The fact that China was going to be a focal point of US foreign policy under Donald Trump was evident from the presidential campaign itself, when candidate Trump called China a currency manipulator, accused it of dumping exports, and stated that in the future, under his administration, trade cases would be brought against China in US courts as well as at the World Trade Organization (WTO).
Recent developments reveal that President Trump is doing exactly what he stated in his campaign, as he has slapped multiple tariffs on Chinese goods for repeated violations of intellectual property rights (IPR) as well as unfair trade practices. The only departure is that the tariffs are being slapped on unilaterally without recourse to the WTO’s dispute-settlement mechanism.
An extremely worrisome indicator of increasing US unilateralism is its withdrawal or threats of withdrawal from international and multilateral organizations. It has already pulled out of the United Nations Human Rights Council (UNHRC) while objecting to the existence of members like China, which are regularly condemned for human-rights abuses themselves; and has threatened to pull out of the WTO as well. While these may serve immediate US interests of portraying a more muscular foreign policy, the fact remains that in the long run, these moves only strengthen Chinese ambitions on the international stage.
The 19th Congress of the Communist Party of China last year signaled China’s arrival on the international stage, as President Xi Jinping laid out Beijing’s objectives of taking on more responsibilities, pushing for globalization and for a more centralized role in global affairs.
Xi’s speech at the Congress clearly indicated a departure from Deng Xiaoping’s guideline of keeping a low profile, and this is actually being increasingly facilitated by the US move to unilateralism, which gives China the scope to portray itself as the responsible power in the international system.
An example of this lies in China’s own trade practices. While it has been advocating free trade and globalization, the fact remains that the Chinese economic miracle is built on trade surpluses with its trading partners, whose exports face tariff as well as non-tariff barriers in the Chinese market, over and above IPR violations in the form of counterfeit products, and despite complaints from several of its trading partners on multiple occasions over years, the situation has remained largely the same.
A close look at US exports to China, for example, reveals that the Chinese government attempts to manage the export of many primary, intermediate and downstream products by raising or lowering the available value-added-tax (VAT) rebates. China sometimes reinforces its objectives by imposing or retracting export duties.
Four years ago, in 2014, China agreed to improve its VAT rebate system, by actively studying international best practices, and to deepen communication with the US on this matter, including regarding its impact on trade. To date, however, China has not made any movement toward the adoption of international best practices. Additionally, the Chinese government uses Quarantine Inspection Permits (QIPs) to keep out agricultural products from the US, causing costly delays while they sit on the docks.
Over and above these, China keeps out genuine exported commodities, while they are pirated in China. This is because of China’s maintenance of restrictions on the right to import and distribute legitimate copyright-intensive products, such as music CDs or movie DVDs for example. This is a painful exacerbation of China’s poor record of IPR protection. These restrictions delay the introduction of such products into the market, while creating time and space for individuals and groups to ensure that infringements and patent violations continue to dominate the market in China.
As revealed by a US government report, Chinese government officials have pressured foreign companies to license their technologies or intellectual property on unfavorable terms. US attempts at getting China to address these issues have yielded negligent success. The scenario is the same for China’s other trading partners as well.
However, the US move to slap on tariffs directly without recourse to the dispute-settlement body of the WTO, or making a concerted effort with the other countries against such practices adopted by China, provides Beijing with ample scope to emerge as the supporter of a multilateral international system, while portraying the US as having selfish hegemonic aims.
Additionally, such moves enable China to forge closer alliances with other countries that find themselves at the receiving end of unilateralism. Amid this, China still gets to strengthen its own domestic development agendas.
An example of this is the US decision to pull out of the Iran nuclear deal. As reflected by Chinese Foreign Minister Wang Yi’s comments about Beijing’s determination to protect the Joint Comprehensive Plan of Action (JCPOA), in which he stated that the agreement was a result of multilateral efforts to support peace and stability, China emerges as a supporter of multilateralism, while the US pullout signals hegemonism.
As stated by Ju Jianhua, an official with the Chinese Ministry of Natural Resources, China has overtaken the US as the world’s biggest buyer of crude oil, and relies heavily on imports for the development of its strategic emerging industries.
China is already Iran’s biggest trading partner and one of the biggest buyers of Iranian crude oil. In addition to pulling out of the JCPOA, the US also threatened sanctions on Iran. That threat could actually scare off investors, and as seen in the case of Indian oil imports, Indian refiners in June began weaning their plants off of crude from Iran, in a bid to avoid US sanctions set to take effect in November.
In response, Iran’s deputy ambassador and charge d’affaires, Massoud Rezvanian Rahaghi, cautioned New Delhi that it would stand to lose “special privileges” if it cuts import of Iranian oil after US sanctions.
In contrast to this is China, which has stated that it will keep working with Iran despite the US move. Given the developmental need for oil, as stated by Ju, in addition to the fact that Chinese businesses were involved in Iranian developments to the tune of at least US$33 billion as of June 2017 according to Beijing’s Commerce Ministry, engagement between the two sides is only set to deepen further.
Therefore, if ensuring that the US is an upholder of globalization and a multilateral international system based on equality was ever an aim of US foreign policy, it is only being defeated by the resort to unilateralism. While these may be responses to other international actors that have been impinging on US national interests, be it Chinese unfair trade practices or the existence of countries like China and others as members of the UNHRC, US withdrawal into isolationism only gives more space for Chinese foreign policy to maneuver.
While some of the intended goals of US foreign policy might be to reduce scope for aggressive pursuing of Chinese foreign-policy goals, the fact remains that the results are the exact opposite.