The Best and the Worst of Times

Mar 12 , 2017
   
   

Barely two months into the Trump Administration, the world has already witnessed its fair share of surprises in American foreign policy. Worries about the deteriorating state of the China-US relationship have proliferated with the sobering reality that the most important bilateral relationship of the 21st century is at stake, affecting the long-term interests of both nations and the prospects for world peace and global economic growth.

Despite rising pessimism and worries around the China-US relationship, there have been some strong signs in bilateral communications and consultations of late, which offer hope for stability. As President Xi recently noted in his Davos speech, this is the best of times and the worst of times. The same certainly goes for China-US relationship, as it is now facing both great opportunities and serious challenges.

The most significant event to date has been the phone conversation between Presidents Xi Jinping and Donald Trump on the 20th of February, when both leaders reaffirmed their determination to increase cooperation between the two countries on the basis of “no conflict, no confrontation, mutual respect and win-win through cooperation.” Most importantly, President Trump stressed that his administration will continue to adhere to the “One China Policy.” These positive pronouncements have been again and again echoed during the recent meeting in Washington between President Trump and Chinese State Councilor Yang Jiechi as well as during the first visit to China by Secretary of State Rex Tillerson. It is widely noted that Mr. Tillerson’s visit to Beijing has reinforced the signal that China and the US are busy preparing a summit between the two Presidents as early as possible and “cooperation is the only correct choice for two major powers” in the next half century. This signal is not lost to the expectant world that this most important relationship will continue to move ahead steadily. 

Admittedly, Trump’s China policy, as with his other policies, is still evolving and will take some time to take shape, but the basic realizations and policies for the future are already beginning to emerge.

One of Trump’s first realizations is the fundamental understanding that the U.S. and China, the two major powers of the world today, need cooperation, not confrontation, the importance of which can’t be over emphasized. There are many spaces where the two nations’ interests converge or remain fairly close to each other, especially in maintaining peace in Asia and the world at large and promoting global economic growth.

The second is that economic cooperation and trade frictions will probably simultaneously increase as the new administration begins to focus on deriving greater economic benefits from trade through “buy American and hire American.”

The third realization is that some adjustments will have to be made in global governance by both countries to accommodate the changing tides of globalization, as well as the reprioritizing in America’s positions in certain fields of global governance such as climate change.

While the initial ideological confrontations might have subsided temporarily in bilateral dealings, eventually they will resurface. Geopolitical entanglements will loom larger as the Trump Administration continues the “rebalance” in Asia-Pacific by strengthening military capability and its physical deployment in the region.

Regional security will therefore become more complex and risky as the U.S. begins to deploy the THAAD missile defense system in South Korea and as it encourages Japan and other allies to continue on their courses of possible collision with China. What strategic consensus both can reach on such core issues, to a large extent, will determine whether the two countries are capable of avoiding falling into “Thucydides Trap.” The reality is that, as mentioned by President Xi, the Pacific is spacious enough for both the U.S. and China to prosper and peacefully co-exist.

Trade and economic interdependence have been the bedrock of China-US relations for decades, benefitting both nations. That exact interdependence puts Trump’s “America First” policy into perspective. Before Trump decides how to reduce the U.S. trade deficit with China, he must first realize where China’s surplus actually goes. American companies in China profit greatly from the current bilateral trade, including supplying components to those final products “made in China”. They share a big chunk of the surplus.

The same goes for “lost American jobs”. According to research done by both American and Chinese economists, over 80% of that loss is a direct result of technological innovations. One suggestion to reduce the trade deficit is for the U.S. to expand and increase its exports to China by, among other things, selling surplus shale gas and oil to China and lifting bans on sales of some of its dual-use high-tech goods to China. From the above we can come to one conclusion that some adjustments might be necessary and inevitable, but the overall direction of economic cooperation and two-way free trade and investments must be kept intact.

From the perspective of common strategic interests of both countries, it falls on the U.S. and China to contribute to a new security framework in Asia-Pacific, by working together towards a better security arrangement for the region. Over-reliance on military alliances targeting third parties cannot replace efforts to provide adequate security for all. Only new cooperative and collective security arrangements will do the job. New security concepts proposed by China should be given more serious consideration. Within this framework, the ability to defuse a nuclear crisis and rising tensions on the Korean Peninsula is of paramount importance to both countries. Any thinking and actions towards possible “surgical strikes” on DPRK facilities would light the fuse for war. China will not accept a nuclear Korean Peninsula, nor condone any action that will lead to another war. By the same logic, the deployment of the THAAD missile defense system in South Korea is completely unacceptable to China. The U.S. and the ROK should reconsider such a reckless move that will undermine the fragile strategic balance in the region. Both nations need to work closely and continue to seek a proper solution through peaceful political negotiation.

As major powers, the U.S. and China have special responsibilities, as articulated in the United Nations Charter, to maintain world peace and security. In today’s era of globalization, such responsibilities should also include confronting economic and social challenges, for which a cooperative relationship based on shared interests between the two is indispensable.

  
   
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