Shao Yuqun
Senior Fellow
Center for American Studies Director
Institute for Taiwan, Hongkong & Macao Studies
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Nov 07 2017
Assessing China-U.S. Relations in the Trump Era
By Shao Yuqun

People used to say that the China-U.S. relationship had both a ceiling and a floor. However, that description of the bilateral relationship has seldom been heard over the past several years during academic discussions and debates in Beijing and Washington DC, or even in Shanghai and New York. The most debated question for the policy and academic community is whether the two powers will fall into the Thucydides trap, where China, as the rising power, will unavoidably challenge the United States, which has been the established hegemon in the world for decades. The optimistic answer is no, due to the combination of nuclear deterrence and strong interdependence between the two countries. The pessimistic answer is yes, and the reasoning comes from both western international theories and history. For the first time since the two countries established diplomatic relations in 1979, the Chinese side raised the concept of a “New Type of Major Country Relationship” to define the China-U.S. relationship, and the response from the United States was mixed. In general, the U.S. government has welcomed Chinese efforts to avoid conflicts and confrontation between the two countries and to seek cooperation, which is in the interests of both sides; it has reservations, however, regarding mutual respect for each other’s core interests. Some American researchers have accused China of identifying the issues on which they do not want to compromise as “core interests” in order to force U.S. concessions. No matter what the attitude is, the two countries have successfully avoided conflict and confrontation during the past eight years, even at times when they had strong disputes over security issues in the Asia Pacific region. They also cooperated on the climate change issue and worked together within the framework of the G20 resulting in impressive achievements.  

Even so, those who watch the China-U.S. relationship still have great concerns, especially because the Republican nominee, Donald Trump, who had criticized China harshly and talked frequently about having a trade war with China during the presidential campaign, won the election on November 8, 2016. When President-elect Trump had a phone call with Tsai Ing-wen, the leader of Taiwan, while also tweeting twice about the call, not only were cross-Strait relations experts in both countries surprised, but international relations observers around the world were also shocked. The phone call was a major break from the “One China” policy adopted by previous successive U.S. administrations since President Jimmy Carter switched recognition from the Republic of China (ROC) to the People’s Republic of China (PRC) in 1979, acknowledging that Taiwan is a part of “One China.” Though observers were not sure whether the phone call represented a strategic shift of the incoming president’s policy towards China, in the context of rising strategic competition between the two countries, most people predicted an unstable beginning to bilateral relations as Donald Trump entered the White House on January 20, 2017.  

What has been done so far?

For the past six months, however, the development of China-U.S. relations has been relatively stable and thus has gone beyond most observers’ expectations. To generalize, there are four major fields that contribute to this relatively stable situation. First and foremost, President Xi Jinping and President Donald Trump have met twice and established a good working relationship. The major obstacle for the first summit meeting was President-elect Trump’s position on “One China,” so when President Trump said he would honor the United States’ longstanding “One China” policy during a phone call with President Xi on February 9, it paved the way for future interactions between the two leaders. The Mar-a-Lago summit on April 7 and 8, 2017 happened earlier than most people expected. The whole atmosphere was comfortable for both sides. The meetings and discussions were constructive and intensive, helping the two teams get to know each other, and they were not hijacked by President Trump’s order for the bombing of a government-controlled Syrian air base. The second meeting was during the G20 Hamburg summit, which was not reported on extensively by the U.S. media since the focus was on the first Trump-Putin meeting. History has shown that top-level meetings and working relationships are critically important to keep the China-U.S. relationship going smoothly, and this time is no exception.

Second, to adapt to a very results-oriented U.S. government and to respond to the Strategic & Economic Dialogue (S&ED) fatigue, the Chinese side agreed to streamline the S&ED into four working dialogues, namely the Diplomatic and Security Dialogue (D&SD), Comprehensive Economic Dialogue (CED), Law Enforcement and Cyber Dialogue, and Social and Cultural Dialogue. The first round of the D&SD was held on June 22, 2017 in Washington, DC. Chinese State Councilor Yang Jiechi cohosted the dialogue with U.S. Secretary of State Rex Tillerson and Secretary of Defense James Mattis. Notably, General Fang Fenghui, Chief of the Joint Staff at the Department of the Central Military Commission, also joined the dialogue. According to the U.S. State Department, this is the highest-level civil-military dialogue that the two sides have had. In less than one month, on July 19, the first round of the CED was held in Washington, DC. Chinese Vice Premier Wang Yang, U.S. Secretary of Treasury Steven Mnuchin and Secretary of Commerce Wilbur Ross were the co-hosts. According to both governments, the other two dialogues will be held later this year.  

Third, instead of engaging in a trade war with each other, officials of the two biggest economies agreed to have a 100-day plan, later extended to a one-year plan, in order to manage difficult trade and investment issues. During the planning process, the American side focused on balance, fairness and reciprocity on matters of trade, and the Chinese side emphasized the complex reasons that caused the imbalance of trade in goods. The shared spirit is that some early harvest is needed for stabilizing the bilateral relationship. According to the “initial actions” of the 100-day plan, some outcomes were reached, covering agricultural trade, financial services, investment and energy. Then, about two months later during the first round of CED, both sides agreed to reduce the trade deficit in a cooperative manner. Since differences are guaranteed in this bilateral economic and trade relationship, the two sides’ decision to use dialogue and negotiations to manage differences is a good message for both China and the U.S. as well as the rest of the world. As the Chinese side said before the dialogue, the two teams would also have discussions on strengthening macroeconomic policy coordination, as well as global economy and governance, conversations which are in the interests of all related economies. The American media has been critical of the dialogue’s results, complaining that no big achievements were made. The working teams understand, however, that there are no silver bullets here and the only way to tackle the problems is through dialogue and negotiation with a cooperative spirit.    

Fourth, in the security field, the focus has been on the North Korean nuclear issue. Then President-elect Trump was warned by the Obama administration that the North Korean nuclear issue would be the top priority on the incoming president’s agenda. The more than 20 missile tests and two nuclear tests conducted by North Korea in 2016 have made the American side conclude that it is very urgent for the U.S. to stop North Korea’s nuclear program before it is able to target the U.S. mainland with a nuclear-tipped intercontinental ballistic missile (ICBM). The Trump administration has adopted the “maximum pressure plus engagement” strategy with a lot of pressure on China as the so-called most influential player on North Korea and with almost no engagement with the North Korean side. At the same time, because President Trump and senior officials in his administration have repeatedly said that “all options are on the table,” fear of a rapid escalation of tension on the Korean Peninsula has been spreading. While strengthening its sanctions on North Korea, Chinese Foreign Minister Wang Yi also offered the suggestion that as a first step, North Korea should suspend its nuclear and missile activities while the U.S. and South Korea should also suspend large-scale military drills, and such a “dual suspension” would allow all sides to come back to the negotiating table. The response to the “dual suspension” from the American side has been negative, and the Trump administration started “secondary sanctions” on some Chinese entities.  

The good news in the worsening security situation in Northeast Asia is that so far the two major powers are still working together to figure out what to do next. On July 28, however, North Korea conducted its 2nd ICBM test, which led President Trump to criticize China via Twitter.  

What are the major features of the relationship?

The framework of China-U.S. relations has been stable and very difficult to pull down. The first six months of China-U.S. relations has been more stable and peaceful than most observers predicted they would be at the end of 2016. Although there is a long history of China-bashing during American presidential campaigns followed by a return to a close working relationship with China when winners enter the White House, the history breaking phone call between Trump and Tsai made most people worry about an unstable and tough beginning to the China-U.S. relationship under President Trump, even though Trump is regarded as a dealer and a negotiator by nature. What we have seen after January 20, 2017 is that President Trump rapidly shifted his position on “One China” to pave the way for the April summit in Mar-a-Lago. It is a vivid example that this bilateral relationship is so critical for the United States that no U.S. president can risk damaging it. When the two countries face tremendous challenges, there is no choice but to work together, which is in both of their interests. No political player in the U.S., whether it is the president or Congress, can break the foundation and the framework of China-U.S. relations.    

Economics and trade, as well as the North Korean nuclear issue, are the two most important issues that will define the development of the bilateral relationship in the second half of 2017, and perhaps even in 2018. President Trump is a very results-oriented president, and he needs to deliver results to his domestic audience to prove that he has the capability to bring back jobs for people mainly from the “rust belt,” who have not benefitted from globalization and have been forgotten by both political parties for many years. Assessing the chaotic situation we have seen in the Trump administration, especially the difficult relationship between the president and his fellow Republican colleagues on Capitol Hill, it is very possible that following the White House failure on the repeal of Obamacare, the tax cut and infrastructure program will also fail to pass Congress by the end of this year. If that happens, then the White House will need more from the trade area to appeal to the president’s base and to mobilize the Republican grassroots for the midterm elections in 2018, which means the Trump administration will likely put more pressure on China in the coming months to either make a bigger compromise in the negotiations or to act more swiftly with regard to policy adjustments.  

The 2nd ICBM test conducted by North Korea shows that the North Korean nuclear issue will continue to be the most challenging security issue for China-U.S. bilateral relations. According to some early analyses, the intercontinental ballistic missile flew for about 45 minutes, going 3700 kilometers high, and for a distance of 1000 kilometers. If the missile were fired on a flatter, standard trajectory, it would have major U.S. cities such as Los Angeles, Denver and Chicago well within its range, with the possible ability to reach as far as New York and Boston. On August 5, the UN Security Council imposed new sanctions on North Korea. With 15 votes in favor, Resolution 2371 passed unanimously. The sanctions target North Korea’s primary exports and will also slash North Korea’s annual export revenue of $3 billion by more than a third. While Nikki Haley, the U.S. Ambassador to UN, showed toughness on North Korea, Secretary Tillerson showed flexibility when he said during his visit to Southeast Asia that Washington was willing to talk to Pyongyang if it halted a series of recent missile test launches. The North Korean side, however, has not stopped the provocations. Instead, North Korean state media announced that the country’s military devised a plan in mid-August to fire four intermediate range missiles at the U.S. territory of Guam. That statement stirred another round of strong words from the United States, and although this round of rhetoric appears to have passed for now, there is still rapidly rising worry that such verbal escalations will turn into a military conflict on the Peninsula.

China has continued its existing policy by urging North Korea to respond to the positive message sent by Secretary Tillerson while also emphasizing that China will strictly execute all the contents of the UN resolution regardless of great economic loss. Both China and the U.S. see the current North Korean regime as a “trouble maker” to the regional peace, but they have differences regarding how to deal with the “trouble maker.” The challenge is that not only do they have to coordinate with each other, they also have to coordinate with other regional countries. Whether a new version of the Six-Party Talks will happen in the second half of this year is a measurement of the effectiveness of China-U.S. coordination.

All the other issues are still there. Starting from the second term of the Obama presidency, China and the United States have had a very tense relationship in the South China Sea. While the United States is not a claimant state, it conducts “freedom of navigation” operations (FONOPs) regularly and supported the Philippines to launch the arbitration case against China. Since Donald Trump came into power, the South China Sea issue has not been prominent in the bilateral relations between U.S. and China, but the issue is still there. According to the U.S. media in early May, FONOPs had not been conducted in South China Sea since President Trump took office. While the Pentagon said that U.S. Defense Secretary James Mattis was putting FONOPs on hold as part of a broader review of “the American security posture around the world,” some observers believed that it was due to the Trump administration’s need for China’s assistance on pressuring North Korea.  

The calmness in South China Sea did not last long. At the end of May and in early July, the U.S. conducted two FONOPs—by the USS Dewey near Mischief Reef and the USS Stethem near Triton island, respectively. Then on August 10, the USS John S. McCain carried out a FONOP again and travelled close to Mischief Reef in the Nansha Islands. While repeatedly criticizing America’s FONOPs, China concluded discussion with ASEAN countries about the framework of a Code of Conduct (COC) in the South China Sea during the recent ASEAN foreign ministers’ meeting in Manila and the two parties are going to start talks on the COC this year. Chinese Foreign Minister Wang Yi specifically mentioned the precondition for the official start of the COC consultations, which is “when the situation in South China Sea is generally stable, [and] if there is no major disruption from outside parties.” In general, the Trump administration will not change the policy adopted by the Obama administration in South China Sea due to its commitment to its allies and its geo-strategic interests in the Asia-Pacific region. Even though its strategic focus is not currently on the South China Sea, it will come back to this issue sooner or later. Besides the South China Sea, other issues—like the two countries’ interaction in cyber space and outer space, U.S. NGO activities in China, the Taiwan issue, the human rights issue, etc., will not disappear.  

What will happen in the future?

The definite answer is do not be surprised if something terrible happens. When combining all the above potential issues of this bilateral relationship with the historical trend of an unstable beginning to the China-U.S. relationship because of the political transition to a new U.S. administration, it is natural to conclude that the bilateral relationship will cool down and even face new immediate challenges.

Since President Trump took office, the mainstream media and the foreign policy establishment have all been worrying about Trump’s elusive and erratic personality, his unwillingness (or inability) to learn, and the lack of professional officials in his administration. Unpredictability has been the key word when people talk about Trump’s foreign policy. Even among those who have full confidence in the U.S. political system and its restrictions on the White House, worries remain because of the president’s immense power in the foreign policy decision-making process. However, if one takes Trump’s policy towards the Asia-Pacific region as an example, most observers agree that in general, despite President Trump’s tweets, his administration’s policies have not deviated from previous policies, which are supported by both Democrats and Republicans in the United States. Still, people are worried about what President Trump will do if a crisis happens; nobody can be sure of his response.  

In addition to the concern above, there are two questions that will be difficult to answer during the Trump era but vital for the development of China-U.S. relations. The first one is to what extent will the rising nationalism and high division within the American society affect U.S. foreign policy? In other words, when and how will President Trump make a deal with the Congress for its support on his domestic agenda that sacrifices China’s interests?  

What we have been seeing during the past six months is President Trump’s tense relationship with his Republican colleagues on the Hill. With “America First” as the catchphrase for the Trump administration, President Trump’s priority certainly is on domestic issues, such as job creation. However, on the repeal of Obamacare, tax reform or budget cuts, Trump’s ideas are different from those of the Republican Party. So far, President Trump was unable to get a Republican-controlled Congress to repeal Obamacare. On tax reform and budget cuts, two critical issues for the Trump administration, it is also extremely difficult for the White House to coordinate its plan with Senate and House Republicans. Though President Trump is an unconventional political figure, he still needs to deliver on his campaign promises to those who voted for him on November 8, 2016. As president, he needs to coordinate and make deals with Congress. In this sense, President Trump is more likely to make deals with Congress than with China, and when China’s core interests are sacrificed, China-U.S. relations will face great challenges.

The second question is to what extent will the possible decline in the capability of U.S.-led alliances in the Asia Pacific influence China-U.S. relations? Most would agree that despite Trump’s words during the campaign, his policy towards U.S. allies in the Asia-Pacific region has not changed so far. The U.S. allies, especially Japan and Korea, however, while trying hard to strengthen their alliance with the U.S., are preparing for the rainy days. The often-heard complaints about President Trump in Tokyo’s and Seoul’s policy circles should not be neglected. It does not necessarily mean that the strategic trust between the U.S. and its allies is decreasing; however, the allies are facing a more inward-looking United States, and they, Japan in particular, will seek more independence and autonomy in dealing with regional security challenges. The other choice for U.S. allies is to have more coordination with China on regional security and economic issues. Currently, both the Abe administration and the Moon administration have shown their willingness to improve relations with China. Whether these two bilateral relationships can overcome difficulties and move forward is still unknown, but strategically, these three countries have already felt the need to work more closely together in the fluid regional situation. Whether it is to have more independence or to work more closely with China, Japan and Korea’s policy adjustments will have an impact on China-U.S. relations. The challenge is for observers to predict the impact of such adjustments.

Regarding the development of China-U.S. relations in the Trump era, one thing is for certain:  the two countries will continue to have limited competition and cooperation both on the global and the regional levels. The competition will happen mostly in the international economic institutions and in the development area, due to the rapid growth of Chinese economic strength and its global influence. The prominent example is the Asian Infrastructure Investment Bank (AIIB). In the context of the One Belt One Road Initiative, AIIB has a lot of space for China to test its new ideas. Sooner or later, new models and paradigms that are more suitable to the regional countries will be implemented. This process can be called a competition between China and the U.S. However, AIIB is not a mechanism used by China to destroy the U.S.-led international economic institutions, as alleged by the Western media. AIIB still works within the established economic and financial framework, and it is cooperating and will continue to cooperate with the World Bank, the Asian Development Bank and others. Since China is still a beneficiary of the current international order and its overall economic power still lags behind the United States, it is not wise for the Chinese government to seek a confrontational policy toward the United States. The competition between China and the U.S. will not be comprehensive, but it will be limited.  

In areas where the two countries should and can cooperate, cooperation will also be limited. On the global level, climate change and the world economic recovery used to be two of the issues on which China and the U.S. had quite successful cooperation within the UN framework and the G20. Under the Trump presidency, U.S. policy towards climate change is totally different compared with its predecessor’s and has made China shift its major partners to the EU, Canada, and some other large economies. The G20 is still an indispensable platform for leaders of major economies to engage with each other, coordinate their policies and seek the establishment of a more equitable governance framework. Because of the Trump administration’s lack of interest in global governance, despite the annual meetings, the G20 may not be a forum where China and the U.S. can lead effective cooperation on governance issues related to many countries. On the security front, there are many issues that require China and the U.S. to cooperate with each other. Putting aside the North Korean nuclear issue, the two countries already have some limited cooperation in Afghanistan and the Middle East. In the Asia-Pacific region, China has participated in the RIMPAC exercises twice despite the escalating tensions in the South China Sea. Due to the trust deficit, however, it is almost impossible for the two countries to have further cooperation either in Afghanistan or in the Middle East. And worse, even if the two countries improve their cooperation in the above areas, it will not help decrease the trust deficit. For China-U.S. relations, the most critical field is their security relations in the Asia-Pacific region. As long as their interaction in this region, which is currently focused on the North Korean nuclear issue, does not serve to build mutual strategic trust, cooperation in the peripheral areas will not be of much help to improve overall bilateral relations.

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