China Summit: An Avoidable Collision Course with Unavoidable Consequences
On April 6th, President Xi Jinping will have arrived in Florida for a two-day summit at President Trump’s Mar-a-lago resort —the importance of which cannot be understated. The first summit between a new US President and any world-leader is always important; however, in keeping with his unconventional style, this first summit is shaping up to be significantly more important due to the Trump administration’s unclear stance on China. In light of Mr. Trump’s recent statements concerning action against North Korea with or without China’s help, and despite what many commentators are speculating, a relationship defining faux pas is possible, if not likely.
Frankly, neither Mr. Xi nor Mr. Trump will approach this summit from positions of political strength. At the fast approaching 19th Party Congress in autumn, Mr. Xi will need to retain his consolidated control over the state and party, while also ensuring those loyal to him are elevated to top posts. Mr. Trump, on the other hand, has a dual burden. From a diplomatic standpoint, he has proven to be unpredictable in situations relating to China. As a result, we cannot assume whether the US will remain diplomatically consistent —devaluing any potential US promise. On the other hand, Mr. Trump’s inability to rally support around the GOP’s most recent attempt to repeal and replace the Affordable Care Act (ACA) demonstrates that even if he wishes to be consistent, he may not have the party support to uphold any promises.
Amidst all the posturing, you might find yourself asking what both leaders wish to accomplish with this summit. To answer this, however, we should look at what both leaders need to happen—or not happen—in the near future. For Mr. Xi, any summit that is unable to fully dispel fears of a trade war between the US and China can be considered a loss. Earlier I mentioned China’s upcoming Party Congress; simply put, this twice a decade event determines the political hierarchy and national focus over the next five years, while also judging the government’s effectiveness over the last five years. China’s current five-year plan set forth lofty goals concerning economic growth by the end of the decade. Unfortunately, China has already set its annual GDP growth target at around 6.5%, which is the lowest general growth rate that can achieve its stated goals. As a result, Mr. Xi must placate Mr. Trump, while not giving ground on anything that may negatively impact China’s economy.
Mr. Trump, by contrast, has the relatively more difficult position. With his presidency off to a shaky start, Mr. Trump needs to leave the summit appearing successful—something easier said than done. This means that Mr. Trump needs to follow-up on his North Korea ultimatum by coming to an agreement of increased cooperation between the US and China in halting Pyongyang’s nuclear program. Anything short of this agreement will put Mr. Trump in the awkward position of needing to take unilateral action that would further destabilize the political relationship between the US and China, or back out of another promise. Additionally, Mr. Trump’s desire to implement broad tax reforms requires that he has the support of the GOP rank and file. Due to a myriad of factors from attempted healthcare reform to constituent pressure is becoming increasingly difficult to rely on.
While I could speculate further about the goals of Mr. Xi and Mr. Trump at tomorrow’s summit, I am instead going to pivot to what to look for, and what that means for you. In terms of the political points to be lost or won over the next two days, few, if any, will produce a direct impact on the average person’s life. That said, however, there are a few possible outcomes that very well might. First among these is tone; this summit is likely to cement the tone of US-China relations under the Trump administration. It is entirely possible that the Trump administration will continue to comment on China in a contradictory way, but going forward such statements would be judged against the perceived outcome of this summit. This will impact how journalists and pundits weigh policy statements from the White House and Beijing—as either a deviation or continuation of established positions—and, therefore, will impact the type of information and analysis that is reported to you.
Second is the ultimatum regarding North Korea. If Mr. Trump truly is serious about his promise to take unilateral action against Pyongyang, then doing so would place US-China relations under immense strain. China, owing to its national history and current regional strength, views itself as a gatekeeper to East Asia. What does this mean for the ultimatum? For Mr. Xi, it means that any action that does not receive tacit approval from Beijing must be rejected. Despite his own power within the state, as well as his—and China’s—implied stance that North Korea should be reigned in, Mr. Xi will be unable to tolerate Western intervention that may violate the sovereignty of the North. The decision to act unilaterally is unlikely to impact the everyday lives of average Americans. In relative terms, this is because–short of a nuclear strike–North Korea does not have the military or population necessary to effectively wage a war outside of its local region. That said, any unilateral action on the US’ part will create geopolitical, diplomatic, and economic fallout that will inevitably affect US politics.
Finally, the issue of trade continues to be a core interest of the Trump administration. In reality, it would take a miracle for a comprehensive trade deal to be drafted and agreed to in a two-day summit. At the same time, however, future talks will take cues from this summit as a guide of what is, and isn’t, possible. They will certainly discuss Mr. Trump’s assertions that he will impose measures—such as tariffs—to correct the trade imbalance the US has with China. The outcome could prove to be mostly positive, as was the case when Japanese automakers agreed to voluntary export restraints in an effort to limit Japanese competition with domestic automakers. Or the outcome could be mostly negative, which, assuming that tariffs and other trade barriers are erected, would create a political nightmare for Mr. Xi and increased consumer prices in the US. Translated, this means products you buy every day, from clothing to computers, would become more expensive. The availability of jobs that rely on cheap imports from China—such as jobs in retail—would become less available. All the while, relations between Mr. Trump and Mr. Xi would become strained, as implementation of protectionist policies will be seen by China as a direct attack on their domestic goals, ultimately hindering any efforts to resolve the above issues.
Regardless of where you stand on the political issues discussed in this article, tomorrow’s summit will have far reaching effects. For Mr. Xi, it is a chance to establish a working relationship with a president that has a penchant for contradiction. Additionally, after the summit, Mr. Xi will know whether or not a more cooperative relationship with the US is possible. By contrast, Mr. Trump will set the tone of future interactions between China and the US, as the tone he chooses at the summit will indicate the US’ intentions and perceptions of China going forward. On top of this, however, it will indicate the seriousness of Mr. Trump’s many promises—from acting on North Korea to engaging in a trade war with China. At any rate, definitive statements about the current status of US-China relations will need to wait until next week.
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