What To Watch As Xi Jinping Meets Donald Trump
For once, a US-China summit is genuinely hard to forecast, but those looking for tectonic shifts are likely to be disappointed. We can expect some clues, however.
For all the excitement about a superpower strongman summit so early in the new US President’s term, we will not see substantive moves towards anything like the mooted US-China “grand bargain” some Trump advisers have talked of. The two presidents are not about to conclude major deals on core issues, they are looking for low-hanging fruit around the edges. At best, each will be able to claim some modest wins, firmly state “core interests” and maintain tough appearances, but still set a sufficiently cordial tone to allow for more substantive future talks.
However, unlike most US-China summits, there is real uncertainty and the tantalizing possibility of veering from the usual choreography. This makes it intriguing for pundits but risky for protagonists. Trump will be less familiar than Xi with key issues, has not yet developed a coherent policy or team on East Asia, and faces pressure to back up his tough talk on China. Xi is more experienced and politically dominant at home, but must surely be nervous about Trump’s capacity to surprise and potentially embarrass him. As self-styled strongmen, each must fear looking weak at Mar-a-Lago, whether in the handshakes, talks or outcomes. Outcomes may thus be modest on major issues such as trade and North Korea.
The Trade Relationship
On economic and commercial issues Xi has considerable scope to offer selective concessions such as tolerating symbolic punitive trade actions, and incentives such as major Chinese investments targeted to support Trump’s domestic economic agenda. Yet Trump has been relatively consistent and sincere in his calls for ‘fairer’ trade; the gulf between his and Xi’s perceptions of fairness in US-China economic relations creates scope for real tension. This will not be significantly narrowed at Mar-a-Lago, but we may get some clues.
We could get some insights as to where Trump’s real expectations lie on the spectrum from relatively limited, symbolic concessions from China, through to the much larger – and largely unachievable – goal of making China fundamentally change its whole economic model. Trump is probably much less implacable than advisors like Peter Navarro, but it is certainly too early to write off the president’s resolve to seriously up the ante with China.
Signs should emerge as to what extent Trump will focus on headline trade deficit and currency issues, versus more specific market access and reciprocity grievances among US business in China. The former are arguably political red herrings and arguably of more Tweetable than tangible benefits for the US economy. In contrast, the kinds of issues that Bilateral Investment Treaty talks have sought to address offer scope for progress, but it is unclear if the Whitehouse is focused on these less emotive areas.
North Korea, No Simple Fix
North Korea has emerged as an apparent priority for Trump’s administration, but no foreign policy issue poses trickier challenges to US-China cooperation. We continue to see a rising risk trajectory for the Korean peninsula this year. North Korea is one area where a more risk-taking, anti-conventional US leadership could actually do some historic good; the corollary is that getting it wrong could be catastrophic. Despite talk of pre-emptive military action, the Trump team’s recent policy review seems to portend intensification of existing efforts to tighten economic pressure on the North, largely via pressure on China. In assessing any summit outcomes on this front, there are some fundamentals to bear in mind.
A policy to make this “China’s problem to fix” is unrealistic: North Korea’s entire strategic outlook and threat perceptions are fixated primarily on the US and most of their goals involve the US. China has the ability to cripple the North Korean economy, but that is not the same as fixing the problem. A Kim regime under siege may well resist to the point of collapse rather than simply give up nuclear weapons, and a policy to trigger that collapse would be a huge, high-risk gamble.
A Beijing stick won’t work without some Washington carrots. The North views the US with as much distrust as vice versa, so won’t give up its WMD programs without some tangible guarantee of regime survival. Incentivizing Pyongyang is easily dismissed as “rewarding bad behavior” after the failure of past negotiations. But everything we know about North Korea indicates that expecting denuclearization before a wider resolution to its security dilemma is a fantasy, however abhorrent it may be to offer security to such a regime. China has been creeping towards the point where the risk of supporting the North starts to outweigh the risk of destabilizing it, but is still unlikely to cut Kim off unless Trump is open to talks with Pyongyang. That really would test the art of the deal.
Andrew Gilholm is Principal and Director of Analysis for Greater China & North Asia at Control Risks, the specialist business risk consultancy.