Together, the U.S. and China make up 40% of the world’s economy, 23% of the world’s population, and 12% of the world’s land area. China-U.S. relations probably constitute the most important bilateral relationship on the planet. And today, with the election of President Trump, the already strained connection has been immediately and inevitably shoved into the spotlight. What will be Trump’s policies, and how will President Xi Jinping of China respond? How will those policies alter the lives of Americans, the Chinese, and the global economic and political landscape? The next four years, and perhaps more, will serve as the ultimate test for Trump, his administration, and the current Chinese government.
As a Chinese-American, I hope for increased mutual understanding, peace, and friendship between the two nations I call home. The largest developing country and the largest developed country in the world should work together to solve humanity’s problems and to strive for a better, more prosperous future. After all, it is in no one’s interest for a Cold War-esque escalation of military, political, and economic tension between the rising and established global superpowers. Today’s situation, however, is not as simple as a trivial de-escalation of strained relations or even a maintenance of the status quo, for the Trump administration’s stance on China is already beginning to alter the landscape of China-U.S. relations.
Trump’s “America First” ideology makes fundamental sense: to bring back jobs to US soil. To confront terrorism. To portray America as a leading global superpower. But the actions that follow these ideas should not damage other countries and should definitely not alter international relations for the worse. From an economic perspective, this is, unfortunately, already beginning to happen. The sentiment within the United States, and even in some nations abroad is increasingly leaning towards protectionism as opposed to free trade: of relative isolation as opposed to globalization.
Trump’s rhetoric on the campaign trail included a promise to slap a 45% tariff on Chinese imports and labeling China as a currency manipulator. Moreover, Trump has already terminated the Trans-Pacific Partnership, a trade agreement including much of the Pacific, which notably excludes China. A 45% tariff on Chinese imports would almost certainly lead to a trade war, where both countries would lose. China would lose jobs and its exports will be hurt, but American consumers will face higher prices, corporations will face rising costs, and even jobs may not be guaranteed.
According to the theory of comparative advantage, trade is beneficial to both parties. Each country should specialize in the industries that it is competitive at, and obtain goods and services in other industries through trade. America is competitive in many industries (high-tech, high-end manufacturing, and services, to name a few), but it is not competitive at labor-intensive manufacturing. Forcing a rebound in the non-competitive American industry of labor-manufacturing will only lead to higher prices for consumers and a deteriorating US economy. As such, Chinese workers would lose jobs in some industries, and America may gain some jobs, but the average American consumer would be severely hurt by massively increased prices on inexpensive goods. China, with a trade surplus with America, would most certainly struggle with its exports.
China, additionally, would most certainly retaliate. An op-ed in the Chinese newspaper Global Times stated: “A batch of Boeing orders will be replaced by Airbus. US auto and iPhone sales in China will suffer a setback, and US soybean and maize imports will be halted. China can also limit the number of Chinese students studying in the US.” Simply put, China may not need America as much as America needs China, at least from an imports perspective. China’s imports from the US can be found in other European countries with similar quality, but America’s imports from China cannot be matched at such a large scale. Chinese smartphone brands such as Huawei, Oppo, and Vivo are now among the top five smartphone manufacturers in the world, and Chinese consumers could easily buy European cars instead of American ones. All of these retaliatory actions may hurt the US more than a 45% tariff on Chinese goods would hurt China. In fact, even the stated goal of bringing jobs back to the US may backfire. In 2015 alone, Boeing sold $102 billion in planes to China, and China is predicted to buy over $1 trillion of planes in the next two decades to serve its rapidly growing aviation market. If China decides to replace new orders with Airbus, Boeing could lose much of its profit, and even worse, tens of thousands of its employees.
China-U.S. trade, at almost $600 billion in 2016, is too big to stop without far-reaching negative consequences. Chinese investment in the US in 2016 alone reached $45.6 billion, tripling that of 2015. And since 2000, Chinese investment in the US has created over 100,000 jobs for Americans. With a trade war, Chinese investment would likely stop, and those jobs would be lost. As President Xi Jinping said at the World Economic Forum’s Davos 2017 summit, “Pursuing protectionism is like locking oneself in a dark room. While wind and rain may be kept outside, that dark room will also block light and air. No one will emerge as a winner in a trade war.” Withdrawing from the TPP is evident of protectionism already being implemented by the Trump administration.
China, additionally, by consensus of economic experts, is not a currency manipulator, and is not artificially lowering the ratio between the Chinese Yuan (RMB) and the US dollar to stimulate exports as Trump claimed. That was a decade ago. Now, China has been doing the exact opposite – allowing the Chinese Yuan to grow stronger, thereby providing Chinese citizens with more purchasing power on an international stage and helping American exports. Such dangerous rhetoric, and actions if they are implemented, from Trump would only hurt the US and China-U. relations.
Of course, much of these possible policies are very much hypothetical, and may never be implemented. Trump may realize the consequences of imposing extremely high tariff barriers and forcing US companies to move out of China, and put an end to this speculation. And without doubt, China would also be hurt tremendously by a trade war. It truly would be a “lose-lose” situation.
Geopolitically, the new Trump administration is playing a dangerous and extremely complex game. Perhaps most outstanding is Trump’s recent rhetoric regarding Taiwan and the one China policy. In an unprecedented move, Trump and Taiwan’s leader Tsai Ing-wen talked to each other on the phone after the election, breaking 40 years of precedent – no US president has talked to a Taiwanese leader since 1979, when the US formally cut diplomatic relations with Taiwan for Beijing, under the one China policy. Beijing sees Taiwan as a breakaway province, and the one China policy is the formal acknowledgement that there is only one government of China, located in Beijing. Trump later defended this call, adding that he “fully understand[s] the ‘one China’ policy, but I don’t know why we have to be bound by a ‘one China’ policy unless we make a deal with China having to do with other things, including trade.” Such a move sparked outrage, both within the US and in China. Many complained that Trump did not understand the One-China policy, the bedrock of China-US relations and China’s primary condition for countries interested in formal diplomatic relations with Beijing. China’s state-backed Global Times, in an op-ed, wrote that Trump was “naïve like a child on diplomacy,” and the Chinese Foreign Ministry said clearly that the One-China policy is simply “not up for negotiation.” As a result, Trump’s relations with China were frozen for two months. Bonnie Glaser, director of the China Power Project at the Center for Strategic and International Studies, claimed that “President-elect Trump does not really comprehend how sensitive Beijing is about this issue.” Not honoring the one China policy would be a severe mistake for Trump, as it would severely deteriorate China-US relations, to a point where diplomatic relations between the two nations may even be terminated.
Fortunately, in Trump’s first conversation since his inauguration with Chinese President Xi Jinping on February 9th, “President Trump agreed, at the request for President Xi, to honor our “one China” policy,” said a White House statement. “The phone call between President Trump and President Xi was extremely cordial, and both leaders extended best wishes to the people of each other’s countries.” Put simply, this is the correct direction for Sino-US relations. Understanding and respecting each other is the first step to a better friendship. In this case, changing the status quo would be catastrophic, and Trump’s decision to honor the one China policy should be applauded. “Whether he likes it or not, he’s going to need to work with China on a lot of different things,” said former Ambassador Christopher Hill. “Trying to reopen things long since resolved like the ‘one China’ policy, you just don’t do that. The Chinese are not going to put up with that. But they have a lot of pragmatism. They’d like to hold their fire and have things calm down.”
The Trump administration may have, for now, restored normal relations with China on the Taiwan issue, but its geopolitical conflicts with China go beyond Taiwan. In Secretary of State Rex Tillerson’s confirmation hearing, he said, regarding China’s actions in the South China Sea: “We’re going to have to send China a clear signal that, first, the island building stops, and second, your access to those islands also is not going to be allowed.” Such words, if translated into actions, imply that the US may forcefully block the islands from China with a naval blockade. That seems awfully similar to the Cuban Missile Crisis in 1962, and may have vast, unintended consequences that could escalate into war.
The correct way to solve the South China Sea issue is not through military buildup or blockades, but rather, through diplomacy. And fortunately, there are indications that this will be happening. “At this time we do not see any need for dramatic military moves at all,” US Secretary of Defense James Mattis said in Tokyo regarding China’s island reclamation in the South China Sea, stressing that the focus should be on diplomacy. But we must all remain cautious, as the China-US relationship is ever so complex yet ever so fragile.
Interestingly, despite the Trump administration’s increasingly hard stance against China, China may actually benefit from many of Trump’s policies and actions. US withdrawal from the TPP, which notably excludes China, paves the way for China’s own economic initiatives that also are, without doubt, politically motivated. Chinese-led trade strategies “One Belt, One Road” (a modern Silk Road) and the Regional Comprehensive Economic Partnership (a 16-nation trade bloc that notably excludes the United States) will surface to dominate the Asian landscape, and the US may find itself in a situation that allows China to dominate the Asia-Pacific region.
Trump’s “America First” policy, in this sense, would backfire. China will not only gain more power in the Asia-Pacific region, but US-led global initiatives may falter, allowing China to lead the world on numerous issues. Trump’s stance on climate change, for example, may lead to Trump’s withdrawal or non-enforcement of the Paris Agreement, a landmark climate change agreement between 194 signatories, led by the US and China. Without the US, China would likely step up as the global leader of combating climate change. President Xi, in his Davos speech, said that “The Paris Agreement is a hard-won achievement which is in keeping with the underlying trend of global development. All signatories should stick to it instead of walking away from it as this is a responsibility we must assume for future generations.”
This type of neo-isolationism that Trump seems to suggest does in fact have historical precedent. China, at its height during the Ming dynasty in the early 15th century, exerted its culture and influence to the rest of the world through great fleets of ships led by famed admiral Zheng He. But soon after the ships returned, China isolated itself, built a wall in the north (the Great Wall), and European powers took over as leaders of the world. Now, as America retreats itself from the global stage, China is poised to expand its influence. Is this a lesson for Trump in the 21st century, with the sprinkled parallel of a border wall?
Only time will tell. For now, all we can do is implement a wait-and-see approach, and hope Trump and Xi will get along well. America should not seek to dominate China, for its efforts will backfire. But America should also not fear China’s dominance, for China has many of its own problems that it must resolve first. No country should promote its interests by putting down other countries, and Americans should understand that the United States may no longer be the only world power. President Trump’s campaign slogan was to “Make America Great Again.” President Xi Jinping widely uses the term “Chinese Dream,” referring to the “great rejuvenation of the Chinese nation.” It is natural that both countries should seek to improve the livelihood of its people, protect its security, and expand its influence abroad. But the relationship between China and the United States is the most important bilateral relationship in the world today. Both sides need to tread carefully, and most importantly, work together. A new Cold War is not the answer. Both countries’ well-being depend on their leaders’ abilities to cooperate with their counterpart. As China inevitably rises to become a global superpower, the US and China must share responsibilities to promote global peace and sustainable development, and work together to prevent wars, combat terrorism, and confront any threats to humanity. This bilateral relationship is incredibly complex, but there is one concept that is simple: only cooperation can lead to a better world.