When Xi Meets the Trumps
China's president has descended on Florida for a summit with a counterpart he's never met. What happens now?
President Donald Trump will soon host his Chinese counterpart, Xi Jinping, in their first face-to-face meeting when Xi arrives at Trump’s Mar-a-Lago resort in Florida on Thursday. The meeting comes early in Trump’s presidency, after a campaign in which he frequently attacked China while contending he was better equipped than past presidents to “make deals” with its leaders. In particular, Trump has criticized his predecessors for their trade policy. Trade relations, along with the intensifying nuclear threat from North Korea, are expected to top the meeting’s agenda. What is likely to happen? How should each side approach the other? And what would constitute a successful meeting? —The ChinaFile Editors
Never has there been a better moment for President Trump to live up to his twitter handle, @realDonaldTrump. The upcoming Mar-a-Lago summit with Xi offers the clearest opportunity yet for the unmasking of the real Donald Trump.
In keeping with his long-standing association with professional wrestling, Trump has set up a classic internal battle to resolve this identity crisis. In one corner are the traditionalists — a tag team led by Gary Cohn and Steven Mnuchin, who dominate the still nascent policy process at the National Economic Council and U.S. Treasury, respectively. In the other corner are the disruptors — led by Stephen Bannon and Peter Navarro, strategists without explicit policy portfolios. Both teams appear to have strong benches: senior advisor Jared Kushner for the traditionalists and Wilbur Ross (commerce secretary) and Robert Lighthizer (U.S. trade rep nominee) for the disruptors.
Each side has its own distinct agenda heading into the Mar-a-Lago summit. The traditionalists are also incrementalists. Afflicted by a severe case of “trade-deficit disorder,” they are looking to a reduction of the outsized U.S.-China bilateral trade deficit as the means to “make America great again”; their focus is on improved U.S. access to rapidly growing domestic markets in China, especially for automobiles, agricultural products, and services (both financial and nonfinancial). The traditionalists are well-aligned with Xi’s agenda, which appears framed more along the lines of the mutual respect required of the so-called “new model of major-country relationship” that arose out of the Sunnylands Summit of 2013. As such, the Chinese would like nothing more than Trump administration validation of their new global initiatives — especially the “One Belt, One Road” program, the Asian Infrastructure Investment Bank, and World Trade Organization-based market economy status.
The disruptors argue that the days of incrementalism are over — that they have accomplished nothing more than ever-expanding trade deficits with China, the means by which a once great America has been “raped” by massive job losses, factory closings, currency manipulation, and noncompliance with WTO rules. While the facts are loose and easy in substantiating their case — especially since a technology-led erosion of U.S. manufacturing long predates the rise of modern China — the disruptors have a secret weapon: the rhetorical support of candidate Trump and his penchant for campaign-style governance.
In Trump’s world, where uncertainty is the only certainty, there are clear limits to the skill sets of those of us who purport to be experts on the U.S.-China relationship. Whether we come at the relationship from the perspective of economists, foreign-policy strategists, historians, or amateur psychologists, it is virtually impossible to predict which Donald Trump will sit down with Xi over the next couple of days. Needless to say, recent developments in North Korea complicate the call. But Trump has tipped his hand here. If need be, as he stated in his recent Financial Times interview, the United States will “totally solve” North Korea with or without China.
So now it’s show time at Mar-a-Lago, and the @realDonaldTrump is about to stand up. But don’t be surprised: Once a disruptor, always a disruptor.
Many commentators above and below are right in predicting that the North Korea problem is going to loom large in the meeting. North Korea’s firing of a ballistic missile into Japan’s waters on the eve of the meeting makes sure this is the case.
There are plenty of issues — Taiwan, the South China Sea, trade, etc. — that could sour U.S.-China relations, but nothing is more urgent than the North Korea issue. Kim Jong Un has been ever more aggressive and erratic lately, frequently conducting missile and nuclear tests (two underground nuclear tests last year alone) and allegedly assassinating his half-brother in broad daylight in Malaysia.
Looking back to the 1990s, the international community, Asian countries in particular, were worried that the North Korean government, having plunged into desperation after its Soviet sponsor disappeared, could either go rogue or collapse. That would have triggered a war or a refugee crisis in northeast Asia. Back then, Beijing guaranteed the United States and its Asian neighbors that it would keep North Korea in check, deterring it from becoming aggressive and developing nuclear and missile technologies. Since then, Washington has seen Beijing’s help as indispensable to the maintenance of peace and stability in northeast Asia, while the U.S. military was busy in the Balkans, the Middle East, and elsewhere. Over the last quarter century, whenever there was a debate in Washington about whether to compromise and help Beijing on trade, Taiwan, or other issues, invariably “we need Beijing’s goodwill and help in restraining North Korea” was a key argument supporting American accommodation of China’s demands.
Given the increasing security threat posed by North Korea today, many Asian countries would say China has not delivered. North Korea’s ballistic missile and nuclear weapon development never stopped. Making things worse was the Obama administration’s revelation last year that a Chinese state company was involved in the North Korean nuclear program in defiance of international sanctions. Many see Beijing as either having lost control of Pyongyang or having aided Pyongyang’s ambitions clandestinely. As such, the THAAD missile defense system that the United States recently deployed to South Korea is quite popular there. South Koreans see it as a necessary defense against North Korea’s growing threat when China is not helping much. China’s nationalist reaction to the THAAD system and the ensuing Chinese boycott of South Korean products only swayed South Korean public opinion more to the United States.
The Trump administration has been embattled by domestic troubles. A domestically unpopular government is often tempted to show some muscle overseas. Xi should take seriously Trump’s threat of the United States going it alone to take out North Korea’s aggressive capability. If an open conflict between the United States and North Korea breaks out, public opinion in Japan and South Korea will likely be on the side of the United States. Such a scenario would be a nightmare for Beijing, as it would force a choice between defending Pyongyang against everybody else or abandoning it. The Trump-Xi meeting is a good chance, if not the last chance, for Xi to promise more concrete, realistic action to avert military conflict over North Korea.
In the two months and more since assuming office, Trump has created several opportunities, on topics ranging from climate change to Syria and Yemen to global trade and economic stability, for the United States to cede leadership and credibility to other countries. In some of those instances, it has been Xi who has come forward to play the role of global adult. For the first time, China has a chance of assuming a role of moral leadership in addition to its roles in trade, development, and its military presence — and the elements for this are all in Xi’s control. The awareness of this in China is succinctly expressed in the state media suggestion that the United States is just one of several stops in Xi’s world tour. Nothing special, just another place to check in.
For Trump, the challenge is to present himself and his country as simply important — not hyped, not gilded, not branded, just important. It has been a century or so since Americans have had to make this effort (this is looking back to Teddy Roosevelt’s days of the soft speech and big stick), and there appears no widespread instinct for how this is done, and certainly no confidence that Trump has any way of doing it, particularly at Mar-a-Lago. By all comprehensive standards, the United States is still the world’s wealthiest society and its unquestioned military behemoth. But it is losing ground every minute as an object of respect and admiration. At the same time, Xi has proved much more at ease with an international role than any of his predecessors. He has done a good job of presenting himself in international venues as a man of confidence and courtesy, able to attract respect without bluster. The “One Belt, One Road” initiative is still marketable as a scheme for mutual enrichment and stability in much of Asia, Africa, and Europe. It doesn’t look like an even match.
But it might not be as easy for Xi as all that. Trump has managed to mar the dignity of every world leader who has come within arm’s length of him. It is one thing to sit on the other side of the world and look like a man of substance while the United States reels from a series of self-inflicted taser strikes. It is another to get through a shoulder-to-shoulder meeting with Trump without being insulted, embarrassed, or both. Xi’s handlers will have to figure out how to keep a proper distance between their man and the American president without their old tactics of shoving and shouting. Each side has its work cut out for it.
As we know, relations between President Barack Obama’s administration and Beijing were not untroubled: The pivot to Asia raised hackles in Beijing, and the period was marked by open geo-strategic rivalry that frequently tipped over into public acrimony. But one strand of U.S.-China relations not only produced positive results in both domestic and international policy but also consolidated a set of relationships that were sufficiently robust and positive to ensure that active cooperation continued, even when everything else was in the freezer.
That strand was, of course, climate change.
The United States and China are the world’s largest emitters, together accounting for around 38 percent of global emissions of greenhouse gases. Up to and beyond the Copenhagen climate summit in 2009, they were locked into a negative climate relationship, each reluctant to act unless the other was seen to do so. (China, as an emerging economy, was not obliged to pledge emissions reductions. The United States should have done so but avoided commitment by refusing to ratify the 1997 Kyoto Protocol.)
President Obama and Xi ended this stalemate and turned a negative relationship into a positive, paving the way for the successful outcome in Paris in 2015. It is hard to overstate the importance of this, not only for the United States and China, as vulnerable to the impacts of climate change as other countries, but to the rest of the world: Europe, which has exercised leadership in the past but has recently been preoccupied with other problems; and the global south, and those many countries that have contributed almost nothing to climate change but nevertheless will suffer its consequences.
In another world, climate cooperation might have been high on the agenda for this meeting: The world’s two biggest polluters might have agreed to deepen a mutually beneficial cooperation that would have earned them broad international support.
As things stand, China has muted its statements on climate change recently, perhaps to avoid raising tensions further in advance of the meeting with a man who, in one of his least defensible observations, has described climate change as a “Chinese hoax.” Xi will be well-aware that Mar-a-Lago is one of many U.S. coastal properties threatened by sea level rise but will doubtless be too polite to point it out.
Xi has made it clear that China will not abandon its climate commitments, but there is no doubt that the Trump administration’s obstruction and hostility to climate action places a greater burden on China, and could result in less leadership when more is needed. It also leaves this high-profile meeting without the easily achieved, positive outcome that climate cooperation offered. This is a diplomatic loss to the United States and China, and raises the threat for the other 195 parties to the Paris Agreement that climate action will be too little, too late.
The word “historic” is being bandied about in the walk-up to the Xi-Trump meeting, and, yes, any meeting between leaders of the world’s two most important countries is important. Still, let’s not allow the theatrical aspect of it to obscure the underlying reality, which is that there’s not really all that much that Xi or Trump is likely to do to change the basic patterns of the past couple of decades, during which the United States has had to cede a great deal in the face of China’s rise. Following is a sort-of balance sheet.
The United States has had some successes:
- Taiwan remains democratic and de facto independent;
- Trade with China has benefited American consumers and a number of major American companies;
- There has been an important degree of cooperation on matters like sanctions against Iran and on climate change;
- China has become a “normal” country, a rational actor that doesn’t want war.
The failures are more conspicuous:
- The United States has essentially yielded to aggressive territorial expansion by China in the South China Sea;
- The United States has not persuaded or coerced China to lower its trade barriers or eliminate its unfair practices;
- China has done little to help stop North Korea’s nuclear program, which is now unstoppable;
- In a colossally stupid self-defeat, the United States has jettisoned the Trans-Pacific Partnership;
- Militarily, China is making great strides toward gaining an “area-denial” capability vis-a-vis the United States in the Western Pacific;
- The main intellectual justification for “engagement” — that it would induce China to become an open, democratic, and responsible global citizen — has turned out to be mostly (not entirely) incorrect.
In other words, China, the global model for the new authoritarianism, is on course to become the dominant power in Asia, and Trump for all his tough talk doesn’t have the means at his disposal to much alter its course. Press reports indicate that Xi, eager for an atmospheric success, will make some concessions on trade and investment, which the Trump administration will no doubt ballyhoo. As to the Korean Peninsula, it might be possible that Trump the deal-maker would withdraw THAAD from the South in exchange for greater pressure on the North. Possible, but unlikely, and even if the two leaders agree to step up pressure on the North, nothing short of an American invasion (which China would adamantly oppose) is going to stop the North Korean nuclear program. U.S. foreign-policy talking heads will likely speculate on how well the two men get along. But what really matters is what might be called the deeper forces — impelled mainly by China’s determination to be a major world power and the skill it has employed in pursuit of that objective — and in that sense, it’s a mistake to think it matters whether Xi and Trump like each other or not.
Connecting the two largest economies and militaries in the world, it is hard to overstate the importance of the U.S.-China relationship. How the two countries interact will have a major impact on the global economy, security situation, and environment. Adding spice and uncertainty to the meeting in Florida on Thursday and Friday is that Trump and Xi are a study in opposites. The carefully contained Xi is very much a product of his political system; his entire career has been as a politician, methodically working his way up through the ranks over nearly 40 years. The flamboyant Trump is a political insurgent who has changed parties five times and delights in upsetting the “establishment” in Washington. Despite the intermediary roles played by the U.S. president’s son-in-law, Jared Kushner, by Henry Kissinger, and by the Chinese ambassador in Washington, Cui Tiankai, it is a fair bet that Xi is still unsure of the nature of the man he will be meeting.
Xi himself is still in the process of defining a new, more expansive foreign policy for China, and while he has shown himself not afraid to take big decisions or set new paths, he is likely to tread cautiously. That is especially so since this is a sensitive period politically for him in the run-up to the all-important Communist Party Congress at the end of the year. It is telling that the Chinese delegation has chosen to stay at a separate hotel and not at the president’s Mar-a-Lago resort in order to put distance between themselves and their host (and to avoid the danger of Trump roping Xi into glad-handing other guests).
The two men look to have very different strategies going in to the meeting: After his reverses on health care and the travel ban, and facing a filibuster over his Supreme Court nomination, Trump is likely to be after some quick result that he can tweet and celebrate. His encounter with Angela Merkel having produced poor mood music, he will want to put a positive spin on the Mar-a-Lago meeting. Xi may offer some insignificant gestures, such as talks on restraining Chinese steel exports to the United States (which account for less than 1 percent of the total). But his main aim will be to get the U.S. president to agree to broad principles that may not mean much to a transactional operator but which Beijing can interpret and apply as it sees fit. At the same time, Xi will want to reassert himself as the champion of globalization and of measures against climate change to broaden China’s appeal in the face of uncertainty about the U.S. administration’s stance.
President Trump set low expectations for the trade side of the Mar-a-Lago summit with his tweet that negotiations would be “very difficult.” He is right about that.
What the Chinese want from the economic negotiation is very clear — mostly stability and no trade war. They also have a few specific asks. They want “market economy status” from the United States and Europe, and believe they were promised it unconditionally after 15 years in the WTO. This is an issue of face, as well as having practical import in anti-dumping cases. China also wants the United States to lift restrictions on high-tech exports and to provide unfettered access for its state enterprises to come into the United States and buy firms. They would like the United States to join the Asian Infrastructure Investment Bank and recognize China’s “One Belt, One Road” program (specifically, send a cabinet secretary to their May summit). All of these are non-starters politically, except perhaps the cabinet secretary.
The United States wants to reduce the large trade imbalance and specifically asks China to eliminate the market access restrictions that prevent the consumption of American goods and services. In automobiles, a 25 percent import tariff plus domestic content rules mean that American brand cars sold in China have little U.S. content. Agricultural imports are highly restricted in important markets such as beef. In the modern service sectors such as finance, telecom, media, logistics, and health, direct investment is needed in order for the United States to export services in large volumes. However, China is the most closed among G-20 countries in terms of investment openness in these and other sectors. (In order for Chinese opening to actually lead to a lower U.S. trade deficit, the United States on its side would have to be raising savings by reducing the fiscal deficit and/or incentivizing private savings.)
China has long indicated that it will gradually open these markets, but in fact there has been very little progress for 10 years now. The United States does not have a lot of leverage to push China to open up. Threatening high tariffs is not likely to encourage China to yield and would backfire by hurting the U.S. economy if actually implemented. History is clear that protectionism does not reduce trade deficits. It leads to a decline not just in imports but also exports. Protectionism makes your partners poorer, appreciates the exchange rate, and invites retaliation — all reasons why your exports will decline. Candidate Trump also threatened to name China a “currency manipulator.” However, for several years now China’s central bank has been intervening to keep the currency high, not low. So, it is in America’s interest to recognize that this is helpful.
The first Xi-Trump summit will be a get-to-know-you meeting where each side voices its concerns. The smart move for China would be to commit to open some sectors (perhaps beef, health, and parts of financial services), since openness is in its own interest. However, China’s top leadership is probably not flexible enough to agree to something like this quickly, especially in the lead-up to the Party Congress. It is more likely that China will agree only to a nonspecific commitment to open up over time. A disappointing outcome will fuel the protectionist sentiments waiting in the wings, but China is betting that the administration will be too practical to harm its own economy with harsh measures.
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