By MICHAEL SCHUMAN / Pic By BLOOMBERG
The US-China trade war is looking more and more like a cold war. US President Donald Trump’s tariffs, crackdown on alleged Chinese theft of American technology and rhetoric have overturned decades of US foreign policy that had prioritised cooperation.
Meanwhile, his counterpart Xi Jinping hasn’t budged on any concessions. China experts worry that relations between the world’s two most important countries have reached a turning point.
Trump usually gets the blame (or credit, depending on where you stand) for souring relations. He’s not the real culprit, though. The man truly responsible is China’s president. Xi has altered the course of Chinese policy in ways that made a showdown with the US almost inevitable, whoever sat in the White House.
A case can be made that a standoff has been brewing for decades. Beijing has shown minimal willingness to assuage Washington’s longstanding complaints that China has manipulated its currency, abused US companies, and stolen intellectual property. At some point, frustration had to boil over.
But until Xi came along, American politicians, businessmen and think tankers could still argue that China was moving in the “right” direction — becoming more market-oriented, integrated into the US-led global order, and open to the world. That rosy assessment carried over into the early stage of the Xi era. In 2012, when he claimed power, the president was widely perceived as an ardent reformer. That reputation seemed to be confirmed a year later when he endorsed an economic blueprint that held out the promise of deeper, pro-market liberalisation.
Then the real Xi stood up. His programme doubled down on China’s state capitalist model by targeting new industries for government support, presenting a direct challenge to American economic dominance. Diplomatically, Xi has fostered Chinese-backed alternatives to the global economic order by creating the Asian Infrastructure Investment Bank to rival the World Bank, and launching his Belt and Road Initiative (BRI).
Militarily, he’s beefed up the capability of China’s armed forces, testing American supremacy in the Pacific. And at home, Xi has turned the government into a one-man dictatorship, in the process erecting a high-tech surveillance state to tighten Communist party control.
Meanwhile, American attempts to negotiate for improved market access, better protection of technology and other important issues went nowhere. Xi has made it impossible for anyone
in the US to assert that China is still moving in the right direction.
Perhaps Xi was lulled into complacency by past US administrations that complained loudly, but rarely acted. Or maybe he assumed that American greed would keep CEOs investing in China, and Washington compliant.
More likely, his confrontational policies are a conscious consequence of his quest for supreme authority at home. A key element in Xi’s message is that he will restore China to its rightful position of greatness. The need for nationalist triumphs has led to an overly aggressive foreign and economic policy.
Even more, Xi’s push for greater control within China has eroded trust with the rest of the world. Outsiders fear Xi has extended his tentacles into nearly every aspect of Chinese society, compelling everything to serve the state’s aims. That’s heightened suspicions that Chinese companies and businessmen — even the most prominent, like Alibaba Group Holding Ltd’s Jack Ma — are possible threats to national security.
BRI suffers from a justified perception that it’s merely a front to expand Chinese influence overseas. And it seems only a matter of time before the horrific treatment of China’s minority Uighur population becomes a target of heated global criticism that will make it even more difficult to engage with his regime.
To his credit, Trump has woken Washington to the true danger of Xi’s China. But his stance is, at least in
part, a reaction to the drastic shifts Xi has brought about.
That means much of the responsibility for fixing ties falls on the Chinese president. Unfortunately, he’s shown no interest in reflecting on his role in the impending international crisis. Until he does, relations with
the US will continue to deteriorate, China will find itself increasingly isolated, and the world will face a greater risk of renewed superpower confrontation. — Bloomberg
- This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.