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There Is No Grand Bargain With China

Why Trump and Xi Can’t Meet Each Other Halfway


By Ely Ratner
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In true showmanship fashion, U.S. President Donald Trump is
keeping the world in suspense about whether he will soon double
down on the United States’ trade war with China or call a truce. The
big reveal will come after his meeting with Chinese President Xi
Jinping on the margins of the G-20 in Buenos Aires later this week.
Trump has at times been optimistic, telling reporters, “I think a deal
will be made. We’ll find out very soon.”
Don’t believe the hype. Any agreement in Argentina will be a tactical
pause at best, providing short-term relief to jittery stock markets and
beleaguered U.S. farmers, but having no material or long-lasting
effect on the slide toward a high-stakes geopolitical competition
between the United States and China. The days when the world’s two
largest economies could meet each other halfway have gone.
Over the course of his first five-year term, Xi passed up repeated
opportunities to avert rivalry with Washington. His increasingly
revisionist and authoritarian turn has instead eliminated the
possibility of a grand bargain between the United States and China.
On most issues of consequence, there is simply no overlap between
Xi’s vision for China’s rise and what the United States considers an
acceptable future for Asia and the world beyond.

DEAL OR NO DEAL
Whether Trump and Xi reach some short-term accommodation in
Buenos Aires is anyone’s guess. There are substantial divisions within
the Trump administration and no policy process to adjudicate them.
As a result, the White House has neither an agreed-upon bottom line
nor a clear negotiating strategy. Bilateral negotiations have been
flailing in fits and starts, leaving China guessing what might
ultimately satisfy Trump.
On most issues of consequence, there is simply no overlap between
Xi’s vision for China’s rise and what the United States considers an
acceptable future for Asia and the world beyond.
The meeting in Buenos Aires may well fail to curb the president’s
appetite for more tariffs on China. Over the last year, the Trump
administration has substantially hardened its policies and rhetoric
toward Beijing. Consider, for example, Vice President Mike Pence’s
blistering speech at the Hudson Institute in October, in which he
accused China of a litany of economic, political, and military
misdeeds. Pence continued his strident tone while substituting for
Trump at Asia’s annual regional summits in mid-November. The vice
president openly mocked Xi’s signature foreign policy program, the
Belt and Road Initiative, declaring that the United States, by contrast,
does not “offer constricting belts or a one-way road.” In the meantime,
the Trump administration has stepped up pressure on Beijing with a
series of indictments and financial penalties to blunt China’s illegal
and unfair trade practices.
All that said, it is widely known that Trump is of two minds on China.
Even as the president reiterates his long-standing belief that China
has “cheated” and “plundered” the United States, no one should be
surprised if he chooses to make a deal, declare victory, and go home.
By earning symbolic and politically salient concessions, Trump could
minimize short-term risks to U.S. markets while claiming that he
alone finally stood up to Beijing.
The contours of such a deal are well understood. Trump would agree
to hit pause on any new or higher tariffs. In exchange, China would
pledge to purchase more U.S. goods (including soy beans and
liquefied natural gas), while issuing promises to enhance Chinese
market access for U.S. products, further open its financial sector,
better protect intellectual property, and reduce joint venture and
technology transfer requirements.
Any burst of goodwill, however, will be short lived. Xi and the ruling
Chinese Communist Party are incapable of addressing the United
States’ fundamental concerns over China’s industrial policies and
state-led economic model. Because of this, any process to settle these
issues is bound to fail. Even if tariffs are put on hold, the United States
will continue to restructure the U.S.-Chinese economic relationship
through investment restrictions, export controls, and sustained law
enforcement actions against Chinese industrial and cyber-espionage.
At the same time, there are no serious prospects for Washington and
Beijing to resolve other important areas of dispute, including the
South China Sea, human rights, and the larger contest over the norms,
rules, and institutions that govern relations in Asia. Nothing Trump
and Xi agree to in Argentina will substantially alter this course.

WHO LOST AMERICA?


Historians will debate why Xi so mishandled the U.S.-Chinese
relationship, likely finding some combination of ideology, certitude of
a declining United States, and domestic exigencies that had nothing
to do with foreign policy. Regardless, the record is now clear that Xi,
whether intentionally or not, decisively sidestepped what was China’s
best and last opportunity to avert rivalry with Washington.
When Xi assumed China’s presidency in 2013, U.S. President Barack
Obama’s administration was willing to test the proposition that Xi
was both a reformer and someone the United States could work with.
The leaders rolled up their sleeves at Sunnylands in June 2013 to
begin charting a future course for what both sides referred to as the
world’s most important bilateral relationship. With tensions
simmering between the powers, this was a potentially crucial turning
point.
At the Communist Party’s Third Plenum conclave later that year, Xi
said all the right things about taking China further down the path of
reform, including letting the market play a “decisive role” in the
economy. In turn, Obama welcomed China’s rising power, viewed it
as natural and legitimate, and ultimately saw Beijing as a partner on
issues including climate change and nuclear nonproliferation.
Members of Obama’s cabinet said repeatedly that U.S.-Chinese
cooperation was necessary to address the globe’s most pressing
problems, with Obama himself making clear that he thought a strong
China was preferable to a weak one.
Obama did push back on China, for instance by underscoring U.S.
alliance commitments to Japan and the Philippines to deter China’s
assertiveness in its maritime periphery. But he did so selectively and
intermittently, and never in ways that threatened to undermine
China’s core interests or the bilateral relationship. Toward the end of
the Obama administration, the president directed his cabinet to begin
strategic stability talks with Beijing, believing that dialogue was still
the principal means to manage mounting competition.
Yet, at nearly every turn, Xi rejected Obama’s overtures in areas of
significant dispute. Instead of seeking to narrow differences, Xi
accelerated China’s efforts to develop an illiberal sphere of influence
in ways that increasingly undermined vital U.S. interests. While
Washington negotiated in good faith, Beijing dragged its feet for years
on a bilateral investment treaty that would have addressed many
issues at the root of today’s trade war. At the same time, Xi reasserted
state control over China’s economy, failing to deliver much-needed
reforms that would have created a more reciprocal economic
relationship. And after the Chinese government pledged to cease and
desist on cyber commercial espionage in 2015, U.S. intelligence
officials determined that China was back to its old ways within a
couple of years.
On security issues, Xi was equally uncompromising. In 2015, he
famously lied in the White House Rose Garden that China had “no
intention to militarize” the South China Sea. In reality, he was
planning to build artificial islands with military bases the size of Pearl
Harbor. Wielding a large economic stick, Xi used boycotts and travel
bans to punish U.S. allies, including South Korea and the Philippines,
for standing up for themselves and further aligning with the United
States. He exacted extraordinary pressure on Taiwan, calling off a
diplomatic truce and peeling off some of Taipei’s few remaining
diplomatic partners. Internally, his record on human rights has been
abysmal, exemplified by the estimated one million Muslims sent to
internment camps in western China.
By the 2016 presidential election, Xi had lost the United States.
Regardless of whether Trump or Democratic candidate Hillary
Clinton had taken the helm, Washington was readying to challenge
China on multiple fronts. Even much of the U.S. business
community—long considered the ballast of the U.S.-Chinese
relationship—had had enough, and was newly willing to see
Washington take punitive actions against Beijing. An emerging
bipartisan consensus on Capitol Hill only reinforced the likelihood
that the United States would confront China on trade, opioids,
cybertheft, and human rights.

DARE TO COMPETE
The United States should not shrink from strategic competition with
China. Analogies to World War I or the Cold War are imperfect and
misleading. Competition does not mean confrontation, much less
war. The United States should sustain dialogue with China to manage
potential crises and seek opportunities for cooperation on areas of
common interest, such as climate change. Washington’s focus,
however, should ultimately be on making the United States its best
and strongest self.
In that context, the China challenge presents a rare and essential
opportunity for U.S. political unity. It is imperative that Republicans
and Democrats build a bipartisan consensus on the issue. Both sides
of the aisle will have to make difficult compromises by approaching
divisive issues such as trade, defense budgets, fiscal policy, domestic
spending, and immigration at least in part through the lens of
enhancing U.S. competitiveness. Future U.S. administrations will
have to do a better job than Trump’s in leveraging the enduring
foundations of U.S. power, including its open society, commitment to
human rights, and powerful alliances and partnerships.
Garnering sufficient political support to compete successfully with
China will also require a clearer description of what’s at stake if
current trends continue and Washington fails to respond accordingly.
A China-dominated order would mean a United States with weaker
alliances, fewer security partners, and a military forced to operate at
greater distances. U.S. firms would be left without access to leading
technologies and markets, and disadvantaged by new standards,
investment rules, and trading blocs. Inert regional institutions would
be unable to resist Chinese coercion, and the world would see a steady
decline in democracy and individual freedoms. The net result would
be a less secure, less prosperous United States that would be less able
to exert power in the world. For now, enhancing American
competitiveness to prevent this kind of illiberal Chinese sphere of
influence should be the cardinal aim of U.S. China strategy.
One day, it will be time to talk with Beijing about making a deal. But
that day will only come once China’s momentum has stalled and Xi or
one of his successors is no longer convinced that his country is on the
path to regional dominance. At that point, Trump’s upcoming
meeting with Xi will be long forgotten.