Shunning Rule Book, Trump Pursues ‘Art of the Deal’ With China

Experts say 'risky and dangerous' approach could produce results.

art of the chinese deal

U.S. President Donald Trump, a self-proclaimed dealmaker and foreign-policy neophyte, is throwing out the rules of diplomacy with China — and experts say it’s a gamble that may work.

Frustrated with Beijing over a slew of issues, the former Manhattan negotiator seems to be pursuing a more transactional approach that doesn’t wall off the economic relationship from security issues. Some experts believe the United States needs an “all chips on the table” strategy to counter an increasingly defiant China, and they see in Trump the appetite and chutzpah for carrying it out.

“In a certain sense, it’s really risky and dangerous. But in another sense, it’s a paradigm shift in how the U.S. deals with China,” Orville Schell, who serves as the Arthur Ross director at the Asia Society’s Center on U.S.-China Relations, said.

Jettisoning long-standing diplomatic practice, as Trump seemed to do over Taiwan even before he was inaugurated, appears to be unsettling a Chinese leadership used to carefully choreographed relations with Washington. “That worries the Chinese, and it’s possible that such impulsive behavior could get them to change their mind and say, ‘Let’s make a deal,’” Schell added.

Trump told the Wall Street Journal that during Chinese President Xi Jinping’s April visit, he had offered him a better deal on trade in exchange for Xi’s help pressuring North Korea to give up its nuclear weapons program. He later explicitly linked his decision to reverse his stance on labeling China a currency manipulator to the North Korea issue, saying on Twitter, “Why would I call China a currency manipulator when they are working with us on the North Korea problem?”

The comments caused many in foreign-policy circles to sit up. In a few words, Trump had seemingly tossed out the conventional wisdom applied to most U.S. diplomatic relationships that frowns on explicitly offering concessions in one area in exchange for concessions in a completely unrelated area. With China in particular, there’s been deep skepticism that such trades work, a point underscored by President Bill Clinton’s failed attempt in the 1990s to tie the annual renewal of preferential trade terms to Beijing’s progress on human rights.

Trump officials have discussed pursuing a more transactional strategy with China that would put all issues on the table, Derek Scissors, an expert on the Chinese economy at the American Enterprise Institute, said. “It’s a legitimate approach that they have talked about in private going back to the election,” he said.

Some observers cautioned that it’s not known what exactly Trump said to Xi, and whether he really made an explicit linkage. His comments defending an abrupt reversal on calling out Beijing on its currency may have been a bid to save face without acknowledging that recent Chinese currency intervention — to prop up the renminbi — is actually the exact opposite of what Trump has long railed about, said Rory MacFarquhar, who served as senior director in the National Security Council and National Economic Council during the Obama administration. “In reality, there’s probably less linkage going on than he would suggest,” he argued.

But others see signs of a marked shift. The new approach could throw open U.S.-China security discussions to a host of unrelated economic issues beyond trade, such as Chinese investment in U.S. startups or theft of U.S. intellectual property, said Juan Zarate, who served as deputy national security advisor in the Bush administration.

“Regardless of what one thinks of this new president, what he does do is open the aperture for some new thinking,” Zarate, who is now chairman of the Financial Integrity Network, said.

To be effective, the administration would need to commit to the strategy of linking economic and security issues in a sustained way and conceive of short-term actions designed to encourage better behavior from Beijing. For example, Washington could ban from the U.S. market for six months Chinese firms that have stolen intellectual property and tie the lifting of the ban to foreign-policy objectives, Scissors said.

“The issue is not asking for too much. And at some point, you have to back it up so they know you’re not bluffing,” he said.

To be sure, some linkage seeps into all sorts of foreign-policy efforts. The bilateral trade deal with Australia in 2005 was sold to Congress as a way to bolster security ties with Canberra, and was widely seen as payback for Aussie support in the Iraq War.

But explicitly linking disparate issues has been to a large degree viewed with skepticism since the early 1970s, when President Richard Nixon and then-National Security Advisor Henry Kissinger pursued a strategy of tying up all sorts of specific demands and concessions across unrelated issues as a way to deter Soviet aggression and prod the USSR to curb its military buildup.

The strategy produced very mixed results, in part because Nixon and Kissinger couldn’t fully control the inducements they were offering. They were often undercut by Congress and the federal bureaucracy, which either ignored their linkages or sought to establish their own. For example, in 1974, Congress passed legislation linking preferential trade terms for the USSR to Soviet emigration policies for Jews, disrupting Kissinger’s negotiations with Moscow.

Beyond the wisdom of linking separate issues, the big question is, with so many high-level vacancies in the administration, whether there will be anyone to carry out such a strategy and follow through on it. The approach won’t work on every issue, proponents conceded, and many were especially skeptical that China would be swayed by mere economic concessions to alter its course on North Korea, whose stability China sees as core to its security.

Meanwhile, the strategy appalls many experts who say that using economic leverage to prod China on security matters will send a broader signal to allies that U.S. foreign policy may be for sale. Even worse, they argue it could distract from the larger problem of how the United States deals with an increasingly aggressive and emboldened power whose values are at odds with own.

“The trade imbalance is a sideshow, and this transactional approach doesn’t come anywhere near the strategic thinking that’s required by China’s rise and our relative decline,” said Robert Daly, the director of the Wilson Center’s Kissinger Institute on China and the United States.

Others believe the approach simply won’t work because it requires executing deals that cut across starkly different issues. Trade deals are forever — or at least for decades — while foreign-policy problems are immediately acute, but can “morph in different ways over time,” MacFarquhar said.

Then there’s the issue of whether the administration can trust a rival power that has a record of stalling and obfuscation. “China is very good at doing the least possible in order to create the illusion of economic benefit,” Daly said.

Clinton’s foray into transactional diplomacy with China provides a cautionary tale. Under pressure from human rights advocacy groups, the former president sought to draw a link between China’s progress in seven areas of human rights and the United States’ annual renewal of favorable trade terms with China. The problem was that trade with China was in America’s strong interest, so the United States was “pitting one set of interests against another,” said J. Stapleton Roy, the U.S. ambassador to China at the time who was charged with carrying out the policy.

Recognizing the internal conflict, Beijing dug in. Then it launched a campaign to mobilize U.S. companies keen on accessing the huge Chinese market and persuaded them their market access hinged on the United States granting Beijing preferential trade terms. The companies lobbied Congress and the administration to renew the favorable trade terms. After nine months, Clinton abandoned his policy.

“Making linkages between unrelated issues generally does not work,” Roy said.

Photo credit: JIM WATSON/AFP/Getty Images

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