Trump Administration Could Drastically Change US-China Relations

Trump’s choice of Peter Navarro and Wilbur Ross for his cabinet – both hard-liners on China – might mean that he intends to break from existing policy on China.

Washington: President-elect Donald Trump appears to mean business when it comes to China. The appointment of Peter Navarro, a trenchant China critic, to the newly created National Trade Council this week is an indication of the new administration’s determination to cut China’s swag some.

Navarro, an economics professor at the University of California, Irvine, will lead the new strategy in trade negotiations, attempt to recover lost space in manufacturing and bring some equilibrium to the relationship between the world’s largest and second largest economies – arguably the most important relationship in the current geopolitical environment.

Where Navarro stands on China is evident from the title of his book: Death by China: Confronting the Dragon – A Global Call to Action. Critics called the book alarming and an overkill but Trump has said Navarro, an important adviser throughout the campaign, influenced his thinking on trade. The clarity of the economist’s ideas impressed him.

Whether the hawkish posture leads to an all-out trade war is anyone’s guess but what is clear is the incoming administration’s determination to force change in the existing China policy.

As if on parallel track, a bipartisan commission recently submitted a report to the US Congress on China’s growing assertions in her neighbourhood and beyond. China’s ballistic missiles can now reach Guam, an American island in the Pacific, while its intelligence tools can penetrate US security institutions, the report says.

While Navarro may sound grating to establishment ears, the US-China Economic and Security Review Commission, appointed under law, makes similar arguments, if in a more restrained manner. It recommends changing US policy on Taiwan and Hong Kong to build pressure on China, something that Trump seems to have already begun.

The president-elect shocked the Washington establishment by taking a call from Taiwan’s president Tsai Ing-wen on December – the first between the leaders of the US since 1979 and orchestrated after months of planning by his advisers, including Navarro.

The incoming commerce secretary, billionaire Wilbur Ross, shares Navarro’s hardline approach on China. It is likely that the two – who already worked closely together during the campaign – will be the main source of “new thinking” on China. The fact that Trump has yet to name his trade representative, the cabinet member actually mandated to craft trade policy, shows he is either looking to balance the two or searching for a like-minded person.

While respected China experts in Washington are appalled at Trump’s total disregard for existing policy – accommodation, dialogue and the pivot – there is evidence that the US Congress might be ready for the “tough love” approach. The loss of manufacturing jobs and silence in the once-buzzing factories in the American midwest was brought home this election as never before.

The commission’s report paints a stark picture of China’s aggressive security and trade policies since the arrival of its president Xi Jinping on the scene. Commission members travelled to China, Taiwan and India to get different perspectives and took testimony from 52 American witnesses from industry, academia, think-tanks and research institutions.

The report documents China’s single-mindedness in reshaping the economic, geopolitical and security order to accommodate its interests, whether it is the ‘One Belt, One Road’ initiative or its growing military might that threatens both the US and India. China’s substantial cyber and intelligence-gathering capabilities have penetrated major US institutions, the report says.

China and South Asia

In a special focus on South Asia, the report adds that China’s objective is to check India’s rise primarily by “exploiting the India-Pakistan rivalry” and by expanding its presence in the Indian Ocean. India, the traditional major-power in the region, is “increasingly concerned about the prospect of Chinese encirclement”.

But India can’t keep up with China’s economic might – whether it be in trade, loans or investments in neighbouring countries. China’s ‘One Belt, One Road’ initiative is “gaining traction in South Asia” despite Indian objections because it would pass through disputed territory, the report says.

On the strategic front, China is creeping into the Indian Ocean with submarine deployments and combat readiness patrols. It is also developing ports in Bangladesh, Pakistan, Sri Lanka, Maldives and Myanmar, precipitating competition in the oceanic region with India.

“The overall balance of power between China and India currently is in China’s favour, and Beijing intends to keep it that way,” the report says. China’s primary tool for maintaining superiority is Pakistan, a country whose nuclear and ballistic missile programmes have been developed with Beijing’s help.

None of the information in the commission’s report is new or surprising for New Delhi. What is interesting is the evolution in American thinking on China from the Clinton administration, when Beijing was regarded as a harmless provider of cheap goods, to now, when it is seen as a threat to American interests.

The commission faults the Obama administration for failing to achieve any “major breakthroughs” with China – whether getting Beijing to address industrial overcapacity or to abide by WTO rules. The report accuses China of dumping steel, which is harming the US defence industrial base. “If the US steel industry is hollowed out, US manufacturers of military equipment and machinery will be forced to import components from China and elsewhere,” affecting military readiness.

Navarro and Ross are not far from the commission’s thinking. It is the established ‘experts’ who are wedded to their positions and find any disturbance in the status quo frightening. If Trump takes a tough posture on China, he may have more support on the ground than imagined.