Picture Credit: Xinhua
Are you a Marxist, a realist or a believer in the accident theory of history? Each school of thought suggests a different way of analysing the crisis in US-Chinese relations.
A trade war is well under way between the world’s two largest economies, and talk of a new cold war is now common in both Washington and Beijing. The two countries have just had a frosty and unproductive encounter at the Asia Pacific Economic Co-operation meeting. But, at the end of this month, Donald Trump and Xi Jinping, the presidents of the US and China, will meet at the G20 summit in Argentina for crucial talks that could culminate in a new deal on trade — or a further rise in tensions.
A Marxist might expect that business interests will prevail, and that, as a result, there will soon be a truce in the trade war between the US and China. A follower of the “realist” theory of international relations would assume that an established power like the US and a rising power, such as China, are inevitably going to clash — and that therefore economic and strategic tensions will keep rising. And somebody who thinks that history is driven by accidents will tell you that no theory can explain how things will pan out since so much depends on unpredictable human beings.
One sign that several outcomes remain possible is the open infighting that has broken out between rival camps in the Trump administration, and the rather less open signs of tension in Beijing, as the Chinese government scrambles to find a way of appeasing Mr Trump.
There is a powerful camp of hawks in Washington who are actively pushing for a long-term confrontation with China. On the economic side, they include Peter Navarro, the White House trade adviser, and Robert Lighthizer, the US trade representative. On the strategic side, they include John Bolton, the president’s national security adviser, and Mike Pence, the vice-president, who recently gave an ultra-hawkish speech on China.
Set against them are the doves, led by Steven Mnuchin, the Treasury secretary, and Larry Kudlow, the White House’s chief economic adviser.
The doves want to see the current trade tensions swiftly resolved, while the hawks know that Mr Trump is both their biggest hope and their greatest potential weakness. He has already gone further than any other US president in confronting China, slapping tariffs on almost half of Chinese exports to the US and stepping up naval patrols through disputed waters in the Pacific.
But Mr Trump is also volatile and has a weakness for doing deals with autocrats. Some of his advisers are worried by the memory of June’s Singapore summit with Kim Jong Un, the North Korean dictator, when Mr Trump suddenly ended a year of dire threats and committed himself to dialogue. Since then, the US president has even tweeted about his “love” for Mr Kim.
Worryingly for the hawks, Mr Trump has long emphasised that he has the highest possible regard for Mr Xi. He has also shown a disconcerting tendency to claim imaginary breakthroughs. For example, the president recently claimed that China had abandoned its industrial policy, known as “Made in China 2025”, because he personally had found it “very insulting”. But there is no evidence of any such Chinese reversal.
The hawks’ anxiety was expressed by Mr Navarro in a recent speech in Washington, in which he accused “global billionaires” of acting as lobbyists for China. A few days later, he was directly contradicted by Mr Kudlow, his White House colleague, who said Mr Navarro’s comments were “way off base”.
Strategic tensions have increased, alongside the trade rivalry. American military strategists fear that China’s programme of building military bases in the South China Sea has changed the balance of power in the region. Admiral Phil Davidson, the head of America’s Indo-Pacific command, told Congress recently that “China is now capable of controlling the South China Sea in all scenarios short of war with the United States”.
To demonstrate that the US has not tacitly accepted Chinese dominance of these waters, the US has stepped up naval patrols, with ships from the two navies recently coming dangerously close to a collision. Some Washington hawks also want the US to persuade its allies — in particular Japan and South Korea — to allow America to deploy short-range nuclear missiles in the region. In theory, this would be to deter North Korea; in reality, the message would be directed at China.
These military tensions make the US-China trade dispute much harder to settle than the Trump administration’s trade arguments with Mexico and Canada, neither of which are strategic rivals to the US.
It is this geopolitical dispute — rather than the economics — that make me think that the “realist” assessment of US-China rivalry is most likely to be vindicated. So even if the G20 summit sees Mr Trump agreeing to defer his plans to increase tariffs on China, a trade truce may not last for long given this backdrop of growing superpower rivalry.
But the personality and impulses of the US president make all firm predictions dangerous. If there ever was a walking, talking embodiment of the “accident theory” of history, it is Mr Trump.
Copyright The Financial Times Limited 2018
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