China is locked in a conundrum with the United States over trade. Illustration: iStock.
The United States and China are both facing economic challenges. Illustration: iStock

Just after US President Donald Trump imposed new import tariffs on US$200 billion worth of its goods, China said it had no choice but “to take countermeasures,” all of which will certainly intensify the tariff war between the world’s two biggest economies.

With the trade war escalating, suspicion, tension and confrontation between the two superpowers are rising to a new level. This is completely different from what Beijing perceived around nine months ago.

In November 2017 – just a few weeks after the 19th National Congress of the ruling Communist Party of China, during which Xi Jinping declared it was time for China to take the center stage in the world – Xinhua News Agency published a lengthy and fawning hagiography of the Chinese leader.

In it, the official news agency used a wide range of obsequious titles to depict the country’s new “unrivaled helmsman.” Notable among these is “a world leader.”

In demonstrating Xi’s skills as a global statesman, it said, since he assumed power in 2012, he has, among numerous other activities and achievements, “held candid talks with both former and current US presidents Barack Obama and Donald Trump, enhancing trust while reducing suspicion and setting out the future of bilateral ties.”

What’s more, according to the profile, “Many believe Xi’s wisdom and solutions have helped avoid a ‘clash of civilizations,’ the so-called ‘Thucydides Trap.’”

The Thucydides Trap referred to a Greek historian’s observations about the war between Sparta (established power) and Athens (rising power) in the 5th century BC. The term was coined by Graham Allison, a Harvard professor, to warn that as it becomes stronger, China threatens to displace the US, the ruling power, and the two powers “are currently on a collision course for war – unless both parties take difficult and painful actions to avert it.”

China has long appeared anxious to avoid the trap or the perception of such a trap as its leaders, officials, media and scholars have repeatedly talked about or warned against it.

Speaking to a group of Western investors in November 2013, President Xi reportedly said: “We must all work together to avoid the Thucydides Trap.”

In a speech in Seattle during his first state visit to the US in September 2015, while stating that “there is no such thing as the so-called Thucydides Trap in the world,” the Chinese supremo warned: “Should major countries time and again make the mistakes of strategic miscalculation, they might create such traps for themselves.”

US-China relations are undoubtedly the world’s most vital bilateral ties. In his first meeting with Trump in May 2017, Xi said: “We have a thousand reasons to get China-US relations right and not one reason to spoil them.”

That’s probably why, in portraying Xi as “a world leader,” Xinhua’s ode hailed him as enabling the US and China to enhance trust, reduce suspicion and avoid the Thucydides Trap.

But many developments since October/November last year tell a completely different story as the world’s two largest economies and militaries are fundamentally at odds with each other on key economic, security and geopolitical issues. Notable among these is, without doubt, a deepening, mutually destructive trade war.

The world’s two largest economies and militaries are fundamentally at odds with each other on key economic, security and geopolitical issues. Notable among these is, without doubt, a deepening, mutually destructive trade war

In a statement on Monday, Trump said that “if China takes retaliatory action against our farmers or other industries, we will immediately pursue Phase 3, which is tariffs on approximately $267 billion of additional imports.”

The US has already implemented the first phase of the trade war, collecting tariffs on $50 billion worth of Chinese goods, and Beijing has retaliated in kind.

Despite Trump’s latest warning, as it vowed last month, China will slap duties on another $60 billion worth of American goods. Beijing’s retaliation will probably prompt the US president to impose duties on virtually all of the Chinese goods that America imports.

According to the US Census Bureau, in 2017, China bought only about $130 billion worth of US goods while selling $505 billion worth to the United States.

It’s unclear how exactly the Chinese government will hit back if and when Trump decides to “pursue Phrase 3” of his threatened tariffs.

While its options may be limited, as it has repeatedly vowed, it won’t be easy for Beijing to back down.

In fact, judging by their arguments, it’s very difficult for Washington and Beijing to de-escalate, let alone resolve, their damaging and deepening trade dispute.

From Beijing’s perspective, it is the US that, based on “groundless and ruthless requirements,” unilaterally started this trade war and China only took countermeasures, which “are self-defensive responses.”

For the Trump administration, its punitive tariffs are aimed at curbing China’s unfair trade practices, notably its alleged intellectual-property theft and its forced technology transfer.

In his June 15 announcement about America’s tariffs on $50 billion worth of Chinese exports, Trump accused Beijing of long “engaging in several unfair practices related to the acquisition of American intellectual property and technology.”

In his statement on Monday, he reiterated that accusation, adding that such “practices plainly constitute a grave threat to the long-term health and prosperity of the United States economy.”

Actually, whether such an allegation is justified or not, it’s clear that Trump’s tariffs against China are more about technology than trade. His first phase of tariffs targeted specifically “goods related to China’s Made in China 2025.”

His Monday statement mentioned a “thorough study” by the Office of the US Trade Representative (USTR). That investigation 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 2025 as a prime example.

Launched in 2015, Beijing’s flagship initiative aims to transform China into a high-tech powerhouse by 2025. In an address on May 29 this year, President Xi 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 American companies to transfer technology, has stoked anger and fear in the US.

Whether accidental or not, late on the same day that Xi called for “developing China into a world science and technology leader,” President Trump announced that his country would impose tariffs on “goods imported from China containing industrially significant technology, including those related to the ‘Made in China 2025’ program.”

That’s why Beijing often sees Trump’s current trade dispute as part of Washington’s strategy to contain China’s rise.

Against this backdrop, it’s right to argue that trade is only one aspect of the wide-ranging and deep-rooted distrust, rivalry and hostility that the US and China are currently experiencing.

In an editorial last month, while arguing that “it is almost impossible for China and the US to let their relations go all the way towards all-round confrontation,” the People’s Daily also acknowledged that their “relations are faced with severe challenges.”

The editors of China’s top newspaper then listed a number of things that Beijing should – or shouldn’t – do. One of these is: “With rationality, China should be humble and keep the defensive position, and should never provoke the US or boast its strengths in front of it.”

Such advice is noteworthy and, indeed, worthwhile, as it points to the forceful posture the Chinese leadership has taken.

Addressing the CPC’s conclave last October and the National People’s Congress (NPC), China’s rubber-stamp parliament, in March this year, Xi Jinping not only solemnly declared that China “has stood up, grown rich, and is becoming strong” and “with an entirely new posture, now stands tall and firm in the East,” but also vehemently urged it to “stride forward at the forefront of the world” and “take center stage” in the world.

Though his nationalistic remarks were primarily aimed at domestic audiences, they caused anxiety and fear in other countries, notably the US, as the Chinese strongman implicitly set out new ambitions for his country to become a global power and challenge the US as superpower.

It isn’t coincidental that the Trump White House’s three key security-related documents – the National Security Strategy, National Defense Strategy and Nuclear Posture Review published after that – all paint China adversely.

In fact, the first two strategies put the People’s Republic first among the top four security challenges facing the US, while in the NPR, it is placed second after Russia. The other two main security threats are “rogue states” (North Korea and Iran) and transnational terrorist groups.

On this reading, rather than reducing suspicion in the China-US relationship, it can be said that Xi has fueled it.

In any case, while it may be debatable that Xi – or, more precisely, his overtly ambitious and forceful policy – is a liability rather than an asset to his country’s vital relations with America, it’s indisputable that under his rule and the Trump presidency, the China-US relationship is getting worse day by day.

If Beijing and Washington don’t take concrete measures to decrease their heightened distrust, enmity and confrontation, sooner or later, they will indeed fall into the “Thucydides Trap.”

Xuan Loc Doan

Dr Xuan Loc Doan researches and writes on a number of areas. These include the domestic and foreign policy of the UK, Vietnam and China, US-China relations and geopolitical issues in the Indo-Pacific region.

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