The Evolving US-China Relationship in the Age of Trump

The first 120-odd days of the Trump administration have taught us to expect the unexpected. Events are moving so quickly, news and even White House officials are struggling to keep up with the new cycle. While speed and the uncertainty it brings are unsettling to many people in America, it is perhaps even more alarming to its diplomats, who have spent decades carefully crafting policies to shape the relations with both America’s partners and competitors abroad. Among these relationships, arguably none is more important than the one with China, being the defining geopolitical relationship of the first half of the 21st century given the potential of China to be a rival or an ally, and so none is more critical to keep on stable and manageable tram lines. As a 5,000 year old civilisation, China takes short-term events within the context of a long-term perspective of events and relationships and defines its strategies and policies accordingly. Its current leaders have a ten-year mandate to rule without the risks and distractions of mid-term elections or legislatives controlled by opposition parties and there has developed a continuity of vision regarding China’s development that has been in place since its opening up 35 years ago.

However, while China’s perspectives on foreign policy may be stable, America’s have proven to be anything but, especially under candidate and President Trump. During the election campaign, Trump appeared willing and even eager to overturn many of America’s foreign policy principles and the liberal international world order that they supported. In the early days of the Trump presidency, a sense of his foreign policy priorities and mode of operation are becoming clearer, particularly following the first US-China leadership meeting between Trump and Chinese President Xi Jinping in April. Accordingly, it is timely to take stock of how the world’s most important bilateral relationship might change over the near term and how it might reshape the Asia and the world too.

One would have thought that the core issues that define the US-China relationship remain unchanged, regardless of who happens to be in power in either country; namely bringing China into the fold of the international community of aligned nations, requiring a respect for international laws and agreements and working with them to deal with major global or regional issues. However, President Trump indicated early on that his view of those core issues was very different from his predecessors. Broadly speaking, President Trump’s vision of ‘America First’ has promised a refocusing of US priorities on domestic and regional issues, a re-negotiation of international positions to promote American interests at the expense of other nations, and a withdrawal from international action and leadership based on values. This approach promises a weakening of the current world order. Further, President Trump, a former New York real estate investor, has repeatedly espoused a transactional approach to governance issues and policy, with a focus on striking a series of ‘better deals’ for the US across a wide range of areas with ‘better’ presumably defined as one that strengthens the reality of ‘America First’. China’s priorities have also been shifting, albeit more gradually up to now. For much of its recent history, it has focused on its ‘peaceful rise’, characterised by economic development and engagement combined with studious non-intervention in regional and international security or political issues. While this strategy has served it well for decades, China today has already risen, and its scale and the scope of its global interests demand a more comprehensive engagement strategy with the world, captured by President Xi Jinping’s ‘China Dream’, which promises the great rejuvenation of the Chinese nation. The complementary visions of America First and the China Dream set the stage for a geopolitical playing field across which the US is retreating and China is advancing.

Seen through this lens, the core issues of the US-China relationship can broadly be put into three categories: Firstly, issues critical to both countries where the transactional nature of Trump’s leadership will require striking a deal or series of deals in a quid pro quo fashion; secondly, bilateral issues critical to China that the US appears to be de-emphasising, thereby giving the former more room to manoeuvre; and thirdly, issues that are global in nature where a US withdrawal provides an opportunity for China to assume a more important or leading role in the future. An analysis of the core issues, summarised below, highlights the quite profound implications for the relationship between the two most powerful players in the world today and how easily words can cost the US its primacy, making America First – which it already is – a far more tenuous proposition in the future.

Issues of Interest to Both the US and China, Most Likely to be Resolved Transactionally

I. US-China Trade Deficit

The Core Issue. While it has come down in recent years the US-China trade deficit remains the world’s largest, at US$347bn, fueled by US consumer purchases of Chinese made goods. And while China has been trying to wean itself off manufacturing and export driven growth and to transition its own economy to one of consumption, exports today remain a key contributor to the country’s economic stability, totaling more than 20% of the country’s net GDP in 2016, indicating that the deficit is likely to be a longer term one.

The Trump View. Some of the harshest rhetoric on Trump’s campaign trail was reserved for China, which was ‘raping’ America in trade and was as a ‘currency manipulator’. These views appear to have softened since the election, although on other matters (such H1-B Visas, Israel) the president appears to have softened and subsequently re-hardened and so China cannot count on the president’s position having actually changed. As far as China is concerned, for now, the Trump Administration has been largely silent on the trade deficit and almost entirely so on currency manipulation, other than President Trump’s recent claim that he had (single-handedly) gotten China to stop the practise. While Trump’s economic principles are clearly protectionist, including threats of tariffs on imports in the name of bringing jobs back to America, fundamentally though, he seems inclined to be seen as a great deal-maker, and he has repeatedly stated that he will get a ‘better deal’ from the bilateral relationship than his predecessors have.

Implications for China and US-China Relations. At heart, the trade deficit will not be undone by a trade deal, no matter how advantageous to the US it may be. A wide array of factors - China’s cost competitiveness, the consumption driven economy of the US which is reliant on low cost Chinese products, the industrial structures of both countries, and China’s relative poverty that make it unable to afford at scale many of the things that the US exports - all ensure the systemic and long-term nature of the trade deficit. In the absence of a fundamental economic (and probably social) restructuring of both countries, bilateral trade engagement will likely focus on series of tactical, tit-for-tat trade deals of limited scope. The US beef for Chinese chicken deal currently being finalised is a good example of what future deals might look like; namely, they will make little difference to the overall numbers. However, President Trump’s focus on ‘transactionalism’ and his need to be seen to have secured a ‘better deal’, even if in reality it is not, has the potential to create real strategic upside for China. With the president’s focus on short time horizons and a narrow definition of interests, China has a real opportunity to secure important long term benefits, since a ‘better deal’ from the president’s view could well entail securing significant, but short term, economic benefits in exchange for enduring diplomatic concessions granted to China.

II. Security: North Korea

The Core Issue. North Korea’s ongoing quest to develop ICBM capabilities with nuclear warheads has emerged as of the key security risks facing the Asia-Pacific region. With the stability of Kim Jong Un’s rule apparently dependent on a spiral of escalation and increasingly vitriolic rhetoric, the country appears to be set to continue to destabilise the region, to the detriment of both its opponents and allies. North Korea has been an uncomfortable ‘partner’ for Beijing, unstable in its actions and ungrateful for China’s support for it even in the face of blatant provocations and China effectively underwriting North Korea’s security. Unfortunately, China does not believe it has much choice in the matter of defending North Korea, which it believes it needs as a buffer state to US-allied South Korea; US ground troops stationed in a unified Korea could reach China’s capital Beijing in less than two days. Accordingly, China’s reluctance to apply significant pressure on Pyongyang has been one of the key reasons for the repeated failure of the six party talks designed to bring North Korea back in the fold of the Nuclear Non-proliferation Treaty, which it left in 2003.

The Trump View. Trump has elevated the question of North Korea to the absolute top of the US-Chinese agenda, even at the expense of many of the other critical issues laid out in this document. At their recent summit, Trump offered a favourable trade agreement if the PRC would confront the North, principally through tougher restrictions on economic cooperation. However, Trump subsequently admitted that President Xi Jinping had convinced him that resolving North Korea “is not so easy.” In parallel to trying to engage China, the US has indicated a seeming willingness to escalate a conflict with North Korea stating that all options, including military intervention were ‘on the table’, and sending a carrier group of warships to the region.

Implications for China and US-China Relations. China clearly has much to benefit from a de-nuclearised North Korea as does the US; while Pyongyang is still developing missiles capable of reaching the US, Beijing has been well within striking distance for over a decade. However, although China’s public position is that North Korea’s nuclearisation is a serious threat to China’s present and long-term national interests – the nuclear test site being used to detonate explosions is only a few kilometres from the Chinese border - the fact remains that China has taken no actions to reduce or remove this threat. An armed North Korea’s continuing value as a buffer to US-allied South Korea may therefore remain far more important to China’s perceived security interests. In terms of its position to date, China has supported what it calls a ‘dual track’ approach, calling for both the suspension of North Korean nuclear tests and US military exercises in the region, but has resisted US requests to consider additional sanctions above those put in place by the UN Security Council. With President Trump already having signaled the importance to the US of resolving the North Korean missile issue, Beijing has the potential opportunity to win an important concession in exchange for more active involvement pressuring North Korea. On China’s list may well be Taiwan, the Senkaku/Diaoyu Islands and the South China Seas in general.

Bilateral Issues Being Deemphasised by the US

III. Human Rights

The Core Issue. The propagation and defence of human rights globally has been a cornerstone of US foreign policy since the First World War. Although often more honoured in the breach than in the observance and often the victim of realpolitik, the US has still done more in defence of human rights in the past century than any other country. At a minimum, the issue of human rights has served as a point of pressure that the US has sought to deploy in what has traditionally been a layered and multi-dimensional engagement strategy with China.

The Trump View. Unlike his predecessors, President Trump has refused to speak out on issues related to China and human rights, and there is no record of it having been discussed during the recent summit with Xi. His repeated “When the students poured into Tiananmen Square, the Chinese government almost blew it. Then they were vicious, they were horrible, but they put it down with strength. That shows you the power of strength. Our country is right now perceived as weak.”
Donald Trump, Interview, 1990
praising and cultivation of strongmen with abysmal human rights records such as Putin, Erdogan, al-Sissi and Duterte is an undeniable shift in American foreign policy following decades of criticism from previous administrations. Of course, as the man who publicly praised China’s leadership’s show of strength in putting down the so-called Tiananmen ‘riots’, Trump himself is not in a particularly strong position to lecture China on human rights.

Implications for China and US-China Relationship. China faces longstanding issues regarding its record on human rights from a wide range of international organisation such as Human Rights Watch, which it has often disputed. Indeed, China’s current crackdown on corruption has gone hand in hand with an equally stringent crackdown on civil society . As it stands, the issue of human rights is set to play an only marginal role in the evolving US-Chinese relationship during this presidency and since its establishment takes decades of precedent, it will potentially be sacrificed as a pressure point and a bargaining chip for the future. While the topic still has support in Congress , without support by the administration, China will likely enjoy an unrestrained hand to continue to follow through on its own way of handling human rights.

IV. South China Seas

The Core Issues. China’s territorial disputes in the South China Seas with five countries have been a source of regional tension for over a decade. Following Obama’s pivot to Asia, the issue had escalated to one of global significance. Subsequent ‘freedom of navigation operations’ conducted by the US Navy in the disputed waters created on and off US-Chinese tension, as has the US support of the UN arbitration panel ruling in The Hague in 2016 which effectively denied China’s sovereignty claims over a large part of the region, a ruling China has refused to recognise.

The Trump View. While during the campaign Trump criticised China for building a “military fortress the likes of which perhaps the world has not seen," in the South China Seas and called Obama as weak for not defending US interests there, the Trump administration appears to be somewhat more ambivalent on the topic now. During the administration’s first 100 days, a US Navy request to conduct another freedom of navigation operation in the region was turned down by the Pentagon, and while the Navy has recently conducted one operation, the White House has indicated that they will no longer announce future operations before they occur and it is questionable whether operations will resume with the frequency they had under Obama.

Implications for China and US-China Relationship. The ASEAN countries involved in the disputes will unlikely be able to comprehensively defend their interests in the absence of a strong allied navy, and with if the US withdraws pressure from the region, China will have a free hand to continue its land reclamation and potential militarisation initiatives. With negotiations on resolving the issue on hold, China can continue to reclaim new land and create new facts on the ground, eventually winning the sovereignty disputes by default.

V. Taiwan

The Core Issue. The US has been Taiwan’s security guarantor since the establishment of the country, a role that even the shift of US diplomatic recognition from Taiwan to the mainland in 1979 has not shaken. The US role has been underpinned not only by the US pacific naval presence, but also by $46bn in arms sales to the island since 1979.

The Trump View. Again, President Trump’s ‘view’ on the issue has evolved since the election, when he broke four decades of diplomatic protocol by speaking directly with the Taiwanese president and questioned the US being bound by the ‘One China’ policy that has been the cornerstone of US-Chinese relations since the establishment of diplomatic talks under Nixon. Since the Xi-Trump summit last month however, President Trump has said that he would not speak directly with Taiwan’s president again without first checking with Chinese President Xi Jinping.

Implications for China and US-China Relationship. Trump’s reversal on Taiwan and the ‘One China’ policy is clear to please Beijing. Trump’s public announcement that he would first discuss further conversations with Taiwan’s president with President Xi first is an evident gesture of goodwill from the US to China and a signal if not for a broader reset, at least for the fact that the US will not rock the boat in cross-straits relations. This is clearly important for China, given that its own leadership seems to harbour a deep concern that China would fracture without the One China policy and that there would be mass unrest among the mainland Chinese public should they mismanage the relationship with Taiwan. US non-involvement or securing the status quo provides China with breathing room to formulate and execute a long-term strategy with regards to Taiwan (and continue to hold a firm line in Hong Kong, Tibet and Xinjiang), and while this is highly unlikely to involve physical force, in the past, China has shown itself willing to employ stringent sanctions and other economic pressures to coerce Taiwan’s cooperation to create increasing integration and dependencies.

Global Issues where China Has the Opportunity to Lead

VI. Global Free Trade and Governance

The Core Issues. For two generations, the US has lead the creation and sustainment of a rules-based international order in what has become an increasingly multipolar world. This has particularly been the case with regards to globalisation and trade, where it had led the development of the global trade and financial system and the continued free access to the global commons, air, sea space, and cyber. America has been a major beneficiary of this with its economy and corporations benefiting by the order it has underwritten. China, having for years benefited as a rule taker of international trade and governance institutions, has entered into a more assertive phase of engagement where it seeks to actively shape the wider economic environment in a manner aligned with its new status as a rising power. With the institutions underpinning free trade in need of reform and reinvention following the increasing western backlash against globalisation, this is a critical time for leadership in defining the next generation of trade rules and standards and if America is not prepared to do so, China may well rise to the fore.

The Trump View. As stated above, the President’s protectionist view of ‘America First’ runs counter to many of the principles underlying free trade. His abandonment of the Trans-Pacific Partnership, his stated desire to re-negotiate NAFTA, and his preference for bilateral deals over multi-lateral institutions generally, as well as his willingness to consider tariffs and trade wars as tactical measures all point to this administration seeking not to underwrite the global trade order and especially not the idea of America as the champion of ‘free trade’.

Implications for China and US-China Relationship. US abandonment of free trade leadership is a tremendous opportunity for China. Xi Jinping has already restated his commitment to global free trade multiple times and the country’s actions demonstrate its willingness to assume a growing part of the position vacated by the US. In the absence of credible US led alternatives, Chinese initiatives such as the Asian Infrastructure Investment Bank have the potential to become de-facto standard setters, allowing Beijing to reposition itself from a global rule taker to a global rule maker. Great Britain went from being the global trade leader and rule setter of the Pax Britannica at the height of its empire being to a rule taker within 50 years, during which its share of global trade and output fell from over 20% to under 5%. Nevertheless, it took two world wars the Great Depression and collapse of its colonial possessions for Britain to see its empire crumble and to cede its leadership position, while America appears to be determined to simply relinquish its position to China with nary a threat in sight.

VII. Climate Change

The Core Issues. Following a decade or more of stop and go progress on combating global climate change, including the only partially implemented Kyoto Protocol from 1997 and the failed Copenhagen Summit 2009, the world appears to have made a significant breakthrough in the 2015 Paris Agreement, which has been signed by 195 countries and ratified by 146. Signatories have pledged to reduce green-house gas emissions with the goal of holding in the increase in global average temperature to well below 2˚C above pre-industrial levels. The overwhelming majority of countries have recognised that tackling climate change is a major social imperative and so there has been growing soft power associated with leaders in managing this effort.

The Trump View. American leadership on climate change has always been tentative, even in the best of times. The country remains deeply split along party lines on the question of man-made climate change, despite overwhelming “We are determined to protect the planet from degradation, including through taking urgent action on climate change and encouraging all parties which have ratified it to fully implement the Paris Agreement” Chinese Communique on Climate Change 2017 scientific consensus in its support, and Republicans have sought to stymie any bold moves by Democrats to implement restrictions on emissions that they believe could hurt the economy even in the short- term. Donald Trump himself has on multiple occasions called climate change a “hoax invented by China”, a comment he later distanced himself from, and has appointed someone labelled a climate change denier "The concept of global warming was created by and for the Chinese in order to make U.S. manufacturing non-competitive." Donald Trump, 2016 as the head of the EPA , an agency whose budget is being cut by 30%, amid a wide range of rollbacks of environmental policies put in place by the Obama administration. Given these and other moves, current estimates suggest that US emissions will stop declining and that it will fail to meet the targets set by the Paris Agreement.

Implications for China and US-China Relationship. China is already positioning to seize the soft power that America is conceding and at the same time is seeing Climate change as an opportunity to build industry leadership in the technologies and know how that will be required to address this global issue. China is on track to meet its Paris Agreement targets. Moreover, it is taking an increasingly active leadership role in combating climate change. China has already made climate change core to its domestic political agenda and committed to the realisation of the economic, social and environmental changes necessary for increased environmental protection. China’s billions of dollars of investment in new-energy technology has the potential to pay rich future dividends, allowing domestic companies to take the lead in a new and increasingly important industry. However, for China to become a true global leader on the issue, it will need to make climate change a diplomatic priority as well, anchored in a comprehensive international engagement strategy, much like it has done with trade and investment. China has already taken initial steps in this regard: At the recent Belt and Road Summit hosted in Beijing, thirty countries led by China reaffirmed their support for the Paris Agreement and called on all countries to implement their commitments.

VIII. Global Capital Flows and Investment

The Core Issues. The US is not just the world’s largest destination of foreign direct investment, it is also the world’s largest source. US capital has been the single biggest contributor to global FDI for decades. Although its share of global capital flows has declined from over 25% in 1990 to under 20% today with the emergence and growth of China and other rapidly developing economies, US capital continues to be one of the primary engines of global growth. China has in recent years recognised the strategic nature and value of overseas investments, first for the acquisition of technology, brands and markets for its domestic economy and more recently in the form of large infrastructure investments to boost trade ties and to more closely integrate regional economic flows into its own orbit. Investment has therefore become a key pillar of China’s foreign policy, as evidenced by the creation of the Asian Infrastructure Investment Bank and the ‘One Belt, One Road’ (Silk Road) initiative, which aims to spend US$1 trillion in developing Eurasian land and sea links.

The Trump View. Under ‘America First’, President Trump has committed to spending US$2 trillion to renew America’s infrastructure, creating jobs and providing the foundation for a ‘renewal of American manufacturing’. With this plan currently unfunded in the current federal budget, the US government will need to entice significant local and private sector spending to finance anywhere near the targeted amount, providing incentives to capital that would otherwise be deployed elsewhere, including abroad. Trump’s focus on domestic job growth has already led a wide range of companies to announce significant investments in the US: Toyota spending US$10bn to build-out US operations, Apple’s US$1bn tech fund for advanced domestic manufacturing, and Intel’s US$7bn fab plant in New Mexico, US, are all commitments by global companies that presumably had other options on where to deploy capital. The flip side to this is of course that if American capital stays in the US, others will take its place abroad.

Implications for China and US-China Relationship. The US’s historic globalist view of trade and investment is a stark contrast to China’s developing nationalist investment strategy. Also, the US’s more mercantile return on investment return view differs from China’s approach; China sees the return on investment as including more than just financial gains and includes improved international relations, economic and regional stability, and increased trade. In fact, China’s broader and longer term approach to investment strategy is beginning to look a lot like the one pursued by the US following World War II and during the Cold War, using capital to secure peace, prosperity and leadership around the globe with the confidence that returns would follow. With the total investment scale of the Silk Road strategy at 11 times that of the Marshall Plan, China has shown that it can formulate and begin executing an ambitious investment strategy, one that will build its strategic influence in places like Central Asia and the Middle East, two key areas covered by the Silk Road strategy, improving its position vis a vis the US in these places. Given President Trump’s focus on attracting investment domestically, China even has an opportunity to improve its position in the US, where, in the past, its FDI has often been stymied by political and security concerns; Alibaba founder Jack Ma’s pledge to create a million jobs in the US through the company’s ecommerce platform, was warmly received by then President-elect Trump.

IX. Soft Power

The Core Issues. Soft power, the ability to attract and co-opt others as a means of persuasion, has been one of America’s greatest intangible assets of the past 70 years. Although hard cash and hard (military) power have been important parts of America’s policy toolkit, the propagation and spreading of its cultural and political values have been equally important in securing American influence across the world. Beyond the attractiveness of America’s civil society, its media, its brands and its consumer goods, soft power also consists of direct government actions, including humanitarian assistance, foreign aid, "We should increase China's soft power, give a good Chinese narrative, and better communicate China's messages to the world." Xi Jinping 2014 leadership in international initiatives and perhaps most importantly, the quality of life it underwrites for its own citizens, acting as a benchmark for others to aspire (or emigrate). American soft power has waxed and waned with different administrations, driven by both policy tools and outcomes, reaching a nadir under George W. Bush, followed by a what now appears to have been a brief revitalisation under Barack Obama. China on the other hand has in recent years learned that as its influence and power grows, image matters. Initiatives such as hosting the Olympics in Beijing and the Expo in Shanghai have not only showcased China’s emergence to its domestic population, they have demonstrated China’s development to the world, and its 500 odd Confucius Institutes around the world have aimed to bring an interpretation of ancient Chinese to other countries.

The Trump View. While President Trump has not addressed the issue of soft power directly, his actions have spoken louder than words. Proposed cuts to the State Department budget, foreign aid, alleged support for the break-up of the EU, exchange programmes and initiatives in support of global commons and immigration all threaten to reduce America’s ability to attract and influence others. And the slogan of ‘America First’ itself already implies a win-lose approach to the rest of the world while Trump’s travel bans damaged goodwill among citizens across the Muslim world (while Middle East allied governments mostly remained dismayed but positive), and striking a ‘better deal’ for America is widely understood to mean a worse deal for others. Trump’s priorities have been made abundantly clear and are well understood internationally, and while international views of the president are not a perfect proxy for soft power, his single digit approval ratings overseas is indicative of the decline in goodwill his administration will likely face in international engagements.

Implications for China and US-China Relationship. Building soft power has been recognized as a way to both soften the impact and reinforce the effectiveness of hard power, as well as lessening the need to exercise the latter too often. It is something the US has come to be seen as a leader of in modern times with its film and music stars, online companies and space missions making a huge impression on people world-over. China has, for all its efforts to date, had a mixed record in creating and applying its soft power. For example, Confucius Institutes at universities in Europe and the US have been terminated for their perceived interference with academic freedom given their strict guidelines on taboo topics such as Taiwan and Tibetan independence. With regards to soft power the best propaganda is not propaganda at all, a lesson China has yet to internalise. Similarly, China enjoys a high standing in many African nations, where it has served as the financing and development partner of choice for many years. But China has often failed to properly follow-up on the goodwill created from its economic activities and failed to counter narratives of economic exploitation and environmental pollution that its investments are perceived to have brought. China’s current leadership initiatives such as the New Silk Road, the AIIB and its proactive stance on climate change are huge soft power opportunities if played correctly. Most importantly, however, soft power emanates not just from government initiatives but from civil society, its creativity and its engagement with the world. As long as China’s leaders keep a tight leash on cultural activities, try to control information and crack down on its own civil society, it will continue to miss a key ingredient to successfully generate soft power, the projection of attractive values for others to aspire to and share.

Conclusion: A Shifting Relationship and Where It Might Lead

Stepping back, the current about-face of the Trump Administration does not mean there is a lasting reversal but it has opened China’s eyes to the possibility of a trade wherein their position could be much enhanced. During his recent visit to Beijing, Secretary of State Rex Tillerson used phrases to describe US-China relations that were consistent with a stream of positive comments from previous US official but were almost verbatim from earlier remarks made by President Xi in 2013, speaking of “mutual interests’ and the need for ‘win-win’ cooperation. China has long sought to define its relationship with the US as ‘a new type of major power relationship’, one between two equals who dominate Asia as a G2 group that can determine the fate of the region through bilateral agreement. While President Obama had decided that China needed to be balanced in Asia, Tillerson’s remarks will have certainly pleased Beijing as a tacit acceptance of parity between the two countries and a sign of America’s potential willingness to define its Asia strategy in the context of its relationship with China, rather than the other way around.

Regardless of the intent underlying “[a relationship] built on non-confrontation, no conflict, mutual respect and always searching for win-win solutions”. US Secretary of State Rex Tillerson, 2017 President Trump today appears to be implicitly giving up a lot of bargaining power by being silent on former core issues while explicitly going out of his way to praise President Xi in a move apparently designed to solicit “China and the United States should increase dialogue, enhance mutual understanding and respect and take care of each other's core interests and major concerns” Chinese President Xi Jinping, 2014 the remarks, the transactional nature of President Trump’s approach to dealing with China and international issues presents a unique opportunity for Beijing. China’s help in advancing his agenda, thus far, employment in the US and dealing with North Korea. Of the many things that President Trump appears to be ready to cede, hard power is associated with global trade leadership and the re-balancing of Chinese power in Asia. In parallel, ceding major levers of soft power, such as human rights and climate change, reduces the levers of American world leadership quite dramatically.

History shows that ground one cedes is hard to recover, especially if a rival moves in well and takes the territory. Although individually each of the concessions are big, together they represent a monumental shift of power. Much has been said of President Obama’s administration creating a power vacuum that allowed Russia to move into Syria and potentially secure a base in the Middle East. At this early stage, it appears that President Trump may be creating multiple vacuums into which China can move in to fill the void. While Russia is and may well prove to be a continuing disruptive force in the future, it has nowhere near the economy, financial clout or political potential of China. No doubt, given President Trump’s own mercurial nature, the reversal of nearly every concession seemingly made to date must be something globalists and Asian nations in particular may well be desperately hoping for and it is a factor that China needs to consider. Far more importantly, the transactional nature of Trump’s foreign policy outlook provides the potential for China (and other) patient and long-term opponents to make significant gains at America’s expense. With President Trump’s horizon currently focused on near term wins and his 2020 presidential re-election, China has the opportunity to trade temporary and short-term financial losses for significant long-term strategic benefits, e.g. opening China to US poultry imports in exchange for America’s official recognition of China strategic interests in the South China Seas.

Beyond the shifts in the bilateral relationship and the opportunities it brings for China to strengthen its position across a wide range of strategic areas, America’s more fundamental withdrawal from global leadership creates a gap that China can bridge. China has shown an increasing desire to be a rule-maker rather than just a rule taker in international relations. American withdrawal provides the opportunity for China to be an actual leader on issues, rather than a country seeking to create a bargain among many. This would require China to not only build international trust and credibility by securing the soft power that America cedes but also to shoulder some of the responsibilities the US has carried in the post-war world order – for example, in trade and security – and thereby gain the hard power territories that America cedes. Moreover, it would require China to exercise leadership that is non-zero sum, allowing others to make gains while benefiting China too.

Making rapid gains in global power is now a distinct possibility for China. And this requires a massive shift in mindset for a country that only five years ago was trumpeting its status as a developing nation and its peaceful rise on the basis of studied non-intervention. A number of barriers exist to the success of such a strategy; India recognises China’s opportunity and has been building its own links directly into the US, Europe has felt the threat of China’s advance and is wary of becoming dependent and Japan and other Asian economies are keen to draw in America into Asia and will find a substitute to the TPP to do so. A more likely scenario is Chinese dominance without leadership, with China exerting increasing influence over regional affairs searching for easy win-wins where possible while maximising value for itself wherever possible. America’s own willingness to cast off leadership in favour of bilateral engagements where it can bring its own dominance to bear provides China with a lesson that global leadership can well become a burden and it may well be better to fight for one’s own interest than to follow the slow and arduous path of building international consensus and enduring institutions.



1 See the May 2016 Sign of the Times:  The Trump Doctrine and the Future of American Power

2 See the March 2017 Sign of the Times  The Shape of the World to Come – Part III: The Path to a New World Order

3 Source:  Business Insider

4 Source: Donald Trump interview, 1990, referenced  here

5 See the March 2016 Sign of the Times:  The Logic Underlying President Xi’s Anti-Corruption Campaign

6 E.g. the recent bipartisan  Congressional Delegation on Protecting Tibetan Human Rights

7 See the September 2016 Sign of the Times:  South China Seas: With Greater Power Comes Greater Responsibility

8 Source:  The Diplomat

9 See the November 2016 Sign of the Times:  The Shape of the World to Come – Part I: How the World is Progressing

10 E.g. at Xi Jinping’s key note speech at the 2017 World Economic Forum in Davos, summarised  here

11 Source:  Intergovernmental Panel on Climate Change;  Quantifying the consensus on anthropogenic global warming in the scientific literature, Cook, J et al, which examined 12,000 papers on climate change over a 20 year period to conclude that that the number of papers rejecting the consensus on man-made global warming is a vanishingly small proportion of the published research

12 Scott Pruitt has denied both the impact of Co2 and mankind on climate change: “I think that measuring with precision human activity on the climate is something very challenging to do and there’s tremendous disagreement about the degree of impact, so no, I would not agree that it’s a primary contributor to the global warming that we see…No, I would not agree that [CO2 is] a primary contributor to global warming.”  Scott Pruitt interview with CNBC March 9, 2017

13 See the April 2013 Sign of the Times:  China’s Potential Green Future

14 Source: U.S. Direct Investment Abroad: Trends and Current Issues James K. Jackson Specialist in International Trade and Finance March 21, 2017, IMF

15 Source:  Pew Research Global

16 Source: China’s Confucius Institutes, Rectification of statues, Confucius as soft power, but the message gets confused at home, Printed in  The Economist

17 Source: Donald Trump ‘wants EU to break up in wake of Brexit vote’, outgoing US ambassador in Brussels suggests, reported in the  Telegraph

18 Source: Trump ban sparks MidEast anger and accusations,  BBC, 30 January 2017

19 Pew Research: cf George W Bush, who held 20-50% approval ratings during the start of his first term, or Obama at 60-90%.

20 Source:  The Asia-Pacific Journal: Confucius Institutes: Academic Malware November 16, 2014, Volume 12, Issue 46, Number1,

June 2017