Tea Leaf Nation

A New Way to Hold the U.S.-China Relationship Together

Climate kumbaya is out. But infrastructure cooperation could keep Washington and Beijing from clashing under Trump.

BEIJING - JUNE 14: A Chinese labourer works on scaffolding at a construction site on June 14, 2006 in Beijing. China. Despite cooling measures being put in place recently, China?s economy continues to grow. Trade surplus has hit a record high with inflation increasing in May according to official data. (Photo by Guang Niu/Getty Images)
BEIJING - JUNE 14: A Chinese labourer works on scaffolding at a construction site on June 14, 2006 in Beijing. China. Despite cooling measures being put in place recently, China?s economy continues to grow. Trade surplus has hit a record high with inflation increasing in May according to official data. (Photo by Guang Niu/Getty Images)

The Trump presidency hasn’t even begun, and the U.S.-China relationship already seems to be in trouble. Tension is fast building around a slew of issues — particularly trade, Taiwan, and the South China Sea — that are inherently irresolvable, and can, at best, be managed. The Obama administration has parried these problems partly with recourse to climate change, a bonding issue that could be deployed at will when things get dicey. So far, the fast-forming administration of President-elect Donald Trump lacks any such glue. It needs to find some, fast. Massive infrastructure cooperation could be just the thing.

Over the past eight years, when things went the wrong way on other issues in the U.S.-China relationship, cooperation on climate change repeatedly injected a degree of calm. For example, in 2014, as tension rose between Washington and Beijing over the latter’s land reclamation efforts in the disputed South China Sea islands, Presidents Obama and Xi Jinping issued their Joint Announcement on Climate Change in Beijing. Later, in September 2015 when the two countries were on the brink of a cyber conflict resulting from what is believed to be a Chinese cyber attack on the U.S. Office of Personnel Management the two leaders diffused the tension by issuing in Washington a joint statement on climate change. Indeed, climate change defined the personal relations between the two leaders more than any other issue. Their other meetings — the June 2013 meeting in Sunnylands, the March 2016 meeting in Washington, and the September 2016 meeting in Hangzhou — were all punctuated by some progress on climate change. In fact, out of all the presidential summits that involved both Obama and Xi, climate was the only area in which both sides could claim significant cooperative progress.

With Trump entering the Oval Office, all of this is now set to change. Trump has made it abundantly clear that climate change will not be a priority for his administration. Unlike President Obama, who views climate policies as engines for economic growth, Trump views them as constraints. During his campaign, he outlined no policies designed to specifically address climate; to the contrary, he pledged to extract the United States from the Paris Climate Agreement and to roll back many climate related laws and regulations that have been instituted in recent years. His appointments of climate skeptic Scott Pruitt to lead the Environmental Protection Agency, oil patch governor Rick Perry to lead the Department of Energy, and Exxon CEO Rex Tillerson as America’s top diplomat indicate that climate will cease to be a central issue in the White House.

For Beijing, the end of U.S.-China climate kumbaya will not be hard to swallow — provided that climate is replaced with another bonding agent. Diplomatic niceties aside, Chinese leaders do not care much about climate. They pretend to care because they want to show the world they are a responsible country, and to show their people they are doing something to reduce pollution — a huge problem indeed. Beijing embraces environmental policies that could help combat its acute air quality problem and gain it competitive advantage in areas like the manufacturing of green energy products, for which there is demand in the West. But Beijing rejects those measures — like the U.S.-led ban on World Bank financing of new coal-fired power plants — that might have a dampening effect on its economy or that of the developing world.

Be it as it may, despite its reservations about potentially damaging climate policies and because of its desire to be viewed as a responsible power, China made a strategic decision that when it comes to climate change, it would go along to get along. In some cases, its commitments to the cause even surpassed those of the United States.

But with the Trump Administration’s indifference toward climate on the one hand and with the potential of newly emerging tensions over trade and currency on the other, China may find its relations with the United States facing an elevated risk of deterioration. A new super glue — a rapport enabling area of cooperation that reflects commonalities in the worldview of both presidents — is urgently needed. What could it be?

As the world’s two largest economies and generators of half of the entire world’s economic growth, China and the United States share a common interest in stimulating global growth and strengthening energy security through infrastructure development. Both Presidents Xi and Trump share genuine commitment to infrastructure development. Trump has pledged to upgrade America’s national infrastructure, while the mainstay of Xi’s foreign policy is an ambitious multi-trillion dollar infrastructure development plan called One Belt One Road (OBOR) aiming to connect China and Europe in a web of highways, high-speed rail, pipelines, ports, energy terminals and fiber optic lines. Beijing has even formed dedicated financial institutions like the Asian Infrastructure Investment Bank (AIIB) and the Silk Road Fund to finance those projects.

The world’s infrastructure deficit, particularly in the developing world, is alarming. Two decades into the 21st century, one-third of humanity is still lacking access to round-the-clock electricity and basic sanitation; over one billion people have no reliable phone service. Yet the Obama administration’s response to China’s infrastructure initiatives has been muted and in some cases — such as the AIIB — it has used soft power tactics in (usually failed) attempts to undermine them. But Trump could be persuaded to go a different way. Having been a builder all of his adult life, fascinated as he is by grandiose construction projects, Trump may find OBOR more appealing. He may even be tempted to expand OBOR (or some U.S. version of it) beyond Asia into other infrastructure-deprived regions like Africa, Latin America, and Central America.

Widespread infrastructure investment, ideally led by the private sector, would not only benefit the world’s poor but also the U.S. economy. Increased prosperity in the developing world will enable more consumers to demand American goods and services. U.S. engineering, construction and equipment manufacturing companies could win lucrative contracts, and its defense and cyber security companies could help protect critical infrastructure worldwide. With more energy terminals constructed around the world, the U.S. energy industry would enjoy more destinations for its oil, gas and coal. And with 80 percent of people in the developing world lacking access to the web U.S. internet companies can expect many millions of new customers if disconnected communities were linked to the world-wide web via proper infrastructure.

Exactly one year ago during his speech inaugurating the AIIB, President Xi pledged that “the door of China’s opening up will never shut and China welcomes all countries to ride on its development.” At his inauguration next week President Trump, could answer the call. Centering U.S.-China relations on infrastructure development could fill the vacuum created by the exit of climate, giving the two countries’ leaders a common goal to work toward amidst all their other disagreements. Such commonality of purpose would help transform the discourse from an adversarial, zero-sum-game one into one more conducive to cooperation. The result would not only be a more connected world where more people can have access to energy, communication, and transportation networks — one generating economic activity, prosperity, and growth — but also a U.S.-China relationship that’s more resilient in the face of the many challenges that will undoubtedly come.

Guang Niu/Getty Images

Gal Luft is Co-director of the Institute for the Analysis of Global Security.

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