Trade war with China represents persisting US concerns

The downturn in US-China relations and the continuing trade war between the two powers are the results of an American attempt at setting right the trade imbalance between the two. The alarming speed of Beijing’s rise both on the economic and military fronts witnessed a steep increase in speculation among American leaders and scholars about Chinese intentions.

Second, the questionable means adopted by China to make such rapid progress have aroused American suspicions over Beijing’s geopolitical ambitions.

After the turn of the 21st century, it was evident that American political and scholarly debate had begun to express such contentions. For instance, American scholar John Mearsheimer, by making a historical analysis of the United States’ own behavior as a rising power in the past and then comparing it to Chinese behavior now, argued that China’s rise was bound to be hegemonic.

He postulated in 2005 that if China maintained the pace of economic growth and military buildup that it was making at the time, it was likely to be locked into intense security competition with the US, with the possibility of military conflict.

The US administration led by president George W Bush in an attempt to contain Chinese ambitions not only expressed its commitment to protect Taiwan from Beijing’s territorial claims, it expanded arms sales to the island. The Bush administration reportedly shifted the focus of US missile defense plans from Europe to the Pacific and called for long-range weapons targeting China’s growing military power.

American leaders and scholars alike continued to express concerns over Beijing’s ever-growing expenditure on military modernization in the absence of palpable threats, lack of transparency in its military strategy, hegemonic policies in the South China Sea and maintenance of special relationships with “rogue” regimes in Sudan, Iran and North Korea. Some scholars saw impeding danger in China’s increasing demand for energy resources (oil and natural gas) and export of Chinese goods with import regulation.

The US for long was concerned with the Chinese failure to maintain international standards on intellectual-property rights within its territory, leading to a surge in cases of duplication, piracy and counterfeiting and losses for American companies. Beijing was allegedly involved in a process of industrial espionage to secure updated technology, which indicated that multinational companies had to reveal many operational and technological secrets as a precondition to gain access and operate in the biggest market of the world.

Although China reportedly showed seriousness in implementing its commitment under the Protocol of Accession to the World Trade Organization, it adopted policies contradictory to free trade and principles of the organization after joining.

Albert Keidel, who was serving at the US Department of the Treasury at the turn of the millennium, argued that Beijing accepted few obligations requiring it to give up or substantially reduce its stronghold on the key sectors of the economy. While Beijing made concerted measures to insulate its energy sector from global markets, the steel sector emerged as an international leader because of supportive measures adopted by the Chinese state. It was only under pressure from its major trading partners such as the US and the European Union that Beijing modified or removed some of the policies that were contradictory to its WTO obligations.

Keidel further argued that China adopted discriminatory value-added tax (VAT) to discourage foreign competitors and encourage key indigenous industries.

This apart, adoption of special policies to discourage the use of imported components for making telecommunication equipment and rejection of suggestions for unilateral liberalization since 2006 indicated Beijing’s ambitions to take quick economic strides without taking international norms seriously, Keidel wrote in 2008.

While the mammoth size of the Chinese market and its low-cost products attracted many major economies to engage in trade with and invest in the country helped its economy to grow rapidly, the US remained concerned as to the Chinese engagement with the world on its own terms.

From a military and strategic perspective, the US not only viewed Chinese assertion of indisputable sovereignty over the South China Sea at the expense of the territorial claims of Vietnam, Malaysia, the Philippines and others as violation of international laws, but it suspected Beijing’s geopolitical moves as strategic maneuvers to gain control over strategic sea routes.

A historical factor that has informed US scholarship contributing to deep-rooted mistrust and irreconcilability between American and Chinese geopolitical interests is Beijing’s isolation from world politics during much of the Cold War era and its denial of membership in the United Nations until 1971. It is argued that as a former superpower (Middle Kingdom), this development might not have been glossed over by China, such that it was likely to adopt retributive policies once it rose to prominence again.

The Barack Obama administration’s “pivot to Asia” strategy was clearly aimed at containing the Chinese influence in the Asia-Pacific region, and the subsequent Trump administration went a step further when it renamed the geographical area “Indo-Pacific region,” underlining the centrality of India in the US containment strategy.

Under Obama’s leadership, New Delhi and Washington issued the Joint Strategic Vision for the Asia-Pacific and Indian Ocean Region in January 2015. The US declared India as a Major Defense Partner in December 2016. The two countries conducted joint military exercises and held a new bilateral Maritime Security Dialogue in April 2016 and signed the Logistics Exchange Memorandum of Agreement (LEMOA) – one of the foundational agreements for their strategic defense partnership. Defense trade between the two countries rose from US$1 billion in 2008 to more than $15 billion by the end of 2016.

The Trump administration seems to be more concerned with the geopolitical implications of China’s Belt and Road Initiative (BRI). Leveraging on its accumulated economic power, China is forging ahead with the mega-project to move massive capital in the shape of loans to many countries for infrastructural and interconnectivity projects with the apparent objective of reviving the Silk Road and Maritime Silk Road cutting across the Asian, European and African continents.

However, the Trump administration holds deep-rooted suspicions over Chinese geopolitical ambitions and has grilled Beijing on issues pertaining to rising indebtedness among countries involved in the BRI, lack of transparency, and disregard for an open and inclusive approach and sustainable financing.

Chinese policy of offering quick loans without conditionality aroused American suspicions that the movement of capital was designed to encourage corrupt practices and was tied to political objectives such as gaining continued legitimacy for its Communist leadership and support for its one-China policy.

US reservations remained as to the diversion of substantial portions of Beijing’s investment toward building heavy infrastructure instead of building human-resource capacity under the BRI. Military and strategic objectives underlying the BRI were corroborated when Sri Lanka leased out its Hambantota Port to China for 99 years.

As Pakistan is seeking assistance from the International Monetary Fund to get over its economic crisis, the Trump administration is likely to exercise its influence to ensure that before any financial assistance is granted, the monies would not be diverted to repay Chinese loans.

The Trump administration is evidently on the path of strengthening the US-Japan-India-Australia “Quadrilateral” format in the Indo-Pacific region primarily as a way to contain Chinese influence. Meanwhile, Australia, the United States and Japan have announced a trilateral partnership to invest in projects, build infrastructure, address development challenges, increase connectivity, and promote economic growth.

As well, after the high-level “2+2 meeting” between US and Indian officials in September, a joint statement also indicated that New Delhi shared US objectives in the Indo-Pacific region.