• About
  • Archive
  • Contact
  • Home 1
  • Submit a Story
  • Submit a Story
  • USCBC Podcasts
China Business Review
  • Operations
    Managing Risk in the “New Era”

    Managing Risk in the “New Era”

    Design Patents vs. Trade Dress: Protecting IP in China

    Design Patents vs. Trade Dress: Protecting IP in China

    As China Emerges from COVID-19, US Companies Invest to Compete

    As China Emerges from COVID-19, US Companies Invest to Compete

    Inside the Mad Rush for Masks – Anatomy of a 10 Million Mask Order

    Inside the Mad Rush for Masks – Anatomy of a 10 Million Mask Order

    Addressing Risk in the Era of US-China “Great Power” Competition

    Addressing Risk in the Era of US-China “Great Power” Competition

    The Year in Social Credit: Where is Corporate Social Credit Going in 2020 and Beyond?

    The Year in Social Credit: Where is Corporate Social Credit Going in 2020 and Beyond?

  • Politics
    Hong Kong’s National Security Law, Five Months In

    Hong Kong’s National Security Law, Five Months In

    China Implements its Long-Awaited Unreliable Entities List Mechanism

    China Implements its Long-Awaited Unreliable Entities List Mechanism

    Competing WTO Reform Agendas and the Contest for the Next Director-General

    Competing WTO Reform Agendas and the Contest for the Next Director-General

    China Eyes Further Northeast Asian Economic Integration in RCEP

    China Eyes Further Northeast Asian Economic Integration in RCEP

    COVID-19 Could Doom or Deliver US-China Commercial Relations

    COVID-19 Could Doom or Deliver US-China Commercial Relations

    A Game of Chicken

    A Game of Chicken

  • Tech
    Export Controls on Emerging and Foundational Technologies: A Null Set?

    Export Controls on Emerging and Foundational Technologies: A Null Set?

    How Companies Are Reacting to China’s New Data Security Scheme

    How Companies Are Reacting to China’s New Data Security Scheme

    China’s Participation in International Standards Setting: Benefits and Concerns for US Industry

    China’s Participation in International Standards Setting: Benefits and Concerns for US Industry

    The Hidden Challenges of China’s Booming Medical AI Market

    The Brave New Business Models Making Waves in China’s Ecommerce Market

    Defining “Emerging Technologies”: Industry Weighs In on Potential New Export Controls

    Defining “Emerging Technologies”: Industry Weighs In on Potential New Export Controls

    Trending Tags

    • Intellectual Property
    • innovation
    • cybersecurity
    • ecommerce
    • tech
  • Society
    COVID-19 Could Doom or Deliver US-China Commercial Relations

    COVID-19 Could Doom or Deliver US-China Commercial Relations

    The Year in Social Credit: Where is Corporate Social Credit Going in 2020 and Beyond?

    The Year in Social Credit: Where is Corporate Social Credit Going in 2020 and Beyond?

    Open Government Developments in China: Implications for US Businesses

    The Hidden Challenges of China’s Booming Medical AI Market

    The Handshake that Changed the World

    President Carter and Vice Premier Deng at the Performance of American Arts

    January 29, 1979 Performance of American Arts for Deng Xiaoping

  • Media

    Gallery: Craig Allen’s Trip to China

    USCBC 45th Annual Membership Meeting

    USCBC 45th Anniversary DC Open House

    USCBC President’s China Visit

    USCBC Hosts Business Roundtable with Zhejiang Party Secretary Che Jun

    USCBC hosts Comprehensive Economic Dialogue (CED) Luncheon

  • Podcasts
No Result
View All Result
  • Operations
    Managing Risk in the “New Era”

    Managing Risk in the “New Era”

    Design Patents vs. Trade Dress: Protecting IP in China

    Design Patents vs. Trade Dress: Protecting IP in China

    As China Emerges from COVID-19, US Companies Invest to Compete

    As China Emerges from COVID-19, US Companies Invest to Compete

    Inside the Mad Rush for Masks – Anatomy of a 10 Million Mask Order

    Inside the Mad Rush for Masks – Anatomy of a 10 Million Mask Order

    Addressing Risk in the Era of US-China “Great Power” Competition

    Addressing Risk in the Era of US-China “Great Power” Competition

    The Year in Social Credit: Where is Corporate Social Credit Going in 2020 and Beyond?

    The Year in Social Credit: Where is Corporate Social Credit Going in 2020 and Beyond?

  • Politics
    Hong Kong’s National Security Law, Five Months In

    Hong Kong’s National Security Law, Five Months In

    China Implements its Long-Awaited Unreliable Entities List Mechanism

    China Implements its Long-Awaited Unreliable Entities List Mechanism

    Competing WTO Reform Agendas and the Contest for the Next Director-General

    Competing WTO Reform Agendas and the Contest for the Next Director-General

    China Eyes Further Northeast Asian Economic Integration in RCEP

    China Eyes Further Northeast Asian Economic Integration in RCEP

    COVID-19 Could Doom or Deliver US-China Commercial Relations

    COVID-19 Could Doom or Deliver US-China Commercial Relations

    A Game of Chicken

    A Game of Chicken

  • Tech
    Export Controls on Emerging and Foundational Technologies: A Null Set?

    Export Controls on Emerging and Foundational Technologies: A Null Set?

    How Companies Are Reacting to China’s New Data Security Scheme

    How Companies Are Reacting to China’s New Data Security Scheme

    China’s Participation in International Standards Setting: Benefits and Concerns for US Industry

    China’s Participation in International Standards Setting: Benefits and Concerns for US Industry

    The Hidden Challenges of China’s Booming Medical AI Market

    The Brave New Business Models Making Waves in China’s Ecommerce Market

    Defining “Emerging Technologies”: Industry Weighs In on Potential New Export Controls

    Defining “Emerging Technologies”: Industry Weighs In on Potential New Export Controls

    Trending Tags

    • Intellectual Property
    • innovation
    • cybersecurity
    • ecommerce
    • tech
  • Society
    COVID-19 Could Doom or Deliver US-China Commercial Relations

    COVID-19 Could Doom or Deliver US-China Commercial Relations

    The Year in Social Credit: Where is Corporate Social Credit Going in 2020 and Beyond?

    The Year in Social Credit: Where is Corporate Social Credit Going in 2020 and Beyond?

    Open Government Developments in China: Implications for US Businesses

    The Hidden Challenges of China’s Booming Medical AI Market

    The Handshake that Changed the World

    President Carter and Vice Premier Deng at the Performance of American Arts

    January 29, 1979 Performance of American Arts for Deng Xiaoping

  • Media

    Gallery: Craig Allen’s Trip to China

    USCBC 45th Annual Membership Meeting

    USCBC 45th Anniversary DC Open House

    USCBC President’s China Visit

    USCBC Hosts Business Roundtable with Zhejiang Party Secretary Che Jun

    USCBC hosts Comprehensive Economic Dialogue (CED) Luncheon

  • Podcasts
No Result
View All Result
China Business Review
No Result
View All Result
Home Bilateral Relations

OpEd: What’s left to talk about?

USCBC by USCBC
December 21, 2016
Share on FacebookShare on TwitterLinkedin

By Andrew Gilholm

If anyone doubted that the post-war consensus on free trade and economic integration was under pressure, the inauguration of an avowed foe of both should dispel the notion. The election of Donald Trump marks the first time an economic nationalist has led the Republican Party since 1940, when Wendell Willkie lost to Franklin Roosevelt.

Combined with Britain’s vote to exit the EU and a surge in support for populist movements across Europe, economic nationalism changes the tenor of the global conversation in 2017. It will also intensify growing pressure on the relationship between the world’s most important economic and political actors: the United States and China.

In decades past, free trade and globalization created a buffer to the often conflicting national interests and prickly pride that separate China and the United States. Economic priorities have helped contain political crises and rapidly repair ties afterward. The 1999 bombing of China’s embassy in Serbia, the 2001 Hainan spy plane incident, and multiple disputes over dissidents and cyber espionage along the way: any or all might have upended a more fragile relationship.

The major force underpinning restraint has been the belief on both sides that, on balance, the bilateral trade and investment relationship is too important to jeopardize. When Trump takes the oath of office, that feeling may no longer be mutual.

Free trade under fire

The extent to which Trump can or intends to follow through on his election promises is unknown. Faced with the realities of office, the campaign version of some policies may give way to a more pragmatic version. There have already been signs of backtracking from, or at least redefining, his high-profile call for a 45 percent  tariff on all Chinese imports. And dramatic withdrawals from trade agreements will not necessarily preclude future re-engagement once Trump has shocked interlocutors into giving the United States a better deal.

Nonetheless, in affirming that he will end US participation in the Trans-Pacific Partnership (TPP) free trade accord, as well as its European variant, the Transatlantic Trade and Investment Partnership (TTIP), Trump has put down a marker: free trade is in the crosshairs. No target looms as large as China.

Trump has strong domestic incentives to aggressively pursue punitive action against China and other low-wage manufacturing nations through the WTO, and to consider a raft of unilateral tariffs targeting Chinese steel, aluminium, auto parts, and select electronics. This would partially fulfill key promises of his campaign, but also invite retaliation. The uncertainty is concerning for companies exposed through complex global supply chains, markets, and investments.

Many in Beijing, expecting a difficult period if Hillary Clinton had won the presidency, are not yet convinced Trump will bring different tactics than his predecessors who talked tough on China. President George W. Bush took office vowing to treat China as a “strategic competitor” not a “strategic partner,” but after an early crisis of relations presided over one of the most stable periods of US-China relations in decades. The United States and China traded tariff-slapping and WTO complaints shortly after Barack Obama took office, but the outgoing president apparently found little value in that approach, using it sparingly thereafter.

Panda-poking season

Chinese leaders are sensitive to the relative uncertainty Trump brings. Any confidence they may have had was dispelled by a single phone call: Trump’s December call with Taiwanese President Tsai Ing-wen brushed aside the diplomatic deference shown to China by every US president since 1979. Trump’s style and strategy mean we should expect more surprises in 2017. He will deliberately tackle taboo topics in diplomacy (and no interest is more “core” for China than Taiwan), in hopes that China will be a more flexible negotiating partner once its sense of security is shaken.

Assuming this is indeed a deliberate approach rather than recklessness, these tactics may actually yield some results. Leaders in Beijing are reassessing long-considered givens on US policy. Regardless, confrontational acts and anxious episodes lie ahead, ushering a riskier, less predictable period. Although restraining their responses so far, politicians in Beijing face domestic pressures. When China refers to”red lines” on issues like Taiwan, it reflects real policy positions, not empty rhetoric.

Nor is China likely to make sweeping trade concessions to appease voters in richer economies. The Trump campaign claimed that Chinese people believe they are benefiting from poor US trade negotiating tactics, but the sentiment is quite the opposite.

December 11, 2016 marked the 15th anniversary of China’s WTO accession, and triggered a deadline on the unprecedented conditions that Beijing accepted to join the club. The way Beijing sees it, China’s openness to trade and investment has long since surpassed that of its developing peers, and higher-cost countries are blaming China for their eroding competitiveness—either for domestic political ends or as part of efforts to “contain” China.

Even in a country where market liberalization and trade have helped drive the largest movement of people out of poverty, the benefits of continued openings are increasingly questioned. Most of its trading partners see China as an economic superpower and leading competitive threat to their industries, and want greater reciprocity and market access.

Whatever the US election outcome, it was clear by 2016 that such trends portended growing bilateral friction under either a Clinton or Trump administration. Spats over steel dumping are one thing, but going forward, China will compete with US companies up the value chain. Like their European peers, these companies will add to the pool of malcontents over issues including market access, Chinese state support to local competitors, and intellectual property protection. The US business community has long been a strong advocate of close, stable China ties. This is still broadly true, but less so than before, even as most US firms in China remain profitable and growing.

A fragile relationship

China’s leaders appear aware of the stakes. During the September G20 summit in Hangzhou, Chinese President Xi Jinping’s anti-protectionist speech reflected his concern at what was transpiring in the US presidential campaign. Since the end of World War II, and in an accelerated form since the end of the Cold War, the United States has been the chief proselytiser for globalization and free trade, and an architect of the institutions that underpin it. In 2017, Beijing is expected to be a louder defender of free trade than Washington, even as China seeks greater influence in those institutions.

It is certainly too soon to declare that the US elections and Brexit signal an end to the era of globalization—a period that has seen an unprecedented movement of capital, goods, and people across international borders, and history’s greatest improvements in poverty, infant mortality, life expectancy, and per capita income. Globalization is seriously challenged, but is still the operating system of the global economy. What is certain is that the footing of global business in 2017 will feel less firm and familiar.

Similarly, with Trump not yet installed in the White House, it is impossible to say how he will ultimately affect the crucial US-China relationship. But tests and turbulence are certain in the coming year.  The incoming US president has not been tested as a handler of high-stakes geopolitical disputes and crises. Leaders in Beijing are vastly more experienced, but we have little precedent for how they may react if pushed and provoked by the United States on sensitive issues.

There are still enough shared interests and economic interdependence at stake to renegotiate the terms of the relationship. A “grand bargain” seems to be what Trump and his advisors envisage, and China is not entirely averse to such a game. But there is an alarming gap between the two sides’ perception of what is “fair” in the economic relationship. The risk is that cracks are appearing in the economic glue that has held together this troubled political relationship, just as it is about to be vigorously shaken by Trump.

 

About the author:

Andrew Gilholm is Head of Analysis, North Asia for Control Risks, an independent, global specialist risk consultancy. They help some of the most influential organisations in the world to understand and manage the risks and opportunities of operating in complex or hostile environments. For questions or further information, please contact the author: [email protected]

USCBC

USCBC

Next Post

New Horizons: Investing in China’s Civilian Airport Industry

Recommended.

How Biden’s Economic Team Views China Trade Policy

January 14, 2021

Hong Kong’s National Security Law, Five Months In

November 25, 2020

China Implements its Long-Awaited Unreliable Entities List Mechanism

October 7, 2020

Competing WTO Reform Agendas and the Contest for the Next Director-General

September 22, 2020

Latest Podcasts.

New MOFCOM rules on extraterritorial application of foreign laws

January 12, 2021

The EU-China agreement and a look at other market liberalizations

January 6, 2021

Is the BRI debt trap diplomacy? And how can the US compete with it?

December 18, 2020

A broad recovery in China means shipping challenges for some companies

December 15, 2020
China Business Review

China Business Review is the official magazine of the US-China Business Council, a nonprofit and nonpartisan trade association that represents more than 200 American companies doing business in China.

  • How to contribute to China Business Review

Categories

  • Bilateral Relations
  • Business Etiquette
  • CBR Spotlight
  • China Deals
  • Corruption
  • Cybersecurity
  • Ecommerce
  • Environment
  • Finance
  • Galleries
  • Getting Started
  • HR & Staffing
  • Infographics
  • Innovation
  • Intellectual Property
  • Management
  • Media
  • Operations
  • Opinion
  • Policy & Regulations
  • Politics
  • PR & Marketing
  • Rural Issues
  • Safety
  • Social Policy
  • Society
  • Standards + Licensing
  • Sustainability
  • Tax
  • Tech
  • Top Story
  • Trade
  • Uncategorized
  • US-China Business Council
  • Videos

Tags

Agreements Agriculture Alibaba Best Practices Business Environment China China's Investments Abroad China Market Intelligence Chinese Consumers Chinese Investment Commentary Consumer Trends E-Commerce Economic Trends Energy Environment Events Food Foreign Investment Going Global Healthcare Reform Human Resources Infrastructure Internet Interview Investment Investments into China IPO Joint Venture Labor Legal Analysis M&A Manufacturing Media National People's Congress Q&A Strategic and Economic Dialogue Supply Chains Technology Trade Transparency US-China Relations USCBC US Exports to China Xi Jinping

Join our Mailing List

Sign up for the US-China Business Council's newsletters to stay ahead of the game with roundups, analysis, and commentary.

Sign Up

Follow Us

  • About
  • Archive
  • Contact
  • Home 1
  • Submit a Story
  • Submit a Story
  • USCBC Podcasts

© 2020 China Business Review

No Result
View All Result
  • Operations
  • Politics
  • Tech
  • Society
  • Media
  • Podcasts

© 2020 China Business Review