Over the last quarter of 2018, the rhetoric coming out of the Trump Administration’s rhetoric on countering China became extremely hawkish, drawing many to conclude that a new cold war was looming. Since Presidents Trump and Xi met in Buenos Aires on December 1st , 2018 and declared a truce pause in the trade war, this rhetoric has been toned down. The rhetorical flip-flopping raises the question of how far the Trump Administration is willing to go in confronting China. Will the hawkish rhetoric return soon? Or has the Administration overplayed its hand and is now being forced to backtrack?
President Trump has mostly refrained from the hawkish language confronting China coming out of the White House in late 2018. It was Vice-President Mike Pence’s speech at the Hudson Institute on October1 that began to lay out a much tougher US position. This was followed by his piece in the Washington Post, as well as his speeches at the East Asia Summit on November 15 and the APEC Economic Leaders’ Meeting on November 16.
All had a recurring theme: China was threatening the established order of the Asia-Pacific region, now conceptually expanded to encompass the entirety of the Indian and Pacific Oceans, the Indo-Pacific. Pence’s message that a "free Indo-Pacific" was being undermined by China was matched by equally blunt comments from Adm. Philip Davidson, the chief of the newly renamed U.S. Indo-Pacific Command. He accused() China of military “coercion” and “intimidation,” while charging that its foreign economic policy amounted to “debt-trap diplomacy” and “predatory economics.”
This hawkish rhetoric indicated that the United States was set on launching a full-blown containment strategy aimed at forestalling China’s rise. Several policy moves started to back up the rhetoric with action: the United States attempted to much more forcefully dissuade allies from employing Chinese telecoms gear to build 5G networks. And many allies and security partners faced American pressure to seek further distance from China. Israel, for example, has faced mounting pressure to scrap a 2013 deal that gave China’s Shanghai International Port Group the right to operate Haifa’s container terminal for 25 years beginning in 2021. Haifa is Israel’s largest port city and a berth for the U.S. Sixth Fleet.
Evidently, the Trump administration’s confrontation with China goes far beyond trade friction, raising the specter that US-China relations could come to resemble the cold war era, or even worse the pre-WWI world with an accelerating slip into a “Thucydides Trap.” In reality, any historical parallels are likely to provide only very general hints of the dangers and dynamics facing the international system today. It is more likely that the Trump Administration has been overplaying its hand on China.
Already, the trade war truce has generated more upbeat rhetoric from both sides. This is likely due to several fundamental factors. First, the Trump Administration seems to have realized that a prolonged trade war will have dire economic consequences. This is due to both direct effects on the U.S. economy, such as higher consumer prices caused by tariffs and lower investment due to uncertainty, as well as indirect effects, especially the fact that as the largest contributor to global GDP growth, slowing Chinese growth affects everyone’s growth prospects, in turn reverberating back to the United States.
Former U.S. trade chief and World Bank president Robert Zoellick thus hit the nail on the head when he recently remarked that() “You can’t contain China.” As a $13 trillion economy that is highly integrated and interdependent with the global economic system, China cannot just be walled off.
“Decoupling” from China, as Pence and many in the Trump Administration, including the President, seem to advocate would exact an enormous toll on the U.S. economy. The resulting political cost for Trump, a president ever mindful of his approval ratings and stock market levels, could be fatal. Already, U.S. stock markets have seen rapidly increasing sensitive to any bad or good news on the trade war front.
But perhaps even more important than the economic and political calculus in Washington is the Chinese government’s strategy. The leaders of the Chinese Communist Party, despite their deep ideological and political differences with America, are not behaving like most rising powers in history. Beijing, first and foremost, is seeking steady relations with the United States. It is not playing a “cold war mentality game,” but rather seeking accommodation and further global integration with the global order.
He Yafei, a former Vice Minister in the Chinese Ministry of Foreign Affairs recently argued (that the “Cold War is long gone. Building an ‘iron curtain’ around China and preventing it from integrating into the world can only be a pipedream.” He further notes that given the deep socio-political cleavages in America, a prolonged trade war is likely to undermine Trump’s own political support.
Therefore, while Beijing is not disinclined to exploit America’s political and economic vulnerabilities, it is trying to balance various interests to reach a basic accommodation with Washington. This turns the playbook of power transitions on its head, since it generally has been the established power that accommodates an aggressive rising power. What we have here is a rising power that seeks global stability and good relations with the established hegemon.
The biggest challenge facing the global order is therefore the Trump Administration’s own ratcheting up of rhetoric and increasingly punitive actions directed at China. Although the United States is still the pre-eminent power, its clout is probably insufficient to undertake a full containment policy of China on a global scale. If there ever was such an opportunity, it has long passed.
It is therefore no wonder that the Trump Administration’s strategy comes across as schizophrenic: harsh rhetoric and various efforts to contain China’s economic, financial, military and technological footprint are followed by the possibility of a “grand deal” to reach a comprehensive trade and industrial policy agreement with China.
During late 2018 the Administration is likely to have rhetorically overplayed its hand, setting out a policy approach that is unsustainable in the long-term. Ideally, rhetoric and actions coming out of the White House could be adjusted to accept the fact that the costs of a full-blown containment strategy of China would be too high.
Unfortunately, given the track record of the Trump Administration and prevailing sentiments in Washington, a continuation of the harsh rhetoric and ratcheting up of punitive actions directed at China is absolutely possible. Such a choice would risk a deep rupturing of the global order, with many smaller nations facing the situation Canada now finds itself in: sandwiched between an established and rising power with no good options.