage, which has, to all intents and purposes, collapsed. However, China will not abandon its ‘Made in China 2025’ industrial policy and will need to acquire foreign technology in support, by whatever means.

In short, the Buenos Aires agreement resolves none of the underlying issues of the economic let alone geopolitical rivalry between the two countries.

We are still in a position in which Trump is addicted to tariffs and Xi has no clear idea on how to treat him.

Update: Trump has tweeted that China has agreed to cut its 40% tariff on US car imports, which were anyway due to be reduced before the tit-for-tat tariffs started. Neither side had mentioned this in public while in Buenos Aires and China has yet to comment on the tweet.

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Washington Piles It On

IT IS BAD cop and bad cop, as far as the United States goes in the trade dispute with China.

Following US Vice President Mike Pence’s statements that not only would the United States not back down but might even double its tariffs on Chinese exports if Beijing did not mend its ways on alleged intellectual property theft and discriminatory technology licensing restrictions, US Trade Representative Robert Lighthizer has updated his department’s ‘Section 301’ findings to say that China continues to fail to alter its practices.

It was the original findings issued in March that triggered the initial US tariffs on $50 billion worth of Chinese goods, now expanded to $250 billion-worth.

It was also Lighthizer, before he joined the Trump administration, who had suggested that a case be brought against China under the World Trade Organisation’s Article 23, which would have much the same effect as throwing China out of the WTO as Kevin Hassett, chairman of the White House Council of Economic Advisers, has recently suggested should happen.

Is there a good cop waiting in the wings in the form of US President Donald Trump?

Expectations are rising in some quarters that a meeting between him President Xi Jinping at the G20 summit in Buenos Aires later this month will produce a ‘trade truce’.

Both sides could use a de-escalation of current tensions, but, equally, neither will back down on their fundamental positions.

At best Beijing will be prepared to make no more than cosmetic concessions that Trump can brandish domestically as evidence that his tough line has worked, even if real change is limited.

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China Can Be Content With The Trump-Kim Singapore Summit

 

North Korea leader Kim Jong Un (left) and US President Donald shake hands in the summit room during the DPRK–USA Singapore Summit, June 12, 2018. Photo credit: By Dan Scavino Jr. [Public domain], via Wikimedia Commons.

THE SINGAPORE SUMMIT between US President Donald Trump and North Korea leader Kim Jong Un was a quick-fire and highly choreographed affair, genuinely historic in just happening, but long on symbolism and short on substance.

It may turn out to provide the basis for the eventual denuclearisation of the Korean peninsula, though an equally long-term success would be the integration of North Korea into the international order as a nuclear power that played by international rules and norms.

Alternatively, it may all fall apart in time, as history provides some precedent.

But potentially it is a ‘reset moment’, although this Bystander is not alone in having no idea what Kim’s long-term game is.

For now, China will be pretty happy with where things stand. Kim has given nothing away that would concern Beijing. Meanwhile, the US president has tacitly followed the ‘suspension for suspension’ approach Beijing suggested all along once it was clear that the dormant six-party talks framework was going to be replaced by bilateral talks between Washington and Pyongyang.

Trump’s statements at a post-meeting press conference that the US would suspend its joint military exercises with South Korea and that the president would like US troops to leave the peninsula eventually (neither of which proposal was in the statement the two leaders signed at their meeting) would have delighted China. Beijing has long wanted a scaled-down US military presence in the region.

So, too, would Trump’s promise of security guarantees for the North Korean regime — China wants no outcomes that lead to either the unification of the Koreas or the collapse of the Kim dynasty, either outcome of which risks putting US or US-allied troops on its Manchurian border.

It will, no doubt, take the occasion when it arises to remind Seoul that Trump considered the joint exercises, or ‘war games’ as he called them, too expensive. From there, it will not be too far a stretch to put the idea in Seoul’s mind that the US president could have been suggesting that South Korea would be too expensive to defend in general.

Senior US officials, alive to the broader security implications of that for Japan and in the South China Sea, were quick to row back on that.

Most importantly for Beijing, no detailed plan or process for managing North Korea’s nuclear and missile programmes was laid out at the summit. The only commitment was to hold follow-on summit implementation negotiations, led by U.S. Secretary of State, Mike Pompeo, and an unnamed ‘relevant high-level [North Korean] official’.

This opens the door for all the interested parties, especially China, to turn that into an international effort for what will necessarily be a detailed and painstaking process of inspection and verification if the US aim of ‘complete, verifiable and irreversible denuclearisation’ is to be achieved. The considerable volume of regional diplomacy that has been underway for some months is, in a sense, preparation for that.

“A good beginning is half done,” a foreign ministry spokesman, said of the summit, adding that China wished to “support the two sides to implement the consensus reached by their two leaders, promote follow-up consultations, further consolidate and expand the achievements, and make the political settlement of the peninsula issue a sustainable and irreversible process”.

In other words, it wants a seat at the table. China has a pivotal role to play in as much as it has the critical hand on dialling up or dialling down the enforcement of international sanctions on North Korea.

Pompeo will visit Beijing on Thursday when Beijing’s ‘support’ will immediately be made available.

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Trump’s 540 Degree Turn On ZTE

THIS BYSTANDER FRANKLY admits to being confused.

US companies were banned earlier this year from selling components to telecoms equipment maker ZTE for seven years on national security grounds, export business worth several hundred millions of dollars. This sanction led to ZTE, which relied on US companies for up to 30% of the components of its phones, ceasing operations, prompting President Xi Jinping to ask his US counterpart to reconsider the penalty. US President Donald Trump then asked his Commerce Department to reconsider the penalty, seemingly as part of a prospective broader trade deal between the two countries.

Now, following criticism from both Democrats and fellow Republicans after the recent US-China trade talks that he is losing the trade war against China, Trump says what he wants is an additional heavy fine and a requirement that ZTE  “buy a big percentage of their parts and equipment from American companies”.

Wasn’t buying US-made components the national-security concern that led to the sanctions on ZTE in the first place?

We understand that US export sales and jobs are at issue, but we are still left scratching ourheads. But such contradictions seem to be the hallmark of Trump’s trade and foreign policy.

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China Is Back In The Korea Game

China’s President Xi Jinping (right) greets North Korean leader Kim Jong-un at the Great Hall of the People in Beijing during Kim’s visit to China from March 25 to 28. Photo credit: Xinhua/Ju Peng.

THIS BYSTANDER WAS was reminded this week that it was then South Korean president Park Geun-hye who was invited to the grand military parade in Tiananmen Square in 2015, not neighbouring North Korea’s still newish leader Kim Jong-un. Beijing considered North Korea an anachronistic problem state, and except for the oldest generations of Party cadres, held it in disdain.

Relations between Beijing and Pyongyang remained cold to the point that by last November, China was enforcing international sanctions against North Korea’s missile and nuclear programme with a severity never before applied. As China accounts for 90% of North Korea’s trade, that hurt.

US President Donald Trump’s bellicosity towards Kim (and vice versa) then gave cause for China to patch up its relations with North Korea. The prospect of a US military strike against North Korea threatened not one but two of China’s red lines — no regime collapse in North Korea that would send millions of refugees flooding into northern China and no US or US-aligned troops up against its borders.

When in May, Trump boldly accepted an invitation from Kim for direct talks, temporarily sidelining China from what had long been six-party discussions over the peninsula’s future, Beijing swung into action, seeing the gains in influence it had made in the region, in part as a result of the Trump administration’s broader regional disengagement, being at risk.

Kim left his country for the first time, taking his armoured train to Beijing, where President Xi Jinping accorded him full pomp and ceremony. As the Kim-Trump summit in Singapore on June 12 approaches, Kim has been back to Beijing. There were close discussions before US Secretary of State Mike Pompeo visited Pyongyang in April and again earlier this month and North Korean delegations are in Beijing in number.

China is clearly signalling that Kim will not go into the meeting with Trump alone; he still has a powerful friend in China.

Beijing will also undoubtedly have been coaching Kim on dealing with Trump in person. Beijing is finally getting a handle on the mano-a-mano dynamics of US foreign policy under the Trump administration (learning now starting to be seen to good effect in the US-China trade dispute, too).

Beijing will also be doing what it can to ensure that any deal Trump and Kim strike is acceptable to it. It will not necessarily want to position itself as the guarantor of an agreement ensuring the security of the Kim regime in return for whatever ‘denuclearisation’ Kim and Trump agree on, but it will want any deal internationally embedded. Ideally, it would like a six-party treaty signed off at an international level and enshrined at the UN.

It is unlikely to get all that but will be satisfied by a deal that gets the Korean question sorted out, or at least contained for a generation in so far as that means stability on the peninsula. A cardinal principle of its foreign policy is not to have more than one troubled front on its borders at any time.

To that end, it has also been warming relations with Japan, primarily, and India.

Full denuclearisation is less of a priority for China than it is for the United States. The crunch question is not about dismantling the North’s nuclear weapon building capacity but whether or not there will be some capacity for North Korea to retain what is already has.

The Trump administration will try to get Kim to agree to remove as many nuclear weapons as possible as quickly as possible. However, Kim will push actively to keep some warheads.

The deal will thus likely be a thin one, with North Korea keeping some of its nuclear capacity for some time but not expanding it, and accepting international inspections for verification of compliance.

The other factor in play is sanctions, which Kim will want lifting (or at the very least for China to stop enforcing). He will, though, have to make concessions on exporting cyber terror and weapons technology.

Kim is now politically secure at home and can turn to prioritising economic development, though he has not entirely quashed domestic opposition to this.

Beijing has a strategic interest in his primary partner being China, not South Korea. Stability, not reunification (South Korean President Moon Jae-in’s objective) is what Beijing wants to see on the Korean peninsula.

There is plenty of risk to all sides in the Trump-Kim summit. Trump is unpredictable, and Kim is an unknown quantity in such a setting. However, both men have invested a lot in getting a deal — any deal. Beijing is now doing what it can to make sure it is not a bad deal but also one that would enable North Korea to be integrated into Chinese-led regional structures more efficiently.

A failure of the talks would be the least welcome outcome. In that event, Trump would most likely resume his bellicosity and resort to US military action. China and North Korea have a mutual defence pact that runs until 2021, so theoretically Beijing would have to come to Pyongyang’s aid if Washington attacked. It is highly unlikely in practice that it would.

However, it could also play into Beijing’s hands if a breakdown in talks further damaged US credibility in Asia, opening more space for Beijing’s plans for security and economic partnerships in the region. There is opportunity as well as risk for Beijing in the outcome of the Singapore summit.

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Breakthrough Or Blunder, Trump-Kim Talks Trouble China

Composite image of North Korean leader Kim Jong-un (left) and US President Donald Trump.

CHINA HAS LONG held that talks are the only way to de-escalate tensions between North Korea and the United States. It now has talks — or at least the promise of them — following US President Donald Trump’s surprise acceptance of an offer to sit down with North Korean leader Kim Jong-un by May for a face-to-face discussion on denuclearization.

The White House confirmed the talks, as it does, by Twitter.

The downside of this development for Beijing is that it will not be at the table (unless by some chance it manages to host the talks), at least initially.

Foreign ministry spokesman Geng Shuang made the right supportive noises about ‘dialogue and discussion’ in response to the announcement in Washington by the South Korean officials who had recently met Kim in Pyongyang. However, it did not escape this Bystander’s notice that he also slipped in a call to start multilateral meetings to advance the process of peacefully resolving the Korean nuclear issue, and that China would continue to make efforts on this.

Beijing will, of course, welcome the sudden prospect of diplomacy after months of belligerent invective between ‘the Dotard’ and ‘Little Rocket Man’. It will also be conscious that that diplomacy may be short-lived; it is difficult to be certain of Kim’s motives, and the history of arms control negotiations involving Pyongyang argues for caution about possible outcomes.

The previous attempt to get Pyongyang to disarm by negotiation was the Six-Party Talks involving the two Koreas, China, Russia, the United States and Japan that followed North Korea’s first nuclear weapons test in 2006. The deal on the table was that Pyongyang would shut down its nuclear and programme in exchange for aid and sanctions lifting. However, what could not be agreed was how to verify the North’s compliance. The talks broke down in 2008. Pyongyang resumed nuclear testing the following year, and Beijing signed on for the first time to sanctions against North Korea.

This time around, Beijing perhaps as much as Washington will be wary that Kim is again just buying time. And its red line remains no North Korean regime collapse that ends up with US or US-allied forces on its border.

The risks in bilateral talks between North Korea and the United States, should they turn out well (at this point a long shot, to our mind), is that North and South collectively end up more aligned with the United States and less with China, providing Washington leverage to use North Korea as a strategic balancing power in the region, a role that would give Kim some of the aggrandisement he craves.

The Global Times, a voicepiece on international affairs for the Party, noted that “as a major power, it is unnecessary for China to worry about North Korea ‘turning to the US’” — a comment that suggests Beijing is worried about just that.

Talks driven by Seoul, Pyongyang and Washington sideline Beijing, not a comfortable position for ‘a major power’.

Perhaps the best analogy for the latest developments is a chess match. Kim has just made an audacious move, which he will have thought through carefully. Trump has responded instinctively. We do not yet know if one or both men have played the breakthrough winning move or have blundered badly.

If Trump comes to feel he has been deceived or belittled, he will likely retaliate punitively. And that may be the worst outcome from Beijing’s perspective of a match at which, for now at least, it is on the sidelines.

For one, it would test Beijing’s commitment to implementing its 1961 Friendship treaty with the North that obliges it to intervene on Pyongyang’s side in the event of military ‘aggression’.

While we have been here before with the Six-Party Talks, what may different this time is that the North now has nuclear weapons that can reach the mainland United States. Historically, after they have acquired a nuclear arsenal, ‘rogue’ nuclear states, move onto legitimising their nuclear status and then finally to casting off the sanctions they incurred along the way.

If Kim is preparing to take the second step and Trump thinks he is stopping Kim from taking the first, where does that leave Beijing?

Arguably it still maintains the most leverage of any of the involved parties over its neighbour. But how can it use that to broker a compromise that provides the regional stability that it most desires within a multilateral framework to deliver it in which it can play a leading role when it is not in the room?

In that regard, much may turn on the personal relationship between Trump and President Xi Jinping, who again talked on the phone on Friday with Xi nudging Trump to develop bilateral talks with Kim into multilateral ones.

As we have noted before, Beijing has two sets of relationships to manage, one with Pyongyang and the other with Washington. Both have highly unpredictable players on the other side — and now both those wild cards are going to sit down together.

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A President At Court

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

IT IS THE time US President Donald Trump spends in Beijing that will be the most critical part of his more-than-weeklong tour of five Asian countries that he started this weekend.

To the other four countries on his itinerary — Japan, South Korea, Vietnam and the Philippines — he will offer some measure of assurance that the United States’ traditional security guarantees to the region can be squared with his ‘America First’ economic nationalism.

Trump’s withdrawal from the Trans-Pacific Trade Partnership (TPP), a cornerstone of his predecessor Barack Obama’s ‘Asian pivot’, has been deeply felt with some concern across the region. Nowhere less so than in Japan, where Prime Minister Shinzo Abe had invested considerable political capital in TPP and must now still assume the role of the principal regional counterweight to China.

The Trump administration is increasingly referring to the region as the Indo-Pacific, not Asia-Pacific, to diminish the Asia part, which to most Americans implies Chinese. The two regions are not the same to a geologist or marine biologist,  but the co-option of the term by geopolitical strategists is blurring the distinction. However, it will take more than rebranding to assuage Asian allies’ anxieties.

In Beijing, the mood will be very different. Trump will be pampered and feted at the court of ‘the King of China’, to use Trump’s phrase. The US businessmen accompanying the US president will sign multi-billion dollar sales deals that will help to diminish China’s trade surplus with the United States, but in designated sectors, notably energy, of Beijing’s not the free-market’s choosing.

Discussions about North Korea have potential to be contentious, but Trump may well find himself an uncharacteristically restrained guest as Xi holds to China’s ‘dual approach’ line and stresses the need to get all parties back to the negotiating table.

Most of all Beijing will project the visit of a meeting of two superpowers, who will jointly “map out a blueprint for the development of bilateral ties in a new era”, as Vice Foreign Minister Zheng Zequang puts it. China-America First, perhaps, but every photo opportunity will be carefully used to convey which of the two leaders is the great draftsman.

It is a formula that worked well for China when Xi visited Washington in January. On these trips, the optics are as, if not more important than the outcomes.

As soon as Trump has departed Beijing, Xi will head to the Asia-Pacific Economic Cooperation (APEC) summit in Danang in Vietnam. Trump, too, will be there, and the allies and adversaries on both sides will make their judgements about which of the two superpowers will figure most prominently in their lives.

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