US President Donald Trump’s intensifying trade conflict with China is reckless and unfortunate, as it could hugely harm not only the world’s two biggest economies but also others. Yet China – or perhaps, more precisely, its “core” leader Xi Jinping – is also culpable for the current stalemate.
In an opinion piece in USA Today on July 19, Chinese Ambassador to the United States Cui Tiankai said the US president’s trade war against China “is unjustified and unfair.” He strongly rebutted the Trump administration’s three main arguments against China on trade – namely America’s large trade deficit with China, Beijing’s intellectual-property (IP) theft and its forced technology transfer.
While the manner and the extent of his confrontation with China on trade are contentious and injudicious, Trump is right, at least, on the last two issues. In fact, as already noted, his concerns about Beijing’s IP abuses and forced technology transfer practices are shared by many in his country and in Europe.
In any case, whether it is justified or not, it is obvious that Trump’s current – or the first stage of – trade war against China is more about technology than trade, and this is mainly fueled by fears that the Asian giant will overtake the US in the technology field.
In his June 15 announcement about the United States’ first tranche of tariffs on Chinese exports, which came into effect on July 6, the American leader accused China of long “engaging in several unfair practices related to the acquisition of American intellectual property and technology.”
In light of such abuses, he announced that his country would implement a 25% tariff on US$50 billion worth of goods from China “that contain industrially significant technologies to dominate the emerging high-technology industries that will drive future economic growth for China, but hurt economic growth for the [US] and many other countries.”
More precisely, Trump specified that the levies targeted “goods related to China’s Made in China 2025 strategic plan to dominate the emerging high-technology industries.”
An investigation by the Office of the US Trade Representative (USTR) found that “China’s acts, policies and practices related to technology transfer, intellectual property, and innovation are unreasonable and discriminatory, and burden US commerce” and singled out Made in China as a prime example. By some calculations, the USTR’s 215-page report published in March referred to China’s flagship scheme 116 times.
Unveiled in 2015, the state-run initiative is aimed at boosting Chinese companies, enabling them to dominate the domestic market and compete globally in 10 key areas, including aerospace and industrial robots.
In a major address on May 29, President Xi strongly pushed ahead with the strategy. With the ambition to transform “China into a world science and technology leader,” he reportedly called for “concerted endeavors and strategic arrangements in key cutting-edge technologies and in fields subject to other countries’ control to achieve innovative breakthroughs.”
But Beijing’s overtly ambitious plan and, especially, its forceful way of achieving it, including allegedly forcing foreign and American companies to transfer technology, has stoked anger and fear in the US.
Apparently, the Chinese leader’s remarks on May 29 intensified such anger and fear in Washington. Late on the same day, the White House announced that the US “will impose a 25% tariff on $50 billion of goods imported from China containing industrially significant technology, including those related to the ‘Made in China 2025’ program.” It also gave notice that “the final list of covered imports will be announced by June 15, 2018, and tariffs will be imposed on those imports shortly thereafter.” All of these happened as they had been announced.
Probably, it is not merely Beijing’s “Made in China 2025” but Xi’s overall domestic and foreign policies since coming to power in 2012 and, notably, since his extraordinary consolidation of power at the ruling Communist Party of China’s National Congress last October and the National People’s Congress (NPC) this March that have made the US more wary of – and forcefully reactive to – Beijing’s intentions and ambitions.
Instead of following the “hide your strength and bide your time” advice of Deng Xiaoping, China’s former paramount leader, in both rhetoric and policy, Xi flashed his country’s new-found power and strongly stirred up national pride and rejuvenation.
For instance, in his marathon address to the CPC’s five-yearly conclave, he assertively and solemnly declared that China, “with an entirely new posture, now stands tall and firm in the East” and, consequently, urged it to “take center stage” in the world.
In the three-and-a-half-hour speech, Xi also said that by 2035, China would “become a global leader in innovation” and “a global leader in terms of composite national strength and international influence” by 2050. Implicitly, he set out new visions or ambitions for his country to overtake the US economically by 2035 and in all key areas, including military, by the middle of the century.
Under Xi’s watch, China has, among other ambitious intentions and contentious actions, massively modernized its army and aggressively built and militarized artificial islands in the disputed South China Sea.
Obviously, his muscular policies and, notably, nationalist addresses were mainly aimed at domestic audiences, especially those within the party and society concerned about his power grab and tightening grip on power. But they couldn’t go unnoticed abroad.
It could be said that Xi’s ambitions and actions are the main reasons his China was painted adversely by the Trump administration’s three key security-related documents – namely National Security Strategy, National Defense Strategy and Nuclear Posture Review (NPR). In the first two strategies, the People’s Republic was put first among the top four security challenges facing the US. The other three are Russia, two “rogue states” (North Korea and Iran), and terrorist groups. In the NPR, China was placed second, after Russia.
Judging by some of its latest moves, it seems that the Chinese government has now realized that its – or more correctly, Xi’s – overtly forceful posture is strategically ill-advised
Judging by some of its latest moves, it seems that the Chinese government has now realized that its – or more correctly, Xi’s – overtly forceful posture is strategically ill-advised. For example, the Chinese government has played down the once-much-hyped Made in China policy. According to a Reuters report on June 25, state news agency Xinhua made more than 140 mentions of the policy in Chinese-language news items in the first five months of 2018, but hasn’t mentioned it since June 5.
On June 24, the Global Times, an offspring of the People’s Daily, even urged the country “to stay modest” as, though China has “made rapid progress” in technological development, there is still “a huge gap between China and the US, which requires generations of arduous efforts to overcome.” More remarkably, the nationalistic and influential outlet observed, “voices that China will surpass the West and eventually pose a subversive threat are frequently heard] in the US and European countries and this “means the sense of crisis is stimulating and motivating society” in those countries.
Early this month the People’s Daily condemned “repeated boastfulness and arrogance,” attacking online articles that exaggerated China’s achievements. However, as rightly noted, the CPC’s mouthpiece failed to acknowledge that encouragement to do so had long come from the very top.
Indeed, in both his addresses to the CPC’s congress and the NPC closing meeting, Xi boasted about the “tremendous transformation of the Chinese nation,” which “has stood up, grown rich, and is becoming strong!” Amazing China, a 90-minute propagandist documentary film by state broadcaster China Central Television, was all about China’s huge accomplishments in many areas, including science and technology, since Xi assumed power in 2012.
Such dissatisfaction and opposition are possible, and would be understandable. While Trump’s burgeoning trade conflict with China is not all Xi’s fault, the Chinese leader shares a large part of the blame for it. Had he followed Deng Xiaoping’s “bide and hide” advice, he probably wouldn’t have generated so much alarm and, consequently, tough posture from Trump’s America.
In a very insightful piece in the Financial Times on July 25, Mark Leonard, director of the European Council on Foreign Relations, said many of the Chinese officials and intellectuals he had spoken to during his recent visit to Beijing “are awed by [Trump’s] skill as a strategist and tactician.”
They also “feel that Mr Xi has over-reached and worry that it was a mistake simultaneously to antagonize the US economically and militarily in the South China Sea.” For that reason, he said, “they advocate economic concessions and a pullback from the aggressive tactics that have characterized China’s recent foreign policy.”
If these are truly the generally held views of the Chinese elite, which is likely the case, Xi’s reputation has already been significantly damaged.
Beijing’s – or Xi’s – propaganda machines have obsequiously depicted him as “a world leader” who has “facilitated the solution to many global problems,” an all-powerful man “who makes things happen” or “an extraordinary leader” whose “super-strong leadership” has gained “international praise.”
Apparently, Xi isn’t such a leader. If he were, he could have prevented or resolved his country’s escalating and damaging trade war with Trump’s America.