In the past few months, US-China relations have sunk to a state somewhere between frosty and hostile. This marks a major change since President Trump visited China in November 2017.
There are several reasons for this, one of which is not often noted.
The simple explanation is that President Trump got China to promise to fix the trade deficit and help the US apply sanctions on North Korea to force Kim Jung Un to negotiate ending his nuclear weapons and missile programs. But Trump soon became dismayed with the results of both.
Instead of the US trade deficit decreasing it increased. This was partly a product of the US economy improving and thus stimulating America’s demand for more Chinese products. It may also have been the result of Chinese leaders assuming that this was a long-term goal and acting on it quickly and energetically contradicted dealing with economic problems at home and unemployment in China.
Chinese leaders no doubt also coupled fixing the trade deficit with solving the North Korea problem and reckoned helping the US deal with North Korea meant they did not have to treat the trade deficit as an urgent problem. Anyway, they wanted to proceed cautiously on North Korea as they did not want to cause the regime there to implode; it was evident to China that Kim faced problems at home in meeting US demands.
President Trump was embarrassed and angry that the trade deficit grew. It also became glaringly evident that China’s “Made in China 2025” strategy launched in 2015 was on a collision course with President Trump’s “Make America Great Again” policy. The former would make China the foremost country in the world in advanced manufacturing and much more. Trump wanted to fix America’s economy and restore America’s global leadership in high tech and a lot more. Thus, the conflict grew.
Trump’s chosen strategy was to place tariffs on Chinese goods entering the US knowing China depended more on exports than the United States. He also understood the deficit was the cause of factories closing in the US, the loss of jobs, and a huge and dangerous debt, and that using shock treatment was the way to successful negotiations.
Thus, in March the Trump administration announced tariffs on USD 60 billion of Chinese imports. At the time Trump cited the results of a Section 301 (of the Trade Act of 1974) investigation into China’s unfair trade practices: disregard for rules on intellectual property, discrimination against foreign (e.g. American) firms, and industrial policies that favored Chinese companies.
The Section 301 report also named a Chinese government initiative as emblematic of China’s bad behavior: Made in China 2025.
The tariffs had a significant impact on China, both economically and politically.
Growth of China’s GDP slowed. Its stock market sputtered. There was a slowdown in construction. Productivity declined. There were increasing worries about domestic debt (now said to be 250 percent of GDP). The yuan fell and this threatened China’s influence in international finance.
Further, the government’s options in controlling the economy seemed to be in question. A USD 600 billion stimulus package in 2017 had created problems in the private sector and did not now seem a good idea.
Political problems followed the negative economic news.
President Trump criticized China openly for the trade deficit and spoke of more, perhaps endless, tariffs.
Chinese leaders felt compelled to answer tit-for-tat. China placed tariffs on American products exported to China. Fares on some items such as soybeans were aimed at Trump’s favorite voting constituencies. Meanwhile China’s media accused President Trump of launching a trade war.
China’s actions had an impact on the US economy and of its politics. In addition, it caused US friends and allies to warn President Trump he was causing a danger to world trade and what he was doing was wrong.
There was another variable affecting US China relations neither the media nor pundits linked to the current hostility and did not often discuss in this context. That is that the United States is in an election campaign mode.
During recent election campaigns China has been an issue. American politicians have found it convenient to portray China as a bogeyman. China’s rise is a challenge to the United States. Politicians also love scapegoats and during election campaigns China has been a favorite.
During the heat of the 1980 presidential election campaign Ronald Reagan castigated President Jimmy Carter for his weak and wrongheaded diplomatic recognition of “Communist China” — which Reagan said Carter did for political reasons notably his low opinion poll numbers. He lauded the Taiwan Relations Act that “corrected Carter’s mistakes.”
Reagan asserted he “would not betray friends and allies.” He even said on several occasions during the campaign he would support reestablishing diplomatic ties with Taiwan.
After the election the Reagan administration cemented a better working relationship with China than had ever been the case before. US military officers engaged with their counterparts for the first time. US defense and intelligence agencies worked closely with China on such issues as the Afghanistan war. Reagan approved the sale of dual-use high tech items to China. US Navy ships made their first visits to Chinese ports.
After the election, one can expect President Trump as other presidents before him will restore good relations with China. He still has a lot of goodwill in China.
Reagan never spoke again about restoring formal ties with Taiwan.
In 1992 candidate Bill Clinton blasted President George H. W. Bush for “coddling dictators” in China citing Tiananmen Square and mentioning specifically Bush’s sending a “secret emissary to toast those who crushed democracy in China.”
As president Clinton de-linked most-favored-nation trade status for China from the human rights issues. He said it was “time to take a new path.” Clinton later moved to establish a US-China strategic partnership and invited Chinese President Jiang Zemin to Washington for an official state visit — the first in twelve years. He then travelled to China for an unprecedented ten-day summit.
During the 2000 campaign George W. Bush excoriated President Clinton for his big “departure” on China policy from the campaign to governing. Specifically, he stated: “China is a competitor, not a strategic partner.”
In office Bush didn’t talk of competition and instead spoke of cooperation with China.
Barack Obama during the 2008 presidential election campaign criticized the USD 1 trillion debt owed to China and called China a “currency manipulator.” He rebuked China for violations of human rights and intellectual property rules.
Once president, Obama talked about “continuity” in US’ China policy and used terms such as “positive cooperative” and “comprehensive” to describe US-China relations.
The election in November 2018, while only a mid-term and should not be so important or so much about foreign policy, for a number of reasons it is otherwise.
First, the liberal Western media is on a tear against China. Its anti-China obsession is almost as strong as its anti-Trump syndrome. China is condemned because it is destroying the liberal world order and is substituting its own for it. China’s “order,” the media charge, is not democratic, not egalitarian, not focused on international law, etc.,
The “Beijing consensus” meanwhile challenged democracy on a worldwide scale. China’s much better economic performance than the Western democracies — even though democracy was supposed to facilitate economic growth — worked miracles in reducing poverty and maintaining social order and progress
China’s rise is thus a trend that needs to be reversed, says the liberal media.
Second, the Democratic Party needs some fungible election issues. That Russia gave Trump the election win in 2016 has grown shopworn and lacks credibility. Democratic Party strategists are in search of a topic to counter Trump’s record and his success in “making America great again.”
The US media and academe making China a “whipping boy” and portraying it as a menace to America is easy because Americans’ knowledge of China is superficial and is mainly provided by the liberal anti-China news outlets. Also, US’ China scholars are mostly on board and love to write about pollution, corruption, real estate bubbles, etc. in China and ignore China’s being the foremost nation in the world in green energy and its helping alleviate global poverty and economic growth as no country ever has.
It is also telling that the US sends to China less than 1 percent of the students China sends to the United States. The number is about the same as US students studying in Ireland. Should Americans not try to understand China better?
Alas condemning China is something for Democrats to grasp onto. The media and academe have laid the groundwork. Opinion polls show the number of Americans that believe China is a threat has tripled in the last year.
Third, Democrats sorely need to rationalize their hardly veiled racism against Asians, especially the Chinese, via their support for affirmative action especially as it manifests in discrimination against Asians in admission to America’s best colleges and universities.
The Chinese in America have recently underscored this issue by suing Harvard University for its racially biased admissions policies.
Recent opinion polls taken of the Chinese in the US show that they feel they are discriminated against in Boston more than any other American city — because of the numerous great universities there that deny equal or fair entrance to the Chinese. The Chinese have even been heard saying “liberals hate Chinese” because they are conservative in their views and dislike big government, high taxes, etc.
The upshot is President Trump needs to fight with China over trade lest the Democrats capture and fully exploit the anti-China issue during the election campaign.
In fact, he may even diffuse it since the left cannot agree with Trump on anything.
After the election, one can expect President Trump as other presidents before him will restore good relations with China. He still has a lot of goodwill in China. Also, Chinese leaders realize that the US cannot sustain the current trade imbalance or the debt it contributes to.
Finally, the nexus of good US-China relations is a sine qua non to maintain a stable financial world system, control nuclear proliferation, deal with the global environment, etc. Both President Trump and the Chinese leaders know this.