US could launch a trade war with China within months, former US defence official says

Signs that the US government may launch a trade war against China are bargaining chips being used by Donald Trump’s White House to force Beijing to do more to contain North Korea’s nuclear weapons programme, a US political scientist and bestselling author said.

Graham Allison, a former dean of the Kennedy School of Government at Harvard University, told the South China Morning Post that unless China took significant action to constrain North Korea “in the next few weeks”, the United States would hit China with unilateral trade measures “early in the new year”.

“If the Trump administration undertakes these unilateral initiatives, the Chinese government has already said it would retaliate,” Allison said. “So we could – in six months – find ourselves in a trade war that would be very damaging to both countries.”

Allison argued in his book, Destined for War, that war between the US and China in the decades to come was “much more likely than currently recognised” unless the two nations found an escape from the “Thucydides Trap” – Allison’s term for the natural, inevitable conflict that occurs when a rising power threatens to displace a ruling power.

A US-China trade war would benefit no one, least of all Americans

Thucydides was a 5th century BCE Greek historian and politician who wrote that the Peloponnesian war inevitable because of “the growth of Athenian power and the fear which this caused in Sparta”.

Allison, a former director of Harvard’s Belfer Centre for Science and International Affairs, also served as special adviser to the secretary of defence under former US president Ronald Reagan and as assistant secretary of defence for policy and plans under former US president Bill Clinton.

Soon after Trump’s first state visit to China in early November, the US signalled that the president’s administration was weighing half a dozen enforcement actions to “fundamentally challenge Chinese trade practices”, with specific decisions expected by early next year, The Wall Street Journal reported.

Trump’s China visit will help avoid ‘trade war, currency war or whatever war’ Chinese ambassador says

Bilateral tensions over trade appear unchanged despite the signing during Trump’s Beijing visit this month of more than US$250 billion worth of business deals.

“The overall approach [towards China] now is not to negotiate over crumbs, not celebrate small deals that will have limited impact [on Chinese trade practices],” the Journal quoted one US official as saying.

Allison said it was “clear that the US is on course to demand more Chinese adjustments [on trade issues]. Trump is determined to shrink the bilateral trade deficit with China.”

In the third quarter of 2017, the US trade deficit in goods with China reached US$103.1 billion, up 6.7 per cent from the same period a year earlier. Meanwhile, US exports to China in the latest period climbed 13 per cent, according to the most recent report from the US-China Economic and Security Review Commission, a US Congressional advisory body.

“It’s likely [Chinese President Xi Jinping] will find ways to be more accommodating [on the trade agenda],” Allison said.

For Trump’s part, he appeared prepared to compromise – more than he would otherwise – on the economic agenda, which right now could be “a bargaining chip” to deal with the security agenda, to achieve his top goal of reining in Pyongyang’s nuclear ambitions, the political scientist said.

Donald Trump and Xi Jinping unveil US-China trade deals and outcomes of Beijing talks

In Beijing this month, Trump and Xi reached consensus on dealing with the North Korean nuclear weapons threat. The two presidents committed to achieve the goal of full, verifiable and irreversible denuclearisation of the Korean peninsula, the White House said.

Apart from the reported talks, Allison hoped that “in their private conversations” in Beijing, Xi and Trump got down to serious business. “If they did, and if these talks were successful, we should see the results in time,” he said.

A week after Trump’s visit to China, Beijing sent special envoy Song Tao, head of the Communist Party’s international department, to Pyongyang – the first visit by a senior Chinese official since 2015. Trump subsequently called it “a big move” in a tweet and said “we’ll see what happens!”

Both Beijing and Pyongyang have tried to put a positive spin on the trip but have remained tight-lipped about whether the Chinese envoy met the reclusive North Korean leader Kim Jong-un.

Meanwhile, China’s implementation of United Nations sanctions against North Korea continues to hamper Pyongyang’s ability to support its nuclear and missiles programme.

According to Beijing’s latest customs data released on Friday, China did not import any iron ore, lead or coal from North Korea in October, while overall trade with its neighbour fell to the lowest since February.

With Trump clearly signalling that the North Korea nuclear issue was a priority, Allison said the US president would need Xi “even more”, and the Chinese leader would become “the indispensable man”.

Allison said Xi could persuade Kim to put a stop to the regime’s missile and nuclear tests for a year. “If Xi is able to be successful here, he will be very important for Trump, in which case the economic conflict will be mitigated,” he said.