US-China Relations in 2019

If 2018 is the only indicator we have of the future of US China relations under Donald Trump, then the world likely has no idea what to expect in 2019.

Xi Jinping went from a personal friend of Trump to a target of US wrath after years of bad behavior from the Chinese. Rampant disrespect for intellectual property laws, state supported corporations receiving protection under non-tariff barriers, and an increasing trade deficit have led the Trump administration to levy increasingly severe tariffs on Chinese manufactured goods. What this has done, beyond tariffs however, is exposed a rift that the economic ties that bound the US and China had covered for a long time. China is not a modern country and can only work with the United States when the US willfully ignores Chinese bad behavior.

Trade policy notwithstanding, the increasingly volatile rhetoric over the south China sea, the detention of millions of Uighurs, and the Chinese response to the Huawei chief’s arrest show that US and Chinese policies are completely divergent, and other than trade, the countries have little to keep them from exploding into deep diplomatic conflict.

China is regressing, not economically, but socially, politically, and diplomatically.

They have used their economic might to subsidize R&D and provide their more technologically advanced firms a favorable base to expand, but they have also exploited international trade to extract American IP and technological secrets and make them a part of the Chinese economy. This makes them poised to continue to expand, piggybacking off of mostly stolen or bought IP and using their massive debt stores to fund research that will continue to technologically buoy their economy. Most of these efforts of state economic support are also aimed at party members, evidenced in the countless corporate heads closely linked to the CCP, Huawei’s Meng, and now Jack Ma, of Alibaba group, who was recently outed as a CCP member.

On the socio-political front, the past decade has seen a deep regression with increasingly active state media censors, a state firewall that is increasingly brazen and open about its removal of party-opposed material, and a social construct that takes support of the CCP as necessary, not only for job, study, and government opportunities, but to become a full-fledged member of modern Chinese society which is still centered around the CCP. They have cracked down on internet freedom, increased their arrests of journalists and suppression of religion, and securitized daily life with their new social credit score system, closely linked to the obeyance of party norms.

Abroad, China has gone from an understated and internal-sovereignty focused foreign policy in previous decades to an expansionist one, focused on increasing the encompassing lines of Chinese sovereignty throughout the South China Sea, but also aiming to control the minds of overseas Chinese, in Singapore, Canada, and even Australia. This will inevitably breed conflict with the US. The question is how the US chooses to address these conflicts. In previous years, occasional statements about “human rights” sufficed for heads of state, and most cases of HR abuses were ignored while China was loosely scolded. Increasing Chinese indignation at the innumerable acts that irritate their totalitarian administration, from the accidental use of Taiwan on a corporate website, to critical words about their regime are increasingly being noticed, however. The Trump administration, for all its faults, does not fear these occasional reprimands by the Chinese diplomatic staff. The rhetorical line on China has been increasingly sharp in recent months. However, there is an open question as to whether this reflects actual opposition to Chinese behavior under the principle of standing up for US values, or whether this is a tool used to exert pressure on China during a period of “negotiation” over China’s trade regime.

Trump has already come out on record saying the the Huawei official arrested for defrauding banks in order to violate US sanctions on Iran could be released as part of a trade deal. The notion that criminal charges have any relationship to trade agreements, or that the Chinese would be interested in publicly agreeing to such an outrageous and humiliating deal is astounding, and show the transactional nature of Trump and his sycophant mind. China, meanwhile, has increasingly shown that adherence to the rule of law is secondary to politics. After the Huawei arrest, which took place in Canada in anticipation of extradition to the US, China has arrested three Canadian citizens in the past few days, and confirmed the arrest of a photojournalist, Lu Guang, in Xinjiang province showing their increasing hostility towards due process.

What should be clear is that under this transactional approach, one of three paths will likely be followed in the next year:

1. China makes significant economic concessions under a new trade agreement with the US, and US diplomatic pressure on China significantly declines. This depends on the willingness of Xi Jinping to accede, and possibly look weak to the Chinese public and CCP officials
2. China makes temporary and small economic concessions under a trade framework with the US. Trump declares victory for a small marginal improvement, and US diplomatic pressure on China temporarily declines
3. China and the US fail to come to an agreement, and the conflict escalates into a larger collapse of the trading relationship. The pain on the Chinese economy could threaten the leadership of the CCP in the long term

The second outcome is the most likely, but it depends on those who have influence within the administration. Xi Jinping has staked China’s future on its dominance in world trade, with the China 2025 plan and the one belt one road initiative. Deep concessions could be seen as weakness on the part of the Chinese, and could damage his standing within the CCP and the public. On the other hand, a collapse in trading relations with the world could be catastrophic and economic pressures could see public support for the CCP decline as the CCP increasingly has to rely on force and repression to maintain power in China. Therefore a middle ground seems the likely path that Xi Jinping will take, making temporary purchasing agreements, and symbolic trade reforms whose enforcement will be limited and decrease over time. As seen with NAFTA, Trump requires little to declare victory, so the advisors who are currently driving his policy and pushed him to press for tariffs in the first place will be the ones who decide how far China must go to placate the US, whether the sacrifice China makes must be symbolic or real.

The bottom line is, in the Trump administration, his ego, along with his parochial view of economics overpowers everything: human rights and American values, decades old alliances, even the well being of America. The question, therefore, is how far China is willing to, and how far do they have to go to buy Trump’s silence on their crimes.

Staff writer and photo credit: Ari B

https://www.cnbc.com/2018/12/11/canada-grants-bail-for-arrested-huawei-cfo-who-faces-us-extradition.html