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US-China Ties Continue to Fester in the Face of Power Politics

Since Trump's speech at the UN, the 'friendship' between the US and has been on tenterhooks with Washington denouncing alleged Chinese interference, the trade issue and “the wholesale theft of American technology".

The United States does not believe in half-measures when it decides to unfriend you. China is just realising that. After piling on tariffs on Chinese imports, and threatening more in the coming months, Washington has decided on a “whole of the administration” approach in demonising Beijing.

It was just the other day that President Donald Trump was declaring that he and Xi Jinping would always be friends despite the trade issues. Having hosted the Chinese leader at Mar-a-Lago and made a visit to Beijing, Trump remained optimistic, even while imposing tariffs on China.

But the mood has changed. Speaking at the United Nations last month, Trump accused China of meddling in the US elections and said that maybe the friendship with Xi was over. Some hours later, in a background briefing to the media, an unnamed US official charged that China had targeted farmers and workers in districts that make up part of Trump’s electoral base. Trump’s ire was based on the China Daily’s paid inserts in a newspaper in Iowa criticising US trade policy.

To underscore the president’s remarks, the US administration fielded vice president Mike Pence at a think tank in Washington DC to comprehensively denounce China, on the issue of trade, election interference and “the wholesale theft of American technology”.

Also read: With US-China Trade War Set to Escalate, the World Stands at the Edge of a Precipice

Reports suggest that there may be a more serious issue here. According to one report, the new US approach is the outcome of an internal study by the Trump national security team on the ways China uses money power to shape public opinion in the US.

Pence said as much when he said, “Beijing provides generous funding to universities, think tanks, scholars, with the understanding that they will avoid ideas that the Communist Party finds dangerous or offensive. China experts, in particular know that their visas will be delayed or denied if their research contradicts Beijing’s talking points.”

US President Donald Trump and his Chinese counterpart Xi Jinping. Credit: Reuters/Thomas Peter

An even more serious charge is now rattling the US-China relations. This is a story by Bloomberg claiming that US intelligence agencies have found that the Chinese covertly implanted chips in the motherboards of a US company Super Micro Computer to be used as a surveillance tool. The story said that some 30 US companies, including Amazon and Apple, were affected and that the US technology supply chain had been thoroughly compromised. The story has been categorically denied by Apple, which has agreed to testify to the Congress that the events did not happen.

Meanwhile last Monday on October 8, Secretary of State Mike Pompeo exchanged words with his Chinese counterpart Wang Yi, signalling the hardening of ties. In response to Wang Yi’s accusation that Washington was escalating the trade conflict, interfering in Taiwan and levelling false charges on China’s domestic and foreign policies, Pompeo responded that on the issues referred to by Wang, “we have a fundamental disagreement.” Pointedly, Pompeo who had met Xi on his visit in June, was denied a meeting this time.

The trade dispute

The trade issue continues to fester. On Monday, September 24, the US and China imposed tariff hikes on each other’s goods. The US put a 10% tax on $200 billion on some 5,745 Chinese products, including bicycles and furniture. China retaliated by 5-10% additional taxes on $60 billion worth of 5,207 goods, ranging from honey to industrial chemicals.

Trump has threatened to put additional tariffs on another $267 billion worth of Chinese goods if Beijing retaliates. But this step remains to be taken. There has been some desultory talk about a possible US-China dialogue. There was a chance that there could be a meeting at the side-lines of the IMF-World Bank meetings and the G-20 Finance Minister’s meeting in  Bali, but it transpires that the Chinese vice premier and trade negotiator, Liu He, will not attend and so there is no chance of a meeting with his American counterpart Treasury Secretary Steve Mnuchin.

In the meantime, the US has worked out a new United States-Mexico-Canada Agreement (USMCA). This will see more cars and truck parts made in North America and in two years, only cars having 75% of its components made in the three countries will qualify for zero tariff. Canada has also opened up its market to US dairy products, but succeeded in retaining a special dispute settlement process. In most areas, however, it is merely an updating of the old NAFTA agreement.

Significantly, the agreement contains  an anti-China “poison pill” provision. That is if any country enters a trade deal with a “non-market country” the other two can quit and make their own bilateral deal. In a bid to pressure China, this provision could be replicated in other US trade agreements, such as the ones the US is negotiating with Japan and the EU.

Recently, Beijing issued a White Paper laying out its case. The  argued paper outlined the “win-win” relationship that had existed between the US and China  in the trade and economic fields that had ensured that the world’s “Biggest developing country” and the world’s “biggest developed country” maintained stable and mutually beneficial relations. It went to charge the Trump administration with unilateralism, protectionism and “trade bullyism.” In keeping with China’s strategy of not hyping the issue, the paper does not mention Trump by name.

A fallout of this has been on the military-to-military ties between the two countries. Perhaps the clearest sign of this was the decision of the US Secretary of Defense James Mattis to cancel a planned visit to China this month. He was scheduled to be in Beijing for the “2+2 dialogue” along with his colleague the US Secretary of State Mike Pompeo. Mattis, however, canceled his visit, though Pompeo visit, as reported above, did take place.

Also read: Trade Relations Over the Edge as Beijing, US Sharpen Knives

The CNN has since reported on a classified proposal of the US Navy’s Pacific Fleet to carry out a major show of force to warn China. The proposal is for the Navy to conduct a series of air and sea operations near China’s territorial waters in the South China Sea and the Taiwan Strait to demonstrate the right of free passage in the international waters. The US conducts these so-called freedom of navigation operations (FONOPS) all over the world, but the current focus of such operations is China.

The report of the proposal came days after the US Department of Defense said an “unsafe encounter” had taken place in the South China Sea when a Chinese destroyer came within 41 meters of a US warship which was conducting a FONOPS near some islands claimed by the Chinese.

Last month, the US State Department announced that it was imposing sanctions on the Equipment Development Department of the Central Military Commission and its Director for violating the CAATSA because China was purchasing Russian S-400s and Su-35 fighter jets. China was outraged and recalled a visiting naval official from the US and summoned the US ambassador to China to lodge a protest. Beijing also denied the request of a US warship to visit Hong Kong. And, even as Trump was questioning the state of his friendship with Xi in New York, US B-52 bombers flew over the South China Sea twice in three days.

Given the stakes, neither side would want to go to war. But the end product of the current estrangement could be quite complex and affect not just China and the US, but their relations with third countries as well.

On the eve of Trump’s address to the UN, his National Security Adviser, John Bolton told Fox News that “This is not just talking about tariffs and the terms of trade. This is a question of power.”

The Trump administration, Bolton said, is determined not to allow China to steal America’s intellectual power to strengthen itself.

Manoj Joshi is a Distinguished Fellow, Observer Research Foundation, New Delhi.

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