Trump's New Strategy Is America's Old Strategy: Gathering Allies
The newly-released U.S. National Security Strategy (NSS) is the most detailed document on President Donald Trump’s international agenda so far. It paints a sharp picture of a world order marked by growing strategic competition where China and Russia are seeking to “challenge American power, influence, and interests.” China, in particular, clearly appears as America’s main challenger economically and even geopolitically.
Although China was heavily criticized by candidate Trump during the presidential campaign, discussions with Beijing over the Korean peninsula in particular have so far been the main focus of the administration. The national security strategy suggests that Trump may be returning to his basic assumptions about great power competition, putting China back in the spotlight. In particular, the document underscores Trump’s desire to focus on trade, or rather, the unfairness of trade towards the United States.
In the context of China’s expanding influence and attempts to gain competitive advantages against the United States, the report notes that “China is investing billions of dollars in infrastructure across the globe” as it “exploits data on an unrivaled scale and spreads features of its authoritarian system.” The U.S.-China rivalry has rarely been so clearly expressed in an official U.S. strategic document.
This comes on top of ongoing efforts by the U.S. Congress, with strong support from the administration, to review the role of the body that reviews foreign investment in the United States—the so-called Committee on Foreign Investment in the U.S (CFIUS). Prominent administration officials such as Commerce Secretary Wilbur Ross are said to be in favor of a more aggressive review of foreign investments in the United States.
More surprising is the document’s mention of China’s “strategic foothold” in Europe, “where it is expanding its unfair trade practices and investing in key industries, sensitive technologies and infrastructure.” While warning against China’s expansion in Europe, the NSS is suggesting that America can cooperate with its European allies to “contest China’s unfair trade and economic practices and restrict its acquisition of sensitive technologies.”
Whether European leaders are ready to play ball with Trump against China is uncertain, however. Chinese foreign direct investments in the EU have been on the rise for the past decade, reaching €35 billion in 2016, according to the Berlin-based Mercator Institute for China Studies. This has included Chinese takeovers of companies in robotics, semiconductors, machine-tools, telecoms, agribusiness, food, as well as infrastructures such as ports, airports, railways and energy utilities.
There are signs that European leaders are beginning to wake up to some of China’s activities on their continent. The creation of a “16+1 framework” of cooperation between China and Central and Eastern European countries in 2011 has made Berlin and Brussels uneasy about Chinese intentions. Was China trying to divide Europeans by setting up its own club? Eleven countries part of the group are in fact EU members, in addition to others such as Albania, Serbia or Montenegro. After launching its “Belt and Road Initiative,” or BRI, China seems to increasingly tie the two concepts, while the EU and most capitals have been reluctant to offer full support to the BRI.
Secondly, Europe is slowly trying to define a joint position on Chinese FDI, although the European Commission had to compromise on a non-binding arrangement giving guidelines to national governments on FDI in sensitive fields. Following an initiative by Germany, France and Italy in early 2017 asking the Commission to rethink rules on FDI, President Jean-Claude Juncker spoke out in favor of more investment screening measures against Chinese takeovers. Germany is also reviewing whether to increase scrutiny of foreign investments. The EU Commission recently released a 465-page report accusing China of distorting its economy and calling for additional EU measures.
With the UK leaving the EU, opposition to protectionist measures in the EU bloc is also weaker. At the June 2017 European Council, countries such as Greece, Portugal, Poland and Hungary opposed any initiative to scrutinize Chinese investments, which the former Polish prime minister described as “protectionist.” Most of these countries have become strong partners of China in Europe and already received substantial Chinese investments or loans. Still, the debate is ongoing with some reasonable chances of delivering results.