With US President Trump's steel tariffs, China and the US are past the 'tipping point' on a trade war. A labourer works at a cold-rolling mill on the outskirts of Wuhan. Photo: Reuters/Alfred Cheng Jin

President Donald Trump has imposed US$60 billion in tariffs on a range of Chinese products and named John Bolton, a tough critic of Beijing and the United States’ “One-China” policy, as his new national security adviser. Trump has also angered the Chinese by signing the Taiwan Travel Act, which allows US representatives to meet officials from what China considers a renegade province.

In the wake of such unsettling developments, is US engagement with China “dead”?

David M. Lampton. Photo: SAIS

David M. Lampton is one of America’s leading China experts. He is the director of China Studies at Johns Hopkins University’s School of Advanced International Studies (SAIS) in Washington, DC and a past president of the influential National Committee on US-China Relations.

Lampton says in an exclusive interview with Asia Times that Sino-US engagement will continue due to unerasable bilateral ties. But he warns the two nations must stop interacting in “counterproductive and destructive ways.” He doesn’t say a trade war is inevitable, yet cautions that it will be hard to “put the brakes” on this kind of mutual retaliation.

China needs to move ahead with promises of economic and social reform. On the US side, Lampton says Americans need to perceive increased “fairness” in their economic relations with China, while according Beijing a greater and equal role in world affairs. Washington and Beijing must also show that they can cooperate well in resolving the crisis on the Korean peninsula.

“Calling into question the admittedly delicate One China Policy is not the way forward, it is the road to perdition.,” warns Lampton, whose most recent book is Following the Leader: Ruling China from Deng Xiaoping to Xi Jinping.

Is US engagement with China dead?

No, because engagement literally means that the US and China are interacting with each other. That is occurring and will occur inevitably, by virtue of our defense, economic, and cultural interdependence.

The real question is: What will be the character of the engagement we have? On that front, key pillars of the relationship are being knocked out from under a peaceful relationship by both sides.

China is knocking out the pillars of positive engagement by not moving ahead with economic and social reform policies promised and implied in the Third Plenum of the 18th Central Committee in 2013, most important of which was “making the market the decisive allocator of resources.”

The US call for “fairness” in economic relations reflects this lack of progress. Also, Beijing’s added pressure on Taiwan and Hong Kong have not helped, and the move away from constitutional governance and succession in China are even more troubling.

For its part, the United States is knocking out key pillars. The Taiwan Travel Act is an important shift, the US president has been very inconsistent on the One-China Policy, and all this will elicit exceedingly negative responses from China.

The US FBI director has questioned the effects of Chinese students on American campuses. And, recent key strategic documents such as the National Security Strategy, the National Defense Strategy, and the Nuclear Posture Review have all brought the character of strategic relations with China into question.

Russia and China are now mentioned in US strategic documents in the same breath, both being characterized as non-status quo actors. Economically, Washington is moving away from comparative advantage as a basis for trade even as the US implores China to act according to comparative advantage.

The US is seeking to build closer relations with allies to constrain China even as Washington undermines relations with many of its allies. In short, the US and China are engaging with each other, but in a totally counterproductive and destructive way.

In May 2015, I said that the US and China were nearing a “tipping point.” While it remains to be seen where all this leads, we are now beyond the tipping point and neither China nor the United States has leaders that are, in all probability, inclined or able to reverse course until the costs become much heavier for both sides.

Is a trade war with China now inevitable?

The response to this question depends on how you define a “trade war.” But, for sure, rising levels of trade friction are certain, indeed underway. It will be hard to put the brakes on this escalation of mutual trade retaliation.

President Trump is a businessman, not an economist, and he thinks tariffs are economically rational and effective. He is not going to change his mind soon, if ever.  And President Xi is dedicated to industrial policy and protecting “pillar” industries of the future and will not back down in the face of Washington’s threats.

Both are getting support for their positions in each of their societies. In the case of Trump’s tariffs, some in the Republican Party support them (while many do not) and many in the Democratic Party support tariffs, though they agree with the US President about virtually nothing else. It is hard to see how we get out of this negative feedback loop in both societies which reinforces very destructive trade policy escalation.

What can the US and China do at this point to mend their differences and put relations back on a positive track?

I think it is going to be very difficult and it calls for leadership in both countries that remember just how expensive conflict between the United States and China was in the Cold War – Vietnam, Korea, no trade, and no cultural/educational exchange.

Unfortunately, both China and the United States are seeing leaders rise who have no visceral sense of the costs of conflict, economic, political, or military.

Managing well the Korean Peninsula is the first imperative. If there is a way forward to minimize conflict it will have to involve the following: Americans must come to perceive greater basic “fairness” in US-China economic relations.

The US call for “reciprocity” is very real and appropriate. I hesitate to speak for China, but the US must be seen to accept that China will play a greater role in global affairs – equality. Calling into question the admittedly delicate One-China Policy is not the way forward, it is the road to perdition.

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