There Is No Grand Bargain With China

By Ely Ratner

Source Link

In true showmanship fashion, U.S. President Donald Trump is keeping the world in suspense about whether he will soon double down on the United States’ trade war with China or call a truce. The big reveal will come after his meeting with Chinese President Xi Jinping on the margins of the G-20 in Buenos Aires later this week. Trump has at times been optimistic, telling reporters, “I think a deal will be made. We’ll find out very soon.”

Don’t believe the hype. Any agreement in Argentina will be a tactical pause at best, providing short-term relief to jittery stock markets and beleaguered U.S. farmers, but having no material or long-lasting effect on the slide toward a high-stakes geopolitical competition between the United States and China. The days when the world’s two largest economies could meet each other halfway have gone.

Over the course of his first five-year term, Xi passed up repeated opportunities to avert rivalry with Washington. His increasingly revisionist and authoritarian turn has instead eliminated the possibility of a grand bargain between the United States and China. On most issues of consequence, there is simply no overlap between Xi’s vision for China’s rise and what the United States considers an acceptable future for Asia and the world beyond.

DEAL OR NO DEAL

Whether Trump and Xi reach some short-term accommodation in Buenos Aires is anyone’s guess. There are substantial divisions within the Trump administration and no policy process to adjudicate them. As a result, the White House has neither an agreed-upon bottom line nor a clear negotiating strategy. Bilateral negotiations have been flailing in fits and starts, leaving China guessing what might ultimately satisfy Trump.

On most issues of consequence, there is simply no overlap between Xi’s vision for China’s rise and what the United States considers an acceptable future for Asia and the world beyond.

The meeting in Buenos Aires may well fail to curb the president’s appetite for more tariffs on China. Over the last year, the Trump administration has substantially hardened its policies and rhetoric toward Beijing. Consider, for example, Vice President Mike Pence’s blistering speech at the Hudson Institute in October, in which he accused China of a litany of economic, political, and military misdeeds. Pence continued his strident tone while substituting for Trump at Asia’s annual regional summits in mid-November. The vice president openly mocked Xi’s signature foreign policy program, the Belt and Road Initiative, declaring that the United States, by contrast, does not “offer constricting belts or a one-way road.” In the meantime, the Trump administration has stepped up pressure on Beijing with a series of indictments and financial penalties to blunt China’s illegal and unfair trade practices. 

All that said, it is widely known that Trump is of two minds on China. Even as the president reiterates his long-standing belief that China has “cheated” and “plundered” the United States, no one should be surprised if he chooses to make a deal, declare victory, and go home. By earning symbolic and politically salient concessions, Trump could minimize short-term risks to U.S. markets while claiming that he alone finally stood up to Beijing.

The contours of such a deal are well understood. Trump would agree to hit pause on any new or higher tariffs. In exchange, China would pledge to purchase more U.S. goods (including soy beans and liquefied natural gas), while issuing promises to enhance Chinese market access for U.S. products, further open its financial sector, better protect intellectual property, and reduce joint venture and technology transfer requirements.

Any burst of goodwill, however, will be short lived. Xi and the ruling Chinese Communist Party are incapable of addressing the United States’ fundamental concerns over China’s industrial policies and state-led economic model. Because of this, any process to settle these issues is bound to fail. Even if tariffs are put on hold, the United States will continue to restructure the U.S.-Chinese economic relationship through investment restrictions, export controls, and sustained law enforcement actions against Chinese industrial and cyber-espionage. At the same time, there are no serious prospects for Washington and Beijing to resolve other important areas of dispute, including the South China Sea, human rights, and the larger contest over the norms, rules, and institutions that govern relations in Asia. Nothing Trump and Xi agree to in Argentina will substantially alter this course.

WHO LOST AMERICA?

Historians will debate why Xi so mishandled the U.S.-Chinese relationship, likely finding some combination of ideology, certitude of a declining United States, and domestic exigencies that had nothing to do with foreign policy. Regardless, the record is now clear that Xi, whether intentionally or not, decisively sidestepped what was China’s best and last opportunity to avert rivalry with Washington.

When Xi assumed China’s presidency in 2013, U.S. President Barack Obama’s administration was willing to test the proposition that Xi was both a reformer and someone the United States could work with. The leaders rolled up their sleeves at Sunnylands in June 2013 to begin charting a future course for what both sides referred to as the world’s most important bilateral relationship. With tensions simmering between the powers, this was a potentially crucial turning point.

At the Communist Party’s Third Plenum conclave later that year, Xi said all the right things about taking China further down the path of reform, including letting the market play a “decisive role” in the economy. In turn, Obama welcomed China’s rising power, viewed it as natural and legitimate, and ultimately saw Beijing as a partner on issues including climate change and nuclear nonproliferation. Members of Obama’s cabinet said repeatedly that U.S.-Chinese cooperation was necessary to address the globe’s most pressing problems, with Obama himself making clear that he thought a strong China was preferable to a weak one.

Obama did push back on China, for instance by underscoring U.S. alliance commitments to Japan and the Philippines to deter China’s assertiveness in its maritime periphery. But he did so selectively and intermittently, and never in ways that threatened to undermine China’s core interests or the bilateral relationship. Toward the end of the Obama administration, the president directed his cabinet to begin strategic stability talks with Beijing, believing that dialogue was still the principal means to manage mounting competition.

Yet, at nearly every turn, Xi rejected Obama’s overtures in areas of significant dispute. Instead of seeking to narrow differences, Xi accelerated China’s efforts to develop an illiberal sphere of influence in ways that increasingly undermined vital U.S. interests. While Washington negotiated in good faith, Beijing dragged its feet for years on a bilateral investment treaty that would have addressed many issues at the root of today’s trade war. At the same time, Xi reasserted state control over China’s economy, failing to deliver much-needed reforms that would have created a more reciprocal economic relationship. And after the Chinese government pledged to cease and desist on cyber commercial espionage in 2015, U.S. intelligence officials determined that China was back to its old ways within a couple of years.

On security issues, Xi was equally uncompromising. In 2015, he famously lied in the White House Rose Garden that China had “no intention to militarize” the South China Sea. In reality, he was planning to build artificial islands with military bases the size of Pearl Harbor. Wielding a large economic stick, Xi used boycotts and travel bans to punish U.S. allies, including South Korea and the Philippines, for standing up for themselves and further aligning with the United States. He exacted extraordinary pressure on Taiwan, calling off a diplomatic truce and peeling off some of Taipei’s few remaining diplomatic partners. Internally, his record on human rights has been abysmal, exemplified by the estimated one million Muslims sent to internment camps in western China.

By the 2016 presidential election, Xi had lost the United States. Regardless of whether Trump or Democratic candidate Hillary Clinton had taken the helm, Washington was readying to challenge China on multiple fronts. Even much of the U.S. business community—long considered the ballast of the U.S.-Chinese relationship—had had enough, and was newly willing to see Washington take punitive actions against Beijing. An emerging bipartisan consensus on Capitol Hill only reinforced the likelihood that the United States would confront China on trade, opioids, cybertheft, and human rights.

DARE TO COMPETE

The United States should not shrink from strategic competition with China. Analogies to World War I or the Cold War are imperfect and misleading. Competition does not mean confrontation, much less war. The United States should sustain dialogue with China to manage potential crises and seek opportunities for cooperation on areas of common interest, such as climate change. Washington’s focus, however, should ultimately be on making the United States its best and strongest self.

In that context, the China challenge presents a rare and essential opportunity for U.S. political unity. It is imperative that Republicans and Democrats build a bipartisan consensus on the issue. Both sides of the aisle will have to make difficult compromises by approaching divisive issues such as trade, defense budgets, fiscal policy, domestic spending, and immigration at least in part through the lens of enhancing U.S. competitiveness. Future U.S. administrations will have to do a better job than Trump’s in leveraging the enduring foundations of U.S. power, including its open society, commitment to human rights, and powerful alliances and partnerships. 

Garnering sufficient political support to compete successfully with China will also require a clearer description of what’s at stake if current trends continue and Washington fails to respond accordingly. A China-dominated order would mean a United States with weaker alliances, fewer security partners, and a military forced to operate at greater distances. U.S. firms would be left without access to leading technologies and markets, and disadvantaged by new standards, investment rules, and trading blocs. Inert regional institutions would be unable to resist Chinese coercion, and the world would see a steady decline in democracy and individual freedoms. The net result would be a less secure, less prosperous United States that would be less able to exert power in the world. For now, enhancing American competitiveness to prevent this kind of illiberal Chinese sphere of influence should be the cardinal aim of U.S. China strategy. 

One day, it will be time to talk with Beijing about making a deal. But that day will only come once China’s momentum has stalled and Xi or one of his successors is no longer convinced that his country is on the path to regional dominance. At that point, Trump’s upcoming meeting with Xi will be long forgotten.