“The administration diagnosed the right problem, but it came up with the wrong remedy.”
President Donald Trump is leading one of the most radical changes in America’s stance toward China in decades.
Where past presidents engaged Beijing in good faith on issues like improving its human rights record or its conduct in cyberspace, Trump has preferred to treat the country as a strategic competitor that requires a more aggressive response by the United States.
The US has a lot to be angry about. Among other indiscretions, Beijing has stolen US technological and personnel secrets for its own advantage, antagonized US allies in the South China Sea, killed or imprisoned more than a dozen American informants, and taken millions of US jobs over the past 15 years.
But instead of working to fix at least some elements of strained US-China relations while putting up with the bulk of China’s misbehavior, Trump has chosen to completely reshape the relationship and go after Beijing on all of it.
“This administration is not really focused on just a couple of things,” says Bonnie Glaser, a China expert at the Center for Strategic and International Studies think tank in Washington, “it’s really focused on everything.”
Here are just a few examples: The biggest one, of course, is that Trump started a trade war expressly intended to cripple China’s economy. But he’s also increased support for Taiwan in its decades-long dispute with China, he disinvited China’s navy from participating in a major international military exercise, and he put pressure on Chinese Communist Party-funded culture and language programs on US college campuses.
The goal, according to experts and current and former Trump administration officials I spoke to, is to squeeze China — and in particular its economy — so hard that it finally decides to play by the rules once and for all. And if it doesn’t, well, then so be it. The Chinese have ripped us off for so long, the thinking goes, who cares if they’re unhappy now?
“Trump is engaged in a sophisticated form of economic warfare to confront the Chinese,” Steve Bannon, Trump’s former top strategist and a self-proclaimed China hawk, tells me.
But so far, it’s not working — because China has started to fight back.
China has already imposed retaliatory tariffs on billions of dollars’ worth of American goods. And although Beijing initially helped put economic pressure on North Korea at the request of the Trump administration, it has now relaxed those sanctions, thereby giving Pyongyang an economic outlet to avoid devastating penalties. On top of that, Beijing has moved closer to Moscow and Tehran since Trump entered the Oval Office, partially thwarting US efforts to isolate those countries.
Experts say the debate in Beijing now centers on whether the US wants to stop China’s economic and political rise or even destroy the country’s ruling Communist Party — and less on how to cooperate with the US.
“Either scenario gives China no incentive for addressing any of the concerns we’re raising,” says Ryan Hass, a top China official on the National Security Council from 2013 to 2017.
China can just wait Trump out, experts tell me, since Trump will only be in office for no more than six more years, whereas Chinese President Xi Jinping is poised to rule China for decades. Beijing can therefore withstand the current pressure and wait for a new administration that likely will be less combative.
That means it’s unlikely Trump’s approach will succeed anytime soon — and may actually imperil the relationship long after Trump is gone.
“The administration diagnosed the right problem,” Hass says, “but it came up with the wrong remedy.”
No more “engagement for engagement’s sake”
Engagement with China, meaning consistent and significant dialogue on areas of mutual interest, has defined Washington-Beijing relations since the Nixon era. But to understand just how differently Trump deals with China, consider how the past two presidents — George W. Bush and Barack Obama — approached Beijing.
Both leaders wanted China to become a “responsible stakeholder,” a wonderfully wonky Washington term that mostly means they hoped Beijing would abide by global, cooperative rules even as it gained immense power.
The past two presidents had a remarkably similar strategy to see that happen: make China act more like America.
In 2001, for example, Bush gave China permanent trade status. That allowed Beijing to exchange goods and services with the US — but with few to no tariffs. The hope was it would open up China’s market to the world and that over time, China would start to abide by accepted global trading practices.
Fourteen years later, Obama reached an agreement with China to curb cyberattacks. Months before the deal, China had hacked into the Office of Personnel Management — the US government’s chief human resources agency — and stolen sensitive information from millions of Americans.
But Obama, like presidents before him, claimed that engaging China might compel it to act less aggressively in cyberspace, or at least stop attacking America so much.
Bush and Obama only slightly curbed China’s unfair trading practices and cyberespionage. But they did find ways to address vital grievances with Beijing, such as human rights and press freedom, and work together on issues like climate change and military interactions, by following the general American strategy to engage China on tough, sometimes unpalatable, issues in the name of improved relations.
Trump has so far rejected that approach. But that was always likely.
Trump considers China one of America’s most cunning adversaries. At a 2016 campaign rally in Indiana, he told the crowd, “We can’t continue to allow China to rape our country, and that’s what they’re doing.”
It’s therefore not so shocking that Trump eschewed Bush and Obama’s approach and adopted a more pugilistic one. “This administration has thrown off an ideological attachment to engagement for engagement’s sake,” a senior administration official told me. “That probably was overdue.”
Here’s what that means in practice: The US will no longer just talk about the problems it has with China. Instead, Washington will simply punish Beijing for perceived wrongs.
That’s manifested itself mostly visibly in a war — a trade war.
“Tariffs. I want tariffs.”
America and China are the world’s two largest economies, and the US is China’s largest trading partner. But nothing seems to bother Trump more than that relationship.
“It’s an economic enemy, because they have taken advantage of us like nobody in history,” he said about China during a 2015 Good Morning America interview. “It’s the greatest theft in the history of the world what they’ve done to the United States.”
America’s trade deficit in goods and services with China was $335.4 billion in 2017. That deficit keeps rising, and in August it grew by another $31 billion, meaning that Beijing exported $31 billion more goods to the US that month than the US sent the other way.
Trump and some of his top economic advisers, including Director of Trade and Industrial Policy Peter Navarro, US Trade Representative Robert Lighthizer, and Commerce Secretary Wilbur Ross, see this as a bad thing.
“When net exports are negative,” Ross and Navarro wrote in a policy paper during the presidential campaign; “that is, when a country runs a trade deficit by importing more than it exports, this subtracts from growth.”
They believe the remedy, therefore, is to curtail imports from China in order to boost economic growth. To do that, Trump has turned to tariffs — taxes on imported goods, in this case from China — that make them more expensive for American consumers to buy.
But as my colleague Matthew Yglesias has explained, doing this to boost the economy doesn’t actually work:
If America’s net exports grow because America becomes a fashionable tourist destination and sales of Boeing airplanes surge, then that will boost the economy. But if America’s net exports grow because new Trump-imposed taxes cause the price of imported goods to surge, then the economy is going to shrink.
Trump and his advisers, though, continue to insist that this is the way to go. “Tariffs. I want tariffs,” Trump told advisers about trading with China during Chief of Staff John Kelly’s first week in the White House.
He has those tariffs now — and it has ignited a trade war.
On August 7, for example, Trump announced that he’d place 25 percent tariffs on $16 billion of Chinese goods. The tariffs mostly targeted high-tech Chinese products to put economic pressure on Beijing’s “Made in China 2025” program, a government initiative to transform the country into an advanced manufacturing powerhouse in areas like biotechnology, artificial intelligence, and autonomous vehicles.
The next day, Beijing responded in kind, putting the same percentage of tariffs on the same amount of American goods. As of now, the US has imposed tariffs on a total of $50 billion in Chinese items, and it doesn’t look like the tit-for-tat will stop anytime soon.
In fact, Trump is a week away from placing tariffs on $200 billion worth of Chinese products in part because neither side has agreed to a new trade deal on intellectual property and industrial issues. Even more could follow: “I hate to say this, but behind that there is another $267 billion ready to go on short notice if I want,” the president said on September 7.
If he follows through on all his tariff threats, Trump will have placed levies on nearly every product China sends to America.
Beijing, of course, is unhappy with this whole ordeal. “There is a Chinese saying,” Geng Shuang, a spokesperson for China’s Foreign Ministry, said on September 14, “‘You will sacrifice 800 soldiers of your own to kill just 1,000 enemies.’ It’s meaningless to discuss who loses 1,000 and who loses 800.”
It appears Trump is the sole reason why Washington and Beijing have yet to reach an agreement even after months of talks. “Twice now the Chinese have thought that they had a deal,” the Center for Strategic and International Studies’ Glaser says, “but then it fell through when it went to the president.”
The US and China may yet hold another round of trade talks despite the newest sanctions, but it now may be too late to stop the spat. “China is convinced that Trump is not looking to resolve the trade dispute,” Daniel Russel, the State Department’s top Asia diplomat from 2013 to 2017, told me. Instead, he says, the Chinese feel Trump is merely using trade issues as a way “to undercut China.”
China’s fears may be more real than it thinks.
America’s plan to ruin China’s economy, explained
Three sources familiar with the Trump administration’s economic strategy toward China tell me that the White House has two main objectives in the trade war.
The first is to remove China from the center of the global supply chain. Here’s one example of Beijing’s importance: Apple has around 27 China-based suppliers, mainly in the electrical components sector.
Imposing tariffs on Chinese products, some of which form parts in complicated items like automobiles, could prompt manufacturers to look elsewhere for those components. That would seriously hurt China’s economy as money flows to other companies in other countries.
The second goal is to make multinational corporations wary about doing business in China. If large companies, say South Korea’s Samsung or America’s Google, decide it’s too expensive or too politically dangerous to operate in the country and choose to build plants elsewhere instead, that would also harm China’s economy.
Apple prices may increase because of the massive Tariffs we may be imposing on China – but there is an easy solution where there would be ZERO tax, and indeed a tax incentive. Make your products in the United States instead of China. Start building new plants now. Exciting! #MAGA
— Donald J. Trump (@realDonaldTrump) September 8, 2018
Put together, it appears the administration is purposely aiming to harm China’s economic strength.
If the plans succeeds, a massive slowdown — or, worse, a reversal — in China’s economy could lead to a global financial crisis. The ripple effects of the world’s second-largest economy slowing down would hit nearly every market in every region and lead to billions of dollars lost throughout the world.
When pressed, the senior Trump administration official denied that the tariffs are intended to crash China’s economy.
As long as Beijing is receptive to US exports, “we have no interest in crippling China’s economy,” the official insisted. “What we have is an interest in is ensuring that China plays by the rules and, as China’s economy develops, it is as open to US participation as the US market has been for China.”
Yet the trade war has led to the opposite result: more tariffs on US-made products. In other words, the Chinese market is currently more closed to American exporters than it was before Trump became president.
The hope is that the trade spat will force China to back down and open up its market more than before in the future. But it has so far had a negligible effect on China’s economy, in part because it takes so long to notice changes in trade. It’s still possible, though, that an extended economic fight with the US could deter investors from pouring money into China.
Even if that does happen, it could end up hurting America’s economy at the same time. While fewer than 1,000 primary metals manufacturing jobs have returned to the US, many of those plants use Chinese products to assemble complex items. Increased tariffs on specialized products could force factories to spend more on those items, thereby costing American jobs in the future.
Meanwhile, the prices of steel and washing machines — both items on which Trump placed tariffs — have gone up.
It’s not just the trade war
On its own, the trade war is a dramatic change in US-China relations — but that’s not the only place where the Trump administration has flexed its muscles.
Let’s start with Taiwan. The little island of 23 million people off China’s coast is of great importance to Beijing. China considers the island — now a self-ruled democracy — part of “One China,” demanding that the US and others accept that.
The US has consistently refused to do so, even as other countries have. In late August, for instance, El Salvador broke its ties to Taiwan and established diplomatic relations with China. The Trump administration reacted forcefully, blaming Beijing for “apparent interference” in El Salvador’s politics and suggesting the US may reevaluate its relationship with the Central American nation. Taiwan now only has 17 countries that recognize it as an independent country.
In June 2017, Trump also approved a $1.4 billion arms sale to Taiwan, which included advanced missiles and torpedoes. And in March, he signed the Taiwan Travel Act, allowing senior US officials to meet with their Taiwanese colleagues in the country, as well as having Taiwan’s officials come to the US.
US support for Taiwan remains a huge sticking point between Washington and Beijing. “Compared with economic and trade issues, the Taiwan issue is a top priority for Beijing and is more politically sensitive,” Fu-Kuo Liu, an expert at National Chengchi University in Taiwan’s capital, Taipei, told Bloomberg on March 13.
But there’s more.
In May, the Trump administration told China it could not participate in the Rim of the Pacific (RIMPAC) international military exercise in Hawaii, which takes place every other year. The drill allows the 22 nations in RIMPAC to practice sailing and operating together. The Obama administration invited China to participate in the exercise twice, in 2014 and 2016, in part to incentivize China to stop behaving so aggressively in the South China Sea.
But the Trump administration specifically cited Beijing’s South China Sea actions as the reason why it was disinvited. “China’s continued militarization of disputed features in the South China Sea only serve to raise tensions and destabilize the region,” Marine Lt. Col. Christopher Logan, a Pentagon spokesperson, told USNI News. “China’s behavior is inconsistent with the principles and purposes of the RIMPAC exercise.”
Beijing claims the South China Sea, which lies on the country’s southeast coast, belongs to China. But other countries surround the body of water, including Vietnam, Taiwan, and the Philippines, each with its own competing claims. More control of the sea allows for greater access to resources — like seafood and energy — as well as global prestige.
Yet China acts like the South China Sea is an aquatic extension of its land. It has built artificial islands, some of which contain runways for warplanes to land on, and regularly allows Chinese companies to fish in areas near other countries’ coasts.
Despite that, Beijing says the area is “calm” and accuses others, including the US, of fomenting tensions there.
Finally, the Trump administration has cracked down on Chinese Communist Party-funded programs, known as Confucius Institutes, that offer language and culture classes on more than 100 college and university campuses in the United States.
The institutes are ostensibly intended to help American students learn Chinese and introduce them to Chinese culture, and many universities have turned to them as a cost-effective way to provide Chinese-language instruction to students.
But critics, including members of Congress and the FBI, accuse the institutes of trying to spread the Chinese government’s influence on American campuses and indoctrinate students and faculty with Beijing’s views on history and foreign policy.
In February, Sen. Marco Rubio (R-FL) described the institutes as part of “China’s aggressive campaign to ‘infiltrate’ American classrooms, stifle free inquiry, and subvert free expression both at home and abroad.”
Indeed, as Bethany Allen-Ebrahimian, one of the leading journalists reporting on Chinese influence operations in the US, has noted, “the Chinese Communist Party has openly said that Confucius Institutes are used for propaganda. Former top party official Li Changchun has referred to the institutes as ‘an important part of China’s overseas propaganda set-up.’”
Trump has sided with the institutes’ critics: In August, he signed a Pentagon funding bill that contains a provision restricting universities from using Defense Department money to fund language programs taught by a Confucius Institute. (The Pentagon frequently provides grants to universities to fund training in critical languages — like Mandarin Chinese.)
China hasn’t caved to Trump. It’s fought back.
Russel, the former top diplomat who’s now at the Asia Society, says the Trump administration’s approach toward China has done little to improve Beijing’s behavior — and in fact has provoked the opposite response, in many cases.
Since Trump became president, China has moved closer to Russia both militarily and economically, helped North Korea escape US-led sanctions put in place to halt its nuclear program, and continued to do business with Iran despite US efforts to starve Tehran’s regime of money.
Take the Russia relationship. China’s military joined Russia’s this month for its biggest war game since the Cold War, sending 3,200 Chinese troops to the participate in the exercise. That came just four months after the US announced it was kicking China out of its big war game, suggesting China’s decision to participate in the Russian exercise was at least partly a response to America’s snub.
The same day the Russian war game kicked off, Chinese President Xi Jinping traveled to the Russian city of Vladivostok to meet with Russian President Vladimir Putin on the sidelines of a Russian-sponsored economic forum. Standing beside Putin, Xi told reporters that China and Russia would work together to maintain stability and peace in the world.
Just two months before, Xi had awarded Putin the first Friendship Medal of the People’s Republic of China.
China has also complicated Trump’s signature foreign policy initiative: dismantling North Korea’s nuclear program. Beijing accounts for about 90 percent of Pyongyang’s trade, which is why Trump has put immense pressure on China to curb its economic ties with North Korea.
But in recent months, Beijing has increased its trade relationship with Pyongyang — thereby weakening the effect of the harsh economic sanctions that helped bring North Korea to the negotiating table in the first place.
Indeed, when Trump abruptly canceled Secretary of State Mike Pompeo’s planned visit to Pyongyang in late August because the US and North Korea were “not making sufficient progress with respect to the denuclearization of the Korean Peninsula,” he explicitly blamed China for the breakdown in negotiations:
I have asked Secretary of State Mike Pompeo not to go to North Korea, at this time, because I feel we are not making sufficient progress with respect to the denuclearization of the Korean Peninsula…
— Donald J. Trump (@realDonaldTrump) August 24, 2018
…Additionally, because of our much tougher Trading stance with China, I do not believe they are helping with the process of denuclearization as they once were (despite the UN Sanctions which are in place)…
— Donald J. Trump (@realDonaldTrump) August 24, 2018
…Secretary Pompeo looks forward to going to North Korea in the near future, most likely after our Trading relationship with China is resolved. In the meantime I would like to send my warmest regards and respect to Chairman Kim. I look forward to seeing him soon!
— Donald J. Trump (@realDonaldTrump) August 24, 2018
And when Trump withdrew the United States from the Iran nuclear deal in May, one goal of doing so was to isolate Tehran economically by reimposing sanctions the agreement had lifted. The Trump administration has lobbied multiple countries, particularly in Europe, to stop doing business with Iran as part of the effort.
Beijing, however, has continued its business relationship with Tehran, mainly in the energy sector. China is Iran’s biggest energy customer, spending around $15 billion a year on crude oil. Beijing doesn’t want that to change anytime soon.
“China’s commercial cooperation with Iran is open and transparent, reasonable and fair, not violating any United Nations Security Council resolutions,” the Chinese government said in a statement in August.
Meanwhile, Beijing continues some of its grander projects. The biggest is China’s Belt and Road initiative, under which the country is investing more than a trillion dollars around the world to improve the country’s economic and political influence.
It’s part of Xi’s grander effort to make China — and not America — the world’s most powerful country.
After Trump’s election and the ascendancy of his isolationist rhetoric, Xi went to the World Economic Forum in Davos, Switzerland — the yearly meeting of the global elite — to proclaim that China would defend increased globalization. And after Trump withdrew the US from the Paris climate agreement in 2017, Xi said China would take the lead in combating climate change, even though China is the world’s largest carbon polluter.
But, surprisingly, Trump hasn’t retaliated against China for thwarting America’s foreign policy in these areas. The answer why may lie in a particular Trump tweet: “President Xi and I will always be friends, no matter what happens with our dispute on trade,” Trump tweeted on April 8.
Trump’s approach is “sowing the seeds” for larger problems
Trump maintains he and Xi remain close ever since they met at Mar-a-Lago for a summit in April 2017.
Xi, who could lead China for life, may feel the same, but he hasn’t stopped pursuing China’s global objectives even with Trump in the White House. That means their good personal relationship — real or imagined — won’t be enough to make China America’s ally anytime soon.
But experts warn that Trump’s strategy toward China could have more serious repercussions that endure long after Trump, and perhaps even Xi, is in power.
“It’s potentially creating a generation of Chinese decision-makers whose view of the United States is a hostile one,” says Russel. “The Trump administration is sowing the seeds of a host of problems that will only become evident over time.”
Correction: A previous version of this article incorrectly stated America’s trade deficit with China in 2017 and by how much the deficit rose in August 2018.
Author: Alex Ward