China and Trump's Creative Destruction

So which is the real Mr Trump? The reckless reactionary destroying critical alliances, or the “stable genius” who is pressuring China? The answer seems to depend on where you ask the question. Things look different from Beijing than from Brussels.

There are a lot of unknowns about the real status of the trade negotiations between China and the US.  Media will claim victory or failure (or ambiguity) depending on where the news is coming from (China or US, Conservative or Liberal).  So, like most things - don't believe most of what you read - or, at the very least, take it all with a big grain of salt.

What can be ascertained is that China and the US have agreed to kick the can down the road and figure out the trade issues in 90 days.  Is this a victory or a defeat?  It's neither.  It's how things get done.  

Neither country wants the other to fail.  China and the US are tied together in a functional codependent relationship.  We are tied at the hip.  A slow, incremental compromise on both sides is the most likely outcome in the near future as well as in the long run - and this 90 day 'pause' is proof of such an outcome.  This sort of a slow crawl benefits both parties.

That being said, the recent news about the trade war reminded me of a July article in the Financial Times about the Chinese respect for Trump.  

The excerpts below tell a very different story than what we normally hear about Trump in the US:

The Chinese are wary of Donald Trump’s creative destruction

The president is the first US leader in decades to challenge China on multiple fronts

Mark Leonard JULY 24, 3018

Donald Trump is leading a double life. In the west, most foreign policy experts see him as reckless, unpredictable and self-defeating. But though many in Asia dislike him as much as the Europeans do, they see him as a more substantial figure. I have just spent a week in Beijing talking to officials and intellectuals, many of whom are awed by his skill as a strategist and tactician.  

One of the people I met was the former vice-foreign minister He Yafei. He shot to global prominence in 2009 when he delivered a finger-wagging lecture to President Barack Obama at the Copenhagen climate conference before blowing up hopes of a deal. He is somewhat less belligerent where Mr Trump is concerned. He worries that strategic competition has become the new normal and says that “trade wars are just the tip of the iceberg”.  

Few Chinese think that Mr Trump’s primary concern is to rebalance the bilateral trade deficit. If it were, they say, he would have aligned with the EU, Japan and Canada against China rather than scooping up America’s allies in his tariff dragnet. They think the US president’s goal is nothing less than remaking the global order.  

They think Mr Trump feels he is presiding over the relative decline of his great nation. It is not that the current order does not benefit the US. The problem is that it benefits others more in relative terms. To make things worse the US is investing billions of dollars and a fair amount of blood in supporting the very alliances and international institutions that are constraining America and facilitating China’s rise.  

In Chinese eyes, Mr Trump’s response is a form of “creative destruction”. He is systematically destroying the existing institutions — from the World Trade Organization and the North American Free Trade Agreement to Nato and the Iran nuclear deal — as a first step towards renegotiating the world order on terms more favourable to Washington.  

Once the order is destroyed, the Chinese elite believes, Mr Trump will move to stage two: renegotiating America’s relationship with other powers. Because the US is still the most powerful country in the world, it will be able to negotiate with other countries from a position of strength if it deals with them one at a time rather than through multilateral institutions that empower the weak at the expense of the strong.  

My interlocutors say that Mr Trump is the US first president for more than 40 years to bash China on three fronts simultaneously: trade, military and ideology. They describe him as a master tactician, focusing on one issue at a time, and extracting as many concessions as he can. They speak of the skilful way Mr Trump has treated President Xi Jinping. “Look at how he handled North Korea,” one says. “He got Xi Jinping to agree to UN sanctions [half a dozen] times, creating an economic stranglehold on the country. China almost turned North Korea into a sworn enemy of the country.” But they also see him as a strategist, willing to declare a truce in each area when there are no more concessions to be had, and then start again with a new front.  

For the Chinese, even Mr Trump’s sycophantic press conference with Vladimir Putin, the Russian president, in Helsinki had a strategic purpose. They see it as Henry Kissinger in reverse. In 1972, the US nudged China off the Soviet axis in order to put pressure on its real rival, the Soviet Union. Today Mr Trump is reaching out to Russia in order to isolate China.  

In the short term, China is talking tough in response to Mr Trump’s trade assault. At the same time they are trying to develop a multiplayer front against him by reaching out to the EU, Japan and South Korea. But many Chinese experts are quietly calling for a rethink of the longer-term strategy. They want to prepare the ground for a new grand bargain with the US based on Chinese retrenchment. Many feel that Mr Xi has over-reached and worry that it was a mistake simultaneously to antagonise the US economically and militarily in the South China Sea.  

Instead, they advocate economic concessions and a pullback from the aggressive tactics that have characterised China’s recent foreign policy. They call for a Chinese variant of “splendid isolationism”, relying on growing the domestic market rather than disrupting other countries’ economies by exporting industrial surpluses.  So which is the real Mr Trump? The reckless reactionary destroying critical alliances, or the “stable genius” who is pressuring China? The answer seems to depend on where you ask the question. Things look different from Beijing than from Brussels.  

The writer (Mark Leonard) is director of the European Council on Foreign Relations

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