The election of Donald Trump as the forty-fifth president of the United States has raised new questions about the future direction of U.S.-China relations, more than any election in recent history. None have been more perplexed and uncertain about what this means for the future of the world’s most important bilateral relationship than foreign-policy observers and officials in Beijing.
The change in U.S. administration comes at a particular sensitive time for China’s leadership. The message from Chinese delegations visiting the United States, and conveyed via state media, is that the Trump administration would be well served to avoid provoking China, especially in the near term. A sudden escalation in an already strained relationship could harm the prospects of President Xi Jinping’s reelection, scheduled for October 2017. According to Chinese media reports, Xi will be especially inflexible while he has to fend off his own domestic critics and secure political support from inside the Communist Party, especially among hard-line factions.
This week, Beijing breathed a sigh of relief when Secretary of State–designate Rex Tillerson told the Senate Foreign Relations Committee January 11 that “I don't know of any plans to alter the One China position.” Better still was Trump’s public comment earlier in the week, while standing next to Chinese billionaire Jack Ma that Ma’s Alibaba, might be able to create one million new jobs for Americans by selling U.S.-made products through the massive Chinese e-commerce platform. It’s also worth noting that Trump himself has never called for direct confrontation with China—merely tough negotiations.
“When dealing with China,” Donald Trump declared in his 2016 campaign book Great Again , “we should stand up to them and remind them that it’s bad business to take advantage of your best customer.” In the same book, he wrote of his admiration for China’s negotiating skills, and said he wanted to appear “unpredictable” to the Chinese. In this, he has richly succeeded. His tweets have caused the Chinese state media to issue unusually defiant warnings that Beijing is “invulnerable” to a trade war and that “core” issues of sovereignty are “non-negotiable.”
When China issues warnings like these, it heightens the stakes for negotiations and raises the specter of a misunderstanding or miscalculation on China’s part. But because of the new “strategic ambiguity” of the incoming administration—or “unpredictability,” as Trump would call it—there is a possibility that China may make once unthinkable concessions toward what is likely to be the new administration’s most important demands of a new bilateral relationship: eliminating its unfair trade practices and reducing our trade deficit. After all, President Xi Jinping has already claimed he opposes all protectionism by any nation, as recently as his major speech in Lima, Peru in November. In December, China’s State Council approved measures to expand foreign investment in banking, securities, insurance and futures trading, and hinted that other sensitive areas will be opened up, including telecommunications and the internet. This is a small step toward abiding by international trade norms that require full reciprocity in bilateral investment.
As the world’s second largest economic superpower, China holds the key to boosting American growth. Indeed, China, perhaps more than any other country, can help us create jobs, stimulate investment and drive growth. But that requires China take a sharp turn away from its brutally mercantilist policies that advantage its workers over ours and flout the norms of international trade. It requires ending China’s unfair trade practices and making trade compromises. China’s policies rank it as the worst offender on ITIF’s Global Mercantilist Index .
Niall Ferguson has sagely argued in the American Interest that China can be part of a stable world order among the five members of the UN Security Council—if Washington and Beijing can avoid confrontation. Indeed, the risks of a global conflagration between two of the world’s biggest and most well-armed nations are too great to consider any other alternative. It’s also why, in the short term, we should pursue a time-limited policy of avoiding conflict with China. Six areas of outsized importance to President Xi and the ruling elite have been revealed in Chinese publications, and by delegations seeking insight into the future Trump administration.
1. The “One China” Policy and Taiwan
Nothing has received more treatment in the Chinese media about Donald Trump than questions about future U.S. support for Taiwan and the possibility of renouncing America’s long held “One China” policy. It is China’s number one fear. Trump was correct that there is no treaty or binding agreement, only a series of nonbinding communiqués that deal with the issue vaguely. Trump did not directly oppose the longstanding understanding on Taiwan. He merely pointed out that “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,” he told “Fox News Sunday” on December 11. His comment creates leverage in China’s eyes because the Chinese know he is essentially correct, that the United States never formally conceded Taiwan to China. Rex Tillerson’s testimony this week that there are no plans to alter the One China Policy comes closer to President Trump actually committing himself, which the Chinese know must be done by each new president.