March 23, 2017 4:20 pm JST
Richard McGregor

Trump's worst enemy

When it comes to checking China's global influence, it's himself

A session of the National People's Congress in Beijing © Reuters

Just before traveling to Washington to meet U.S. President Donald Trump on March 17, Angela Merkel, the German chancellor, took a call from Chinese President Xi Jinping, in which the two leaders discussed their support for "free trade and open markets."

In normal times, such words could be easily dismissed as mere platitudes -- the sort of bromides that are politely exchanged before the conversation turns to more important issues.

But coming a day before Merkel's first meeting with Trump since his November election victory, the words were laden with meaning -- both in terms of America's rapidly declining global stature and China's efforts to take advantage of the shift.

Having replaced the U.S. last year as Germany's largest trading partner, China under Xi's leadership is now trying to turn a valuable economic relationship into a political weapon. Trump's presidency has provided him a perfect opening.

The multiple contrasts between Trump's worldview and that now projected by Xi's China are stark. After Trump won the presidency by running against a global elite that he said had destroyed middle-class America, Xi traveled to Davos in Switzerland, the annual conference that is the apotheosis of globalization, to present himself as a lonely apostle of free trade.

Trump constantly talks about righting the many grievous wrongs suffered by the U.S., while painting negotiations with foreign countries as zero-sum games in which Washington wins and the other party gives ground. Xi's rhetoric is very different -- he talks about "win-win" relationships.

chaos vs. discipline   

With Xi expected to travel to the U.S. in the coming weeks, Trump has proposed hosting him at Mar-a-Lago, the president's sprawling Florida mansion resort, which has become synonymous with the murky merging of his public role and private business.

Meanwhile, Xi has conducted over the last five years what may be the most far-reaching anti-corruption campaign in China's modern history.

In addition, the discipline and respect that America's many international allies expect from Washington -- which helps them maintain domestic support for their alliances with the U.S. -- has been replaced by chaos and casual slights from the White House.

China's highly disciplined system could not be more different from that unfolding under Trump. Xi has remained firmly on message with Merkel and other interlocutors about the benefits to be gained from closer relations with Beijing.

It takes some doing to cede the moral high ground to a congenitally illiberal Communist Party that has become even less tolerant of internal dissent under Xi. But Trump is certainly making a good fist of it.

This is particularly galling for critics when it comes to trade, since the U.S. has ample grounds to push back against a mercantilist China that has systematically closed off large sections of its economy from foreign competition even as it reaps the benefits of the global system underwritten in East Asia by Washington.

China used the annual session of the National People's Congress, which closed with Premier Li Keqiang's news conference on March 15, to project a similar message, accompanied by a warning to the U.S. against taking a harder line with China on trade.

In saying that the U.S. "would bear the brunt" of any trade war, Li cited a report by an unnamed foreign think tank, which reached the same conclusion. But his remarks made it clear that U.S.-funded companies, in particular, would be targeted.

Li also made a remarkable statement, little reported in the global media, suggesting that although China runs a trade surplus with the U.S., more than 90% of the profits end up going to America.

This may be just a recitation of a well-known, but dated, study of what country received the most profits from the sale of iPhones, with the U.S. getting the bulk for design and materials, while China was left with very little for assembling them. But Li's point was that the trade surplus is not an accurate benchmark of the two countries' economic relationship. In saying this at his news conference -- the one time of the year when he is open to media questions -- Li elevated the finding of the study into a talking point for the Chinese government.

Li added that China "will participate in and support all initiatives that will promote the liberalization of global trade," a sign that it will not only push its own vehicle for regional trade liberalization, but also that it will try to co-opt and potentially marginalize the Trans-Pacific Partnership trade agreement that Trump has abandoned.

Xi has a potentially good partner in Merkel. Many German companies depend for their survival on sales to China, particularly the country's biggest industry -- car manufacturing. Germany, like China, is resisting U.S. pressure to reduce its trade surplus.

"As the world's important economies and staunch supporters of globalization, China and Germany have the responsibility to push other parties in building an open economy, safeguarding the effectiveness and authority of multilateral trade rules and systems," Xi told Merkel, according to Xinhua, the Chinese state news agency.

Avoiding a trade war

China is not looking for a trade war of any kind with the U.S. Instability is not welcome in Beijing when China's economy is slowing, and Xi and the Communist Party leadership are preparing for their party congress at the end of 2017.

Sino-U.S. relations are already under pressure over Washington's demands that Beijing do more to rein in North Korea's increasingly threatening nuclear weapons program. They will be strained further if China begins its planned construction of a monitoring station on the Scarborough Shoal, near the Philippines, in the South China Sea.

For all its bluster, the Trump administration appears to have no strategy in place to keep concerted pressure on China. Rex Tillerson, the U.S. secretary of state, is still finding his feet, and the top Asia posts in the State Department remain unfilled.

In the meantime, Trump refused to shake hands for the cameras when he met Merkel in the Oval Office, and he made sure his criticisms of German military spending were made public. China would have been pleased.

Richard McGregor is a Washington-based journalist and author of the forthcoming book, "Asia's Reckoning: China, Japan and the Fate of U.S. Power in the Pacific Century."

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