Trump and China: From trade disputes to military escalation

During his campaign, Donald Trump promised a series of drastic changes in regards to American foreign policy

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During his campaign, Donald Trump promised a series of drastic changes in regards to American foreign policy. Even before he stepped into the oval office, he initiated the first diplomatic crisis. Breaking away from a consensus that had been set in stone for more than 40 years, through both Democratic and Republican Administrations, Trump fired the first shot at Beijing by stating he would revisit the concept of “One China” if Beijing did not agree to modify some of its economic policies.

Since 1971, and a secret visit from Henry Kissinger to Beijing at the height of the Cold War, Washington agreed not to interfere in the conflict between China and its breakaway Republic of Taiwan and tacitly sided with Beijing by stating that there was only one China. This was a classic move of realpolitik aimed at increasing the American geopolitical position in the region, without any moral or ideological grounding. The United States, hitherto referred to as the enemies of Communist China, calculated that by opening up to China they would put pressure on the Soviet Union and obtain a leverage in Vietnam where they were then at war.


Half a century later, the Cold War is over and Putin and Trump have been strong supporters of each other. But Taiwan remains a bargaining chip in the bigger geopolitical game. Donald Trump talked over the phone with the president of Taiwan, a first since 1971, his recent Republican opponent described the move as an improvement to Obama’s foreign policy since it was better to talk to a vibrant democracy such as Taiwan than to talk to authoritarian regimes such as Cuba or Iran.

Yet, this remains a cliché image to serve a purpose. If the regime in Taipei is indeed much more liberal than the one in Beijing, the conversation between Tsai Ing Wen and Trump did not result from a strategy of open support to democratization in the region. One could make the case also that talking to Cuba and Iran is actually the best show of support to the more liberal forces in those countries rather than antagonizing everyone in a dogmatic stance.

Trump regularly criticized Obama for his policies towards Russia – which were hardened after Putin supported breakaway republics against a democratic Ukraine – or for his regular support of uprisings against authoritarian regimes around the world. Therefore the argument that Trump stands up to China on Taiwan for the defense of democratic value is obviously fallacious.

However, Trump has a point when he denounces the hypocrisy of the current American position, denying express support to Taiwan while at the same time selling billions of dollars’ worth of military equipment to the islands for decades. The level of militarization of the region has actually become an issue of global concern which makes Trump’s assertive comments a risky move in a regional powder keg.

Recent intelligence has confirmed that China was becoming increasingly paranoid and determined to defend its sovereignty and access to valuable resources in the South China Sea. The latest satellite images taken of the seven artificial Chinese islands in the Spratlys archipelago confirm that those are increasingly resembling military bases with fortifications, anti-aircraft guns and drones. When confronted with the information, the Chinese defense minister answered via his Weibo account: “If a person shows off his muscles in your doorway, shouldn’t you at least prepare a slingshot?”

The problem is that brazen comments via twitter or Weibo can easily turn into full scale conflict if a spark is ignited in the region. The stealing by a Chinese vessel of an American underwater probe that measured the salinity and temperature of the ocean – determining factors in the propagation of sound in the marine environment whose precise knowledge is indispensable for the use of sonars or submarines to better suppress the noise of their displacement – further confirms the tension and risk for a dangerous escalation.

Trump’s comments on China and Taiwan were meant to strengthen the American bargaining position in future trade talks. The president-elect made no secret of his willingness to gamble on regional stability to demand modifications in Chinese economic policies. Throughout his presidential campaign, he alluded to a Chinese competitive devaluation of its currency to undercut American market shares in export markets, despite the fact that financial analysts agree than the renminbi is not anymore undervalued and this reference to a currency war is a gross misunderstanding of financial markets.

Furthermore, Trump might be overplaying his hands and failing to realize the risk, in the economic sphere itself, of taking on China. Last year, the level of Chinese foreign investments grew by 15 percent and China actually invested more in the American economy than the US in China. By threatening Beijing in order to protect American jobs, Trump might actually do the exact opposite, placing thousands of American jobs in jeopardy.

Wang Jianlin, the chairman of the Wanda Group, which employs more than 20,000 people in the United States immediately warned that he was ready to cut his investments in the United States. Similarly, Beijing confirmed its readiness to impose sanctions on American companies, in particular in the automobile sector, if tensions did not diminish. The impact would be colossal for corporate America as China represents the leading developing market and source of global growth.

Donald Trump may not be realizing how interconnected the American and Chinese economies are. He is also overseeing the amount of American bonds held by Chinese actors and the impact a conflict would have for the American economy itself. As for Taiwan, if American foreign policy seems to have evolved in its favor in the short run, in truth its position remains the same. It is no more than a bargaining chip in the minds of American deciders. Taipei will also be the first to suffer if the risks of a military conflict increase, destabilizing the entire region.

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