China’s President Xi Jinping arrives on U.S. President Donald Trump’s home turf tomorrow for a hugely anticipated showdown between the leader of the world’s hegemon and its principal rising power.
Don’t expect to see the pair hit the golf course. The sport is generally viewed as a symbol of indulgent corruption in China and all but banned for the 90-odd million Communist Party members.
Trump rode a fierce anti-China narrative all the way to his electoral victory last year. He threatened to label China a “currency manipulator” on his first day in office and implement tariffs of up to 45 percent on Chinese imports. Since he took office the relationship hasn’t improved.
It got off to a chilly start after he took a phone call from Taiwan’s President Tsai Ing-wen. The act of taking the call, referring to her publicly as the ‘President’ of Taiwan, and then suggesting that China’s bedrock “One China” policy – which decrees Taiwan to be an inalienable part of China – was a chip on the table for negotiations offended Beijing greatly. In their eyes, it constituted a direct attempt to undermine Chinese sovereignty.
Did Trump play his cards wrong?
Whilst nobody knows for sure whether this represented a highly calculated tactical manoeuvre on Trump’s part, or just bone-headed ignorance, China responded as we predicted.
In the January edition of The Churchouse Letter, “Asia in a Trumped-Up World”, we wrote:
“By calling this bedrock assumption of one China… Trump is establishing a marker that he can ‘back down’ from in return for economic concessions.
Before we move on to what these concessions might be, it’s worth re-emphasising just how important “One China” is to the Chinese. The last time it was actively threatened was in 1995 when Bill Clinton granted a U.S. visa for Taiwan’s President to attend a University alumni reunion. Beijing threatened retaliatory measures against U.S. business in China, or even offering nuclear cooperation with Iran.
You can guarantee that Beijing will be readying exactly the same inventory of potential ‘pressure points’ they believe that Trump will respond to. These could include North Korea, military exercises around Taiwan, further militarisation of the South China Sea…
You can also bet your bottom dollar that President Xi Jinping isn’t going to be in the mood to offer anything in return for Trump’s attempt to rattle the hornet’s nest…
And Xi wasn’t in the mood to offer anything.
Ultimately, it was Trump who backed down in the face of radio silence by the Chinese by committing to “One China” in his first phone call with Xi Jinping after taking office.
Trump has recently attempted to ratchet up the geopolitical pressure back on China in the lead up to the meeting.
North Korea is a perennial thorn in both countries’ sides. Trump said in a recent interview that “if China is not going to solve North Korea, we will. That is all I am telling you”.
The deputy White House national security adviser KT Macfarland is quoted as saying “There is a real possibility that North Korea will be able to hit the US with a nuclear-armed missile by the end of the first Trump term.” This is an unacceptable potential threat from a nation led by a man who’s unpredictability makes Trump look like a beacon of statesmanlike stability.
China keeps the North Korean regime afloat with exports of fuel and commodities, providing up to 90 percent of the country’s energy supplies.
But North Korea also acts as a buffer between China and South Korea, where the U.S. has deployed military assets, specifically the Terminal High Altitude Area Defence systems (or THAAD), designed to shoot down short, medium, and intermediate range ballistic missiles.
Beijing is unhappy with THAAD for the surveillance benefits it brings to the Americans, particularly with regard to improving early tracking on Chinese missiles and the fact that its radar penetrates deep into Chinese territory.
There are other geopolitical hot button issues beyond North Korea and Taiwan. China’s militarization of the South China Sea is another one. But I expect there to be no grand bargain on issues of that magnitude because there are no quick and obvious solutions in sight that are palatable to both Trump and Xi.
Rather, I think we can expect to see Xi Jinping come bearing some economic gifts for Trump, preferably something that Trump can boast about in 140 characters or less. Xi will no doubt be acutely aware of Trump’s limited successes in office so far and his historically low polling numbers. Trump needs a ‘win’.
According to Chinese news agency Xinhua, during Xi’s February call to Trump, he communicated that “China is ready to boost mutually beneficial co-operation with the United States in various fields such as trade and economy, investment, science and technology, energy, culture and infrastructure”.
Last year China invested around US$45 billion in the U.S. When he meets with Trump, Xi may take the opportunity to announce a few more job-creating investments.
Although Xi arrives at this summit with significantly more political stability and momentum than his counterpart (the “grown-up in the room” as my colleague Kim Iskyan puts it), we have no idea how Trump will behave.
He has to make some noise about trade, given the US$347 billion 2016 trade deficit the U.S. ran with China, as we’ve written about before. But when it comes to the currency he doesn’t have a leg to stand on given that China is trying to slow depreciation of the renminbi.
Which Donald will show up?
Will he be needlessly confrontational, looking to pick a fight? Will he be tweeting in between meetings? Will he have figured out how to properly shake hands with world leaders yet?
Bear in mind his key advisors are far more confrontational on China than he is. Early last year his Chief Strategist Steve Bannon said “We’re going to war in the South China Sea in five to 10 years… There’s no doubt about that. They’re taking their sandbars and making basically stationary aircraft carriers and putting missiles on those.”
My hope is that Trump will take the opportunity to appear ‘Presidential’. Xi Jinping is a measured, calm individual and if Trump can come across as a businessman who’s ready to do deals (an aspect about Trump that the Chinese actually respect) then the summit will provide an opportunity to reset relations.
But make no mistake, this is only the beginning of a four-year Trump-China saga and how well or poorly this summit goes will have profound implications on the relationship between the two largest global economies.