US and China: New Possibilities Post-Trump

There is a great deal of speculation regarding the new Biden presidency, including whether it will soothe the existing toxic relationship between the US and China. While many credit Trump with “standing up to China” and question whether Biden will do the same, these same pundits doubt the ever-worsening relationship between the two world powers will materially change under a President Biden. This is based on two false assumptions: first, that Trump’s actions on China have been effective; second, that Biden’s mindset, experience, and leadership approach will not take him in a different direction.

Although the US China relationship is behind other more immediate initiatives of Biden’s first 100 days in office, Biden’s approach to China will be fundamentally different not because Biden is especially, or even slightly, pro-China, but because his mindset and experiences have shaped a style of leading that is so fundamentally different from Trump’s. Where Trump is an ideolog focused on high-level themes— “Make America Great Again,” or “the virus will simply disappear”—Biden is a pragmatist, focused on bringing about positive change. While Trump created ungrounded narratives to suit his political purposes— “trade wars are easy to win” or “masks and social distancing are ineffective against the virus”—Biden is a fact-based leader who surrounds himself with seasoned advisors and takes their advice. While Trump delegated, with disastrous results, full responsibility for the coronavirus response to states, Biden and his team are already well into the development of an aggressive rational program to defeat the virus. Starkest of all, while Trump created and thrived off conflict, Biden has spent his entire career as a negotiator—first as a congressman who frequently reached across the aisle, and later as Vice-President under Obama, where he deepened his extensive experience in foreign affairs to negotiate and resolve conflicts. 

What will Biden inherit from Trump’s China legacy? We must give credit where credit is due: Trump is the first President to have taken significant action to protect US intellectual property from the Chinese, who have historically taken it either through outright theft or forced sharing of proprietary IP. The prevailing perspective in Washington prior to Trump was that, as China advanced economically and its people became more affluent consumers, the country would over time become more democratic. As its people demanded increased individual freedoms, China would—the thinking went—leave behind its communist roots. This theory hasn’t been realized, and it led many in the US to make protecting American companies’ IP a lower priority than it should have been. 

On the other side of the ledger, Trump’s trade war with China utterly failed. His assertion that “trade wars are easy to win” has been entirely disproved. Congressional and economists’ studies estimate the trade war has cost the US half a percent in GDP growth and increased inflation by the same percentage. The merchandise trade deficit, predicted to decline, has increased by $100 billion from 2016 to 2019. The tariffs Trump claimed the Chinese would pay were shouldered by American consumers through higher prices. The manufacturing jobs lost to China were predominantly redirected to even lower-cost countries in Southeast Asia, not domestically to the US. The trade war temporarily dampened the Chinese economy but was nothing compared to the advantage China realized thanks to its more effective containment of the coronavirus. GDP growth in 2020 will be approximately 2 percent in China versus a 4 percent decline for the US. 

By limiting visas for highly educated foreign students—many from China—and pulling out of the Trans-Pacific Partnership (TPP), the US ceded crucial ground and allowed China further influence in the global playing field. The TPP was designed to increase pressure on China’s trading practices, but following the US pulling out, China initiated the Regional Comprehensive Economic Partnership, which covers $2.3 trillion in trade and excludes the US. The Trump Administration critiques of China also included increased control in Hong Kong, treatment of the Uighurs, the Belt Road Initiative, and China’s secrecy in the early days of the coronavirus pandemic. The common theme here, communicated by senior Trump administration officials, is that China is categorically a bad actor on the world stage and must be shunned by other countries. The criticisms have not impacted China’s behavior, but rather have rallied many Chinese people in support of their government. China’s government currently enjoys one of the highest levels of popular support of any major country, according to the global research carried out by the Pew Foundation and Edelman.

There are many benefits to be gained by a less hostile relationship with China, so how will this relationship evolve under a Biden Presidency that is shaped by fact-based decision making, thoughtful advisors and a readiness to negotiate—in so many ways the opposite of Trump’s? 

The first expected change will be initiating a civil dialogue. The Trump administration—led by Vice President Mike Pence, Secretary of State Mike Pompeo, and economic and trade advisor Peter Navarro—painted China as an evil empire. It’s likely Biden will call out China on selected issues, but the tone will be very different. Due to the importance of “face” in Chinese culture, insults antagonize and create a roadblock to a constructive relationship. Mutual respect is essential to moving forward. 

A second and more substantive change will likely be a shift from China’s domestic issues and its governance model to items negotiable for the benefit of both countries. What the US wants first and foremost is greater access to the Chinese consumer market for US corporations, a commitment China made when it joined the WTO, although its pace has been slow and its scope selective. Secondly, the trade war, which has hurt the Chinese economy and continues to harm US businesses and consumers, must be addressed. Tariffs must be sharply reduced and focused on areas of genuine abuse, e.g., the dumping of steel and aluminum or products priced artificially low because of state subsidies. Thirdly, both countries must continue avoiding military conflict, whether deliberate or accidental, at all costs—particularly in the South China Sea. Obviously, the wish list could be far more extensive, but those three points are a substantive starting point. As for China, a priority is certainly scaling back tariffs and ending the trade war. Other aims, ideally, might include regaining access to the US semiconductor industry and installing more of its homegrown 5G technology globally, with Huawei taking the lead. To do this, China must first lobby to overturn the current ban on Huawei in the US, the UK, Australia, and several other western countries. Finally, China is looking for access to the US consumer market for Chinese companies such as TikTok and WeChat, the messaging service of TenCent, which the Trump administration worked hard to limit. 

Beyond the mutually beneficial issues at play for these two world powers are many high-stakes global issues.  Biden is a firm believer in multinational institutions and agreements—again, in so many ways the opposite to his predecessor’s model of America alone. In these early Biden days, the US has already rejoined the Paris Agreement on the environment and returned to the WHO to address the coronavirus pandemic and those to come. Soon will likely be to rejoin the international discussion around efforts to slow down nuclear proliferation and mitigate the risks of nuclear engagements. The constructive re-engagement of the US and China is important not only to the two world powers, but for the world at large, and Biden has the mindset and experience to make important strides in this direction. 

How much of this can be achieved through diplomatic negotiation is unclear, but the opportunities are sufficiently important to begin the process towards more constructive engagement. Biden’s early moves are to develop a fact-based understanding of the key issues – trade, technology, military, and market access. The theme of his first communication with Xi was finding common ground and opportunities to cooperate. Absent was the poke-in-the-eye rhetoric of the Trump administration. The stage is set for constructive engagement.

1 Comment

  1. Michael and Connie Kain on March 8, 2021 at 10:51 pm

    Hi Pete, you give a very informed and thoughtful analysis of the evolving situation. We hope the governments change their approaches to each other, and we think the Biden administration could be the one set a better standard.