China-US relations

How US President Donald Trump’s visit to China can make both nations great again

Andrew Leung says major issues, from North Korea to trade and maritime rights, will be at stake when Trump visits China. But, above all, it will be an opportunity for the two powers to recalibrate their relationship and define the new world order

PUBLISHED : Sunday, 24 September, 2017, 11:01am
UPDATED : Sunday, 24 September, 2017, 6:36pm

For US President Donald Trump’s upcoming China visit, weighty issues are at stake. A new leadership team under President Xi Jinping will be unveiled at the 19th Party Congress next month. The stage is set to redefine an increasingly testy US-China relationship. Finding out how to ­unspring the “Thucydides trap” ­demands more concrete action than academic debate.

Long before Xi’s presidency, a Chinese state-sponsored 12-part TV documentary analysed the whys and wherefores of the Rise of the Great Powers during the past five centuries. Xi’s “Chinese dream” of global renaissance shows his ambitious China seems increasingly confident of its “great power” stature.

In his new book, Destined for War, Harvard scholar Graham Allison describes how seemingly ­unstoppable China’s rise has been, including its economic clout, infrastructure, wealth accumulation, consumer power, university graduate output, hi-tech manufacturing, research and development, quantum computing and geo-economic connectivity.

Graham Allison on China, US and the Thucydides trap

According to the Composite ­Index of National Capability, China is already in some respects the most powerful nation. Clearly, the world’s two most powerful countries, both wanting to become “great again”, need to ­recalibrate their relationship if a vicious spiral of conflict is to be avoided.

Trump’s China visit will help avoid trade war, currency war: Chinese ambassador

But what concrete results can be achieved in one visit? The following may offer some clues.

First, presidents Xi and Trump may jointly deliver on the North Korean crisis. Sanctions alone won’t deter Kim Jong-un from ­acquiring a regime-survival nuclear insurance policy. But any military option risks a leap into an unknown abyss. It’s now high time for Trump to talk face to face with Kim. The aim should be a Korean peninsula peace treaty involving South Korea, Japan, China and Russia. To anchor long-term stability, it should contain provisions to help North Korea’s economic reform.

Trump pulls punches with China by avoiding criticism over North Korea nuclear crisis in UN speech

Xi may help to broker a deal ­behind the scenes. When a draft agreement is ready, the Trump-Kim meeting could take place in Beijing, before the signing of the final treaty.

Xi Jinping urged restraint in call with Donald Trump: state TV

On US-China trade, a flashpoint is the protection of intellectual property. China now accounts for 38 per cent of global patent applications, as many as the next three countries – US, Japan and South Korea – combined. China should, therefore, be amenable to more stringent intellectual property safeguards. As China’s economy balances towards services and domestic consumption, which is exploding, the country should also welcome more American goods and services.

Chinese state TV reports Trump’s move to investigate intellectual property practices

As a quid pro quo, subject to ­vetting by the Committee on Foreign Investment in the US, Trump should welcome more Chinese ­investment, provided it generates sufficient American jobs, even at the cost of some tax incentives. The Foxconn deal to create 13,000 jobs in Wisconsin is a case in point.

Trump should welcome more Chinese ­investment, provided it generates sufficient US jobs

Also instructive is Trump’s earlier receptiveness to Jack Ma’s idea of using the global trading platform of Alibaba – owner of the South China Morning Post – to create a million US jobs. That would help small and medium-sized American businesses penetrate the massive China market.

Thanks to China’s reform ­imperatives, foreign investment ­restrictions have recently been liberalised for a significant number of industries and services. Examples include rail transport equipment, automotive electronics, electric vehicles, new-energy batteries, bio fuels, motorcycles, satellites, agricultural products and marine engineering. Subject to safeguards, US investments in these sectors should create many jobs back at home.

President Trump joins jobs announcement with Foxconn’s Terry Gou

The development of a green economy, including new-energy vehicles and smart cities, has moved up China’s national agenda. China has now joined the UK and France in phasing out combustion-engine cars. As the world’s largest car market, China has massive potential for green-energy technology, as well as for less-polluting fossil fuels – such as shale gas – for power generation.

While China has the world’s largest shale gas reserves, the bulk is buried in challenging terrain. Additionally, shale gas extraction is highly water intensive, with potential risks of groundwater contamination. China may not be averse to ­importing shale gas from the US, where it exists in abundance. ­Although Trump has decided to quit the Paris climate agreement, he may wish to help reduce China’s carbon footprint while opening up opportunities for American businesses.

President Xi lists six key tasks in call for green development

Another mutually beneficial initiative would be a bilateral investment treaty. According to US Treasury Secretary Steven Mnuchin, this is on the cards, subject to progress on other trade issues.

America stands to benefit from a Free Trade Area of the Asia-Pacific (FTAAP), covering the 21 economies of the Asia-Pacific Economic Cooperation bloc, including the US. China promotes this initiative. If the US takes an active part in the negotiations, the elements of America’s higher standards, now lost with the collapse of the Trans-Pacific Partnership, may be reinserted into the Asia-Pacific free trade area.

Apec miracle: how the US and China can look beyond TPP and RCEP for Asia-Pacific trade harmony

Perhaps the most critical theatre for US-China relations is the South China Sea. To China, these waters are arteries of maritime trade and the importation of essential resources. While the United States may have to maintain “freedom of navigation operations” to challenge China’s “island-building”, this need not escalate to an endgame. There is room to build trust.

For example, selected joint naval patrols and search-and-rescue exercises are feasible. Such cooperative gestures may do wonders in easing regional tensions.

Beijing now calls the shots in the South China Sea, the US and Asean must accept this for lasting peace

The Xiamen Declaration of the recent BRICS Summit hosted by China includes specific commitments to fighting terrorism. While China may not be prepared to take on a global anti-terrorism role, it could be persuaded to help with America’s global efforts to stifle the flow of terrorist funds across various channels.

Trump may also wish to look at China’s massive Belt and Road Initiative for global trade growth as a lucrative opportunity for American businesses and expertise.

America’s ability to lead the world depends not just on the example of our power, but on the power of our example
Joe Biden

The Asian Infrastructure Investment Bank, which backs the belt and road strategy, already has a ­cooperation framework agreement with the US-led World Bank. Trump may wish to highlight US business interests in belt and road projects and press Xi to ensure greater transparency and openness to international competitive bidding.

Last but not least, both presidents may heed the wisdom of ­former US vice-president Joe Biden’s words: “America’s ability to lead the world depends not just on the example of our power, but on the power of our example.”

Trump’s visit to China is well placed to show how both countries can be “great again” by forging a new productive relationship, one that is set to define the world order in the 21st century.

Andrew K.P. Leung is an international and independent China strategist