China’s brutally pragmatic response to a shifting world order

Posted on December 1, 2016

China prefers to deal with the devil it knows. Beijing was fully prepared to deal with a President Hillary Clinton but, like the rest of us, the country’s foreign policy establishment is in the dark about what follows the election of Donald Trump. This creates genuine uncertainty in Beijing.

Chinese policy analysts are now working overtime to map out the future of Sino-American relations. Broadly, there are three overlapping schools of thought. China’s response to Mr Trump will be shaped by whichever prevails. Either way, it will be brutally pragmatic and not remotely ideological.

The first of these schools might simply be called the “instability” school. China has a deeply conservative approach to international policy. It does not like unpredictability. With Mr Trump, it has ended up with strategic unpredictability at scale.

A second school is decidedly optimistic, for several reasons. Its adherents see the “chaos” of the US election as proof for its domestic population of the unworkability of western liberal democracy. They also see Mr Trump as a transactional politician, unburdened by the orthodoxies of the US foreign policy, intelligence and human rights establishments. In their view, therefore, he is a leader with whom they have greater potential to cut a deal, either on national security or economic policy.

Furthermore, with the Trans-Pacific Partnership — which excluded China — now dead, Beijing will have greater influence on what replaces it.

Mr Trump’s anti-Muslim rhetoric has the potential to undermine US strategic interests in Indonesia and Malaysia, where China has already made significant progress in extending its south-east Asian influence. In the wider region, the optimists see the ambiguity of Mr Trump’s pre-election language on America’s South Korean and Japanese alliances increasing the probability that China’s neighbours will begin to accommodate Beijing’s interests.

The optimists also see a foreign policy opportunity for China to become a leader, not just a follower, on trade liberalisation and climate change — potentially a boon for Chinese soft power.

The third school is the pessimist school. Mr Trump, in this view, has identified China, not Russia, as the only credible threat to US power. They see the president-elect’s plan for expanding the US military, particularly the navy, as an act directed against China.

The pessimists see a “normalisation” of US-Russia relations — for example, deals on Syria and Ukraine, including the possible lifting of sanctions — as potentially affecting the tone, content and scope of Beijing’s newfound strategic condominium with Moscow. This, they conclude, would boost President Vladimir Putin’s freedom for manoeuvre in dealings with China. This occurs in the context of a complex, often adversarial relationship between Moscow and Beijing going back to tsarist times; and, more recently, strategic competition for influence in central Asia.

The pessimists also note that China’s economic “threat” was central to Mr Trump’s campaign message on why America’s middle class is going backwards and why its industries have closed and moved overseas. They correctly identify that Mr Trump is by instinct a protectionist; when he talks about a general tariff of 45 per cent on Chinese goods, and about his determination to declare China a “currency manipulator”, he might not be joking — however disastrous this may be for the US, China and the world economy in any ensuing trade and currency war.

In the pessimists’ view, this would go to the heart of Chinese national priorities today: namely the future performance of their economy.

Furthermore, China’s pessimists point to Mr Trump’s lack of interest in human rights, democracy and American moral exceptionalism as offering the US a chance to repair strategic relationships with traditional allies such as the Philippines and Thailand.

Which of these analyses will prevail in Beijing? The truth is that the ball is in Mr Trump’s court. America has now become the “strategic variable” in the future of US-China relations.

The earlier the president-elect meets President Xi Jinping at a working-level summit, the better. Both leaders are likely to play hardball. But this might just generate enough mutual respect to make the relationship work.

One area where the two leaders could make progress is North Korea, where the nuclear clock is ticking fast. An agreement on this one might just be able to radically redefine the future of China -US relations early in Mr Trump’s term.

And that would be the ultimate “art of the deal”.

The writer is a former prime minister of Australia and now president of the Asia Society Policy Institute in New York

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