China doesn’t want a trade war either

REUTERS/Damir Sagolj
As Chinese President Xi Jinping signaled this week, China will cast itself as the responsible, forward-looking party — and then make just enough concessions to defuse the crisis.

Let’s not get too worried just yet that threats of retaliatory tariffs by the United States and China will ignite a damaging trade war between the world’s two largest economies.

Sure, it could happen. If recent months have taught us anything, it’s that anything is possible. But more likely, as Chinese President Xi Jinping signaled this week, China will cast itself as the responsible, forward-looking party — and then make just enough concessions to defuse the crisis.

Why? Because in some important ways, Donald Trump is the U.S. president China wants. He’s distracted, transactional and uninterested in human rights. He is frittering away U.S. global leadership, and his instinct is to shrink the U.S. global footprint — leaving China a lot of room to maneuver.

China could hurt Trump and the Republican Party this election year by imposing tariffs on soy beans and other farm products from the American heartland. Its selection of potential targets shows that it understands very well the pressure points of U.S. politics. But doing so would encourage a shift of power back to those more firmly rooted in traditional U.S. foreign policy.

If Democrats were to take back one or both houses of Congress this fall, the leading congressional voices would be loudly challenging Trump on international affairs. And if China were to dig in its heels on trade, it risks pushing Trump closer to his new national security adviser, the confrontational John Bolton.

It’s hard to know what to make of the news Thursday that Trump is interested in rejoining the Trans-Pacific Partnership, a trade deal that among other things is meant to put pressure on China to play fair. After pulling out of the deal just days after becoming president, Trump might see it as leverage in the trade dispute with China. Or perhaps it’s a way to assure farm-state voters. Or maybe he’s not actually serious about it. In any case, after other countries renegotiated the agreement to account for the U.S. absence, rejoining now would be neither quick nor easy.

If you’re in Beijing, what you probably want is for Trump to more or less continue being Trump. In his attraction to authoritarian leaders, his seeming lack of interest in the moral dimensions of foreign policy and his focus on deal making, he’s somewhat like you.

Where he’s not like you, in terms of focus and strategic thinking, his instincts work to your benefit. You do have long-term plans — to be the dominant power in Asia, and an alternative to the model the U.S. has provided for the rest of the world. You’ve just signed off on the 64-year-old Xi being president for the rest of his life, if he wants. In your perfect world, no one worries a great deal about democracy or about the internal affairs of another country.

With Trump backing out of the Paris climate accord, you staked a claim for leadership on climate change. When Trump talks tariffs and protectionism, you become the global champion of free trade.

Of course, supporting free trade is self-serving for China. It’s quite clear that even among those who oppose a trade war, many think China cheats much of the time. So it can afford to give a little now, allowing Trump to claim a victory and encouraging him to keep going down the same path.

In a major speech Tuesday, Xi promised to open up China to more imports and strengthen intellectual property rights. Trump declared himself “very thankful” for the pledge, and said that the U.S. and China “will make great progress together.”

Xi put those policy changes into a global picture, arguing for a new model of cooperative state-to-state relations. It would be naïve to expect China to suddenly become a model global citizen. Nevertheless, in contrast to Xi’s rhetorical appeal to principles, Trump comes across as petty and small-minded.

As a practical matter, when it comes to imports such as soybeans, it’s most likely easier for China – by far the world’s largest importer – not to risk disrupting its supply right now. Brazil has replaced the U.S. as China’s leading supplier. Its production and sales are growing. But America is still a very important No. 2.

If Trump concludes that he was able to pressure the Chinese into trade concessions, it probably won’t be long before he comes back for more. But having compromised once, it would be logical for China to try to stall him or tie him up in negotiations the next time.

The bigger issue is inconsistency. Like any other government, China would prefer to know where the U.S. stands rather than adjusting on the fly to what seem to be presidential whims. A bit of inconsistency in the White House can be a good thing for China because it keeps the United States from defining and pursuing goals. A lot of inconsistency is dangerous because it can lead to miscalculations.

There is an argument to be made for taking the risk, and trying to create as much chaos as possible in Washington. Here’s a bet that China lets Trump win this battle, and stays focused on winning the war.

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