Trump Elevates China-US Cooperation While Pressuring Regional Allies On Trade – Analysis

US President Donald Trump’s visit to Beijing, China, on November 8th and 9th, as part of his 12 day-tour of Asia-Pacific ending Monday, November 13th , went much as expected, focusing on reducing America’s trade deficit while playing on the region’s North Korean nuclear threat – save for an unexpected remark to China’s President Xi Jinping.

The widely-reported statement concerned China’s politically-sensitive trade surplus with the US, where Trump declared, “I don’t blame China….who can blame a country for being able to take advantage of another country for the benefit of its citizens?”, subsequently tweeting he would have done the same if he was leader. The question arises, though, whether this was merely the usual Trump off-the-cuff remark or reflective of a strategy gradually positioning the US to work jointly with China in bilateral trade, global security and other broader areas of global policy making?

Xi and Trump agree their countries’ first strategic bilateral relationship

Perhaps Trump’s surprise comment was a result of his feeling generous with the knowledge that $250 billion worth of trade and investment deals were announced between Chinese and American companies? It may not have been as much as the $400 billion signed in Saudi Arabia, during Trump’s visit there in May 2017, but it was enough to make the US President feel he could bring “deals” of some sort back home to Washington, where the prospects of agreements, with US lawmakers in the domestic arena, including on tax reform, appear more remote than concluding deals on reducing America’s yawning trade deficits with Asian trading partners.

In spite of Trump’s seemingly soft, perhaps one may say face-saving approach, to his host, Xi, the visit to China proceeded with the two leaders concluding a “consensus”, as it was termed, in the development of China-US relations.

One may argue that the consensus has the character of a de-facto strategic partnership – a relationship which China had failed to secure with the US, in the past – including a mooted constructive strategic partnership between former Chinese President Jiang Zemin and US President Bill Clinton. Moreover, it is certainly a turnaround from Trump’s predecessor, Barack Obama, whose approach to China was tilted more towards containment and exclusion of China, than bilateral deal making, in the form of the military and diplomatic “Asia Pivot” policy and Trans Pacific Partnership (TPP) trade policy.

The consensus does highlight several areas of non-economic cooperation including emphasis on the leading role of head-of-state diplomacy; upholding world peace and security; high level diplomatic, security, law enforcement, social and people dialogues; reinforcement of military exchanges; and denuclearization of the Korean peninsula. On the economic front, the two sides agreed for China to increase imports from the US; expand comprehensive economic dialogue; enhance macro-economic policy coordination; ease market access to China’s financial markets such as banking; and reduce China’s automobile tariffs, among other measures.

Trump’s cooling cooperation with America’s allies on trade and regional policy

By contrast, Trump experienced and exercised somewhat less cooperation in meetings with other regional leaders on his five-nation tour.

This was particularly so with Japan’s Prime Minister Shinzo Abe, where no consensus was reached between the two leaders on moving forward with Trump’s proposal for negotiating a Japan-US free trade agreement. For Abe, this had become a thorny issue given that Trump had walked away from the TPP, a project which the Japanese prime minister had co-sponsored, as his flagship regional trade policy, with Barack Obama.

Moreover, uncomfortable differences boiled to the surface, towards the end of Trump’s trip to Japan, on aspects of security policy. On this matter, Trump suggested that Japan should shoot down North Korean missiles with the latest military hardware which the US president was trying to encourage Japan to buy, in an obvious effort to tackle the trade deficit. In turn, Abe somewhat reservedly remarked that Japan may intercept missiles only where “necessary”, given Tokyo’s policy, until then, was to avoid such action.

Taking a somewhat different position to Abe, South Korea’s President Moon Jae-in had agreed to Trump’s insistence for a re-negotiation of the Korea-US free trade agreement, even though Moon had earlier rejected the idea. Nevertheless, it was undertaken, albeit reservedly, in the context of Trump’s assurances concerning Washington’s ongoing security support for Seoul in dealing with the perceived threat from Pyongyang. Trump had also agreed with Moon, that cooperation with China was crucial in resolving the North Korean nuclear issue.

However, during their talks, in Seoul, Moon offered no big ticket concessions in resolving the ballooning trade deficit with the US, which had doubled, in the last five years, since the ratification of the trade agreement, to $27.6 billion, in 2016.

Conclusion

It is noteworthy that throughout Trump’s Asia tour, particularly in Japan, South Korea, Vietnam and the Philippines, the US president made regular reference to a new policy concept, geographically framed as the “Indo-Pacific”. The policy, which prospectively involves India, Japan and Australia, apparently embraces the principles of freedom of trade navigation and transparent rules in the building of infrastructure. Doubtless, such a policy concept has been designed as a counterweight to Xi’s Belt and Road. How this plays out, remains to be seen, but it could be the first major test for Xi’s and Trump’s newfound “consensus” in teaming up to cooperate on global development.

*About the authors:
Bob Savic
and Chris Dixon, Global Policy Institute, London, UK


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