Trump-Xi Summit: New Beginning on a Rocky Road

Chinese officials have described the US-China relationship as “dangerously strained,” and the first summit between US President Donald Trump and China's President Xi Jinping may “stand out as an important first step in redefining and stabilizing a troubled and unsettled US-China relationship,” explains Robert A. Manning of the Brent Scowcroft Center for International Security at the Atlantic Council. Economic realists of the Trump administration, rather than the economic nationalists, had more influence over the summit’s tone and, as a result, no angry words were reported. Trump’s disdain for multilateral agreements, whether on trade or climate change, gives Xi space to expand China’s leadership in these areas. One key result from the summit that may deflect tensions is a 100-day plan to address trade issues with focus on the US$347 billion trade deficit with China. China and the United States are the world’s largest economies with the largest militaries, status that promotes rivalry. Still, the summit demonstrates that, despite harsh words of the past, the two nations have many reasons to cooperate. – YaleGlobal

Trump-Xi Summit: New Beginning on a Rocky Road

No grand bargains, but the Xi-Trump summit demonstrates the two leaders aim for more cooperation for now
Robert A. Manning
Tuesday, April 11, 2017

Florida summit: Chinese President Xi and US President Trump get to know each other; North Korean leader Kim Jong Un pats a long-range rocket that he threatens to send America’s way

WASHINGTON: Chinese President Xi Jinping came to the United States bearing no gifts. No grand bargains were reached, and there were no visible signs of acrimony. Few concrete achievements should have been expected after the White House sought to lower expectations in pre-summit briefings, emphasizing that the first Trump-Xi meeting was about “getting to know each other.” Despite being overshadowed by US cruise missile strikes in Syria, the Trump-Xi meeting may still stand out as an important first step in redefining and stabilizing a troubled and unsettled US-China relationship.

Establishing good rapport between leaders of the world’s two largest economies and largest militaries is still useful. For Xi, just being invited to Trump’s Mar-a-Lago private club, where Donald Trump met recently with Japanese Prime Minister Shinzo Abe, a major US ally, was something of a gift. Chinese media could portray Xi as an equal with Trump, and the Chinese leader got a boost to his stature and popularity at home. That may help explain how Xi absorbed the shock of Trump’s Syria bombings, refraining from criticism and saying only that something should be done “when people are killing children.”

About the summit, Xi euphemistically explained, “We recently have had in-depth and lengthy communications… and arrived at many common understandings, the most important being deepening our friendship and building a kind of trust in keeping with the Sino-US working relationship and friendship.” Trump echoed Xi in a tweet, saying, “goodwill and friendship” was formed.

Prior to the summit, Xi had indicated to Trump advisors that he was interested in a reset of US-China relations, described to me by numerous Chinese officials as dangerously strained. In the summit’s run-up, Trump’s bluster evaporated. Gone were threats to cite China as a “currency manipulator” – in fact, China has spent $1 trillion over the past two years to prop up the renminbi. Also gone was a threat to slap a 45 percent tariffs on Chinese goods. After a major White House policy battle, “realists” such as National Economic Council Chair Gary Cohn persuaded Trump that he could achieve most of his trade goals using current US trade law, including Sec.301 on anti-dumping and Sec.201 on injury to US firms, as well as WTO provisions – and that radical steps proposed by economic nationalists like advisors Steve Bannon and Peter Navarro risked disrupting the global economy.

Ironically, Trump’s “America First” policies are enable Xi to realize the “China Dream,” playing the role of champion of globalization. Trump’s rejection of the Trans-Pacific Partnership gives China free hand to shape the Asia-Pacific trade architecture. Trump’s rejection of climate change also leaves China to posture as a world leader. And Trump’s proposed budget cuts in US contributions to the World Bank, the International Monetary Fund, the Asian Development Bank, foreign aid and the United Nations also allow China to expand its influence – ironically, in post-World War II institutions the US created.

But “America First” is a double-edged sword for China, the flip side being US nationalism. Trump aside, the bipartisan consensus that guided US policy toward China since the Nixon opening in 1972, has increasingly dissipated since about 2010 as Beijing became more assertive economically and militarily. US hopes have faded that China, by developing a middle class and integrating itself into the global economic and political system, would become a more normative actor with  political reform to ensue.  The US-China relationship, always part cooperative and part competitive, began to tilt toward the latter.  Under Obama, the complexities of the Strategic and Economic Dialogue, an annual bureaucratic ritual, and high-profile cooperation on climate change and other global issues, softened the hard edges. The issue of climate change did not even arise during the Xi-Trump meetings.

Though Trump’s Asia team is not yet in place – with only 36 of some 400 senior political appointees nominated – he has scrapped the Strategic and Economic Dialogue and created a new “comprehensive dialogue” with smaller pieces: security and diplomacy; economics and trade; cybersecurity and law; and social/people-to-people exchanges. It’s too soon to say whether this new framework is merely moving chairs around or will result in a more focused, prioritized dialogue. But judging from US expectations for China on North Korea and trade issues, there are sure to be major speedbumps ahead.

One concrete result of the summit is a 100-day plan to address trade issues with a focus on the US $347 billion trade deficit with China. Trump is expected in coming days to hit China with anti-dumping tariffs on steel. To forestall unilateral US actions, Beijing is reportedly offering to end a ban on US beef exports, open its market to more US agricultural products, and allow majority US investment in its finance and security sectors. This could pave the way to concluding a stalled Bilateral Investment Treaty. Reducing tariffs on US autos may also be part of the plan.

Such moves would deflect immediate tensions. But the core problem is curtailing China’s predatory, mercantilist industrial policies that discriminate against US firms and China’s stalled market reforms. To add to the problem, Beijing’s newly announced “Made in China 2025” policy identified 10 areas of advanced manufacturing – including semiconductors, artificial intelligence and robotics – and provides $300 billion in loans and other subsidies to achieve dominance. Trade tensions are likely to persist – unless Xi is willing to dismantle China’s statist policies, implement market reforms to which he claims to be committed and base the bilateral economic relationship on reciprocity.

North Korea, either a source of cooperation or confrontation, has moved to the top of the US-China agenda. Xi conceded that the nuclear problem is reaching “a serious stage” and the two leaders made vague pledges of more cooperation.

Trump has threatened the United States would go it alone if China didn’t help “solve” the North Korea problem. US officials are using tough language: North Korea “must be stopped,” said Defense Secretary James Mattis.  Secretary of State Rex Tillerson hinted at preemptive action if Pyongyang’s weapons program reached “an unacceptable level.” North Korea’s firing off another missile test a day before the summit is a sobering reminder that its missile and nuclear capabilities exist precisely to deter and respond to such threats. A US policy review has explored a spectrum of options ranging from preemptive military strikes and regime change to continuing Obama’s “strategic patience.” The unacceptable risks of a military response that could spark a war are one reason why 25 years of diplomacy has not solved the vexing problem.

China has prioritized stability in Korea above denuclearization. Beijing, whose trade bilateral relationship and supply of fuel and food keep Pyongyang afloat, is unwilling to take steps that could foment instability. Still, Xi has great disdain for Kim Jong Un, and it’s conceivable that Beijing would jointly enforce sanctions ending North Korean access to the international financial system and instructing Chinese banks and front companies – most smaller, regional firms --to halt business with North Korea. No knows if that would satisfy Trump.

Clearly, the summit provided more questions than answers about the future of Sino-American relations. The world’s most important bilateral relationship will almost certainly continue to be part cooperative, part competitive, and it’s too soon to know whether the Trump-Xi Summit can provide momentum to tilt the relationship back toward the former.

Robert A. Manning is a senior fellow of the Brent Scowcroft Center for International Security at the Atlantic Council and its Foresight, Strategy and Risks Initiative. Tweet: @Rmanning4

Copyright © 2017 YaleGlobal and the MacMillan Center

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