This summer thus far has greatly frustrated those in support of friendlier China-US relations. China-US trade talks recently took a turn for the worse. The Trump administration, after accusing Beijing of reneging on past trade commitments, has sought to raise tariffs to 25% on US $200 billion worth of imported Chinese goods. The Office of the US Trade Representative has proposed slapping tariffs on nearly all remaining imports from China, which are valued at approximately $300 billion. It is now soliciting public comment on the proposed list, which is expected to be issued as early as late June, following a congressional hearing.
The real challenge confronting Chinese leaders is not how to cope with the “trade war,” but the fundamental change in US strategy toward China. Beginning in late 2017, the Trump administration's right-wing Republican hawks adopted a series of guidelines, including the United States' latest National Security Strategy, that labeled China a revisionist power threatening international order and America's top “strategic competitor.” The Trump administration has decided to implement a “whole-of-government” strategy to counter China's challenge. Since then, the White House has allowed the executive branch — as well the defense and intelligence apparatus — to issue policies and begin special campaigns intended to further contain and guard against China. The US Navy continues to conduct “freedom of navigation” operations near China's islands and reefs in the South China Sea, implementing the framework of America's Indo-Pacific strategy in an oppressive and proactive manner. The US has also sent Navy ships through the Taiwan Strait more frequently, and strengthened strategic deployment targeting China in its geographic neighborhood.
As China-US trade talks worsened, on May 12, 2019, the US House of Representatives unanimously passed the Taiwan Assurance Act of 2019, adding insult to injury after its earlier Taiwan Travel Act. This move further fueled tension in Cross-Strait relations and put America's already shaky commitment to the “One China” policy on even thinner ice. On May 15, President Donald Trump signed an executive order declaring a national emergency, and requesting a ban on the use of telecommunications equipment produced by enterprises “imperiling national security” in the United States. This was a substantial step in cutting off Huawei's supply chain.
These moves have exacerbated China-US friction and pushed bilateral relations over the edge. Currently, the foreseeable consequences are as follows: First of all, the chance of a successful China-US trade deal is becoming increasingly slim. The earliest possible resolution to the conflict will be postponed until the Asia-Pacific Economic Cooperation conference later this year — and that would be under the best of circumstances. The tariff war also impacts the economic performance of both countries more profoundly, deepening China's stagflation and America's inflation pressure. If this continues for a year or so, the global economy will be dragged into a recession. Second, China-US cooperation on trade, technology, investment, education, and culture will face pressure and even risk total collapse, with possible spillover effects. As a result, the international market fueled by globalization will be subject to potential disintegration. All parties concerned have been researching the bifurcation of globalization. Third, Chinese domestic sentiments of victimhood alongside anti-American feelings are running high. What is even more notable is that this time it is the middle and high-income classes who have become the flagbearers of anti-American sentiments in China — thus the policy foundation that sustains basic bilateral cooperation is being undermined. Fourth, due to growing risk factors around the Taiwan issue, the adventurism of Taiwan-independence separatists has awakened. The Tsai Ing-wen administration has been outspoken about “seizing the opportunity” to bring cash from the Chinese mainland back to Taiwan and sign free trade agreements with US businesses. It advocates buying advanced jets and submarine technology from the US. Fifth, the direct competition between China and the US over the Western Pacific and particularly the South China Sea will come to the surface and become officially normalized. This struggle of naval power will emerge as a prominent aspect in China-US strategic competition. Given the large “grey zone” between war and peace, small armed conflicts are more likely to break out now than ever before.
Due to these dynamics, both Chinese and American strategic experts have lowered their expectations for bilateral relations. Instead of attempting to avoid a new cold war, they now claim that a de facto “tech cold war,” a form of localized cold war, has already begun. In the US, some believe that China-US relations have not only passed the “tipping point” proposed by Johns Hopkins University professor David M. Lampton, but are also crossing the Rubicon by pursuing whole-of-government and across-the-board strategic competition that seems to be unstoppable. More and more it appears that the US is trying to reshuffle the existing mode of globalization by expelling China from the existing supply chain, whose upstream is dominated by the US. If this approach does not work, the US will join forces with its allies to set up a new system with higher standards and exclusive rules based on all kinds of bilateral and micro-multilateral arrangements, leaving China in the old system to play on its own.
These US actions have ruined America's reputation in China's intellectual community and civil society, which took years to build. America's image has suffered across at least three aspects. For starters, the US has always claimed to welcome the peaceful rise of China as a stable and prospering power. However, when China became competitive enough in technological and military domains, the US removed its disguise and showed its determination to crush the emerging powers at all costs, even at the expense of its own people's well-being. Second, the Trump administration is abusing national governance and administrative laws and regulations to suppress the development of Chinese enterprises. In the eyes of many Chinese people, America's self-proclaimed principles of free competition and its “Big Market, Small Government” approach have turned out to be a myth. Third, one of the basic American policy themes toward China was supporting China's market-oriented development, a stance which received at least rhetorical acknowledgement from the Trump administration. Nonetheless, China's private economy has become the first to bear the brunt of the trade war. Most export orders are undertaken by Chinese private business, and it is also private business that has created China's world-class Internet products. The U.S.'s blocking of Chinese companies and Chinese countermeasures have in fact eroded the foundations of China's market economy. Therefore, there is a reason to suspect that US actions are intended to force China to change its economic system, cornering it into a situation where it has no choice but the isolation and self-reliance of autarky.
China and the US are going against their respective public images in each other's country, a development which will have ramifications for their future domestic policies, making it easier to mobilize their populations in support of their inextricably intertwined policies towards the other nation. Meanwhile, further changes in both countries' internal political climates will inevitably shape their foreign policies in turn.
Apparent US “blackmail” against China is triggering an extreme “chemical reaction.” The perception of “highway robbery” threatens the authority of the Communist Party of China's (CPC) leadership and touches upon Beijing's core interests. Forced into a corner, Beijing must fight back resolutely to weather the storm in every dimension. Meanwhile, China will work harder on its basic R&D capacity-building and strengthen the development of its domestic consumer market to be better poised for the worst-case scenarios in economic and military domains, by fostering independent development and innovation, and strengthening its ability to prevent risks and withstand external pressure. This will lead China to a more profound adjustment and transformation in the direction and mode of its national development and international cooperation, beyond a mere reconfiguration of the global supply chain. Probably the broadest consensus reached in China amid the China-US trade war is that the route China takes will not be altered by the final results of China-US trade talks.
A secondary element of the domestic consensus is about the trend of US policy towards China. Domestic debates over America's shifting China strategy and changing China-US relations, in spite of a late start, have been spurred by intensive US campaigns, and proceeded straight to proposing concrete action. Now, it is generally agreed by Chinese strategists that US strategy towards China has gone through a radical shift and there is no turning back in China-US relations. The current adjustments made by the US do not represent the personal will of President Trump but a persistent bipartisan and long-term strategic choice made by the entire American leadership to contain a rising China and maintain American supremacy. In the future, Beijing and Washington will not simply compete over interests or points of geopolitical strategy, but for two different development models, values, and ideologies, as well as visions of international order. Even if a trade deal is eventually reached that satisfies both sides, it will be more of a starting point for long-term conflicts and tug-of-war stretching to more areas and on a grander scale than the mere resolution of temporary trade frictions.
The present major concern is the fact that the US has transformed from China's biggest external market and economic opportunity into the greatest pressure and challenge for China's reform and opening up. Against such a profound shift, should Beijing launch new strategies and policies towards the US? And what kind of framework should be designed? Since the escalation of the Huawei incident, major voices in China's domestic media have made the appeal that China must “take the strategic challenges from the US as a top priority and main task of national security.”Despite the increasingly urgent necessity of forging new strategies towards the US, it takes time to ponder, discuss, and formulate the whole package. It will gradually take shape by addressing specific issues one after another, and its design needs to be balanced with global strategies. Obviously, China is still far from being fully prepared to deal with further reckless moves by the Trump administration, as Beijing seems to be stunned by recent US moves. Even in America, despite a consensus on intensifying the efforts to contain China, politicians still have not specified the framework and content of their new policy towards China.
To be sure, China-US strategies will definitely contain such clichés as struggle, competition and cooperation, dialogues and exchanges, risks and crisis management and control, as well as upholding each nation's proclaimed values. But amid all of this wrangling, China should pay more attention to its final goal: if it is necessary to design a new strategic package towards the US, what is its ultimate end? Is it revenge? If so, do most problems in modern China come from America? Or is the goal for China to replace the US and assume global dominance in its own right? If so, does China really have such intentions or the capacity to achieve such a goal? Or is the goal the national rejuvenation of Chinese civilization while respecting the dominance of the US? If so, what will China look like after such a rejuvenation? Faced with these questions, if new strategies cannot give a clear answer, will they wither like rootless trees and be taken as frivolous strategic fancies? Since China's relationship with the US is closely tied to the big picture of its reform and opening up process, if the overarching tone of bilateral relations going forward is defined by competition and confrontation, how will Beijing adjust its reform and opening-up planning? This is also something to think about in formulating China's new strategy towards the US.
Perhaps the time is now ripe to determine such a new strategy. Strategic discussions help all sectors in China gain a clear understanding of themselves, the US, and the whole world to figure out in what direction China should proceed. Before these discussions bear fruit, wild cards in China-US relations, expected or unexpected, will continue to arise one after another whether China can handle them or not. Countermeasures taken by both sides as well as emotional responses will also carry weight in shaping new strategies. We all should hear alarm bells go off when the two competing powers both deploy the rhetoric of “preparing for the worst” in their policies towards each other — if both sides continue down this path, the worst is bound to result.
