Since 2000 when Bill Clinton signed the U.S.-China Relations Act, China has been a major partner with the United States. We granted Beijing “normal trade relations” with us and cleared a path for China to join the World Trade Organization in 2001. In 2006, China passed Mexico after Canada as the United States’ second-largest trade partner. In 2008 China surpassed Japan in becoming the largest holder of U.S. debt (treasuries) at approximately $600 billion. China also surpassed Japan as the world’s second-largest economy in 2010. And, according to Goldman Sachs chief economist Jim O’Neill, “China is on track to overtake the United States as the world’s number one economy by 2027″. Things came to a tense boil when Hillary Clinton, (who was U.S. Secretary of State at the time in 2011) called for an “increased investment—diplomatic, economic, strategic, and otherwise—in the Asia-Pacific region” in response to China’s growing clout.
That was the top of the peak for positive relations with China. It was pretty much downhill from there, starting in 2012 when trade tensions began to rise. The US and its allies disputed with China over its quota of restrictions on exporting rare earth metals, saying that it “violated international trade norms”. China wasn’t pleased.
President Barack Obama tried to improve relations with China during the 2013 “shirt-sleeves summit” by pledging to increase assistance on various issues in the region. China responded positively, agreeing to create a “new type of great power relations” between the two countries, but the peace was hindered by multiple cases of Chinese hackers facing charges of stealing trade technology from U.S. companies in 2014. Obama was able to keep relations positive during the Asia-Pacific Economic Cooperation summit which took place the same year. He and Chinese President Xi Jinping issued a joint statement on climate change, promising to reduce carbon emissions.
However China continued to cause trouble in their region with their aggressive land reclamation efforts in the South China Sea, making it difficult for its allies like the US to remain friendly towards them. At the fourteenth annual Shangri-La Dialogue on Asian security, U.S. Secretary of Defense Ashton Carter made it clear that the United States opposed “any further militarization” of the disputed territory. China largely denied the issue, claiming that the projects on the island were strictly for civilian purposes. The world rolled it’s eyes.
In the beginning, President Trump was friendly towards China. In 2017 He honored the One China policy and hosted Xi Jinping for a two-day summit at the Mar-a-Lago estate in Florida. However the talks were largely hollow and failed to address serious issues between the two countries. Despite some positive plans made during the summit, talks did not include the growing concerns over trade issues regarding aluminum, car parts, and steel. The failure to resolve these major issues was a foreshadowing of what was to come.
In 2018, using the cases of Chinese theft of U.S. technology and intellectual property as a catalyst, the Trump administration announced sweeping tariffs on Chinese imports. Not surprisingly they started with tariffs on steel and aluminum imports while also targeting goods like clothing, shoes, and electronics. They also boldy restricted Chinese investments in the United States. China retaliated by launching their own measures on a variety of American products. The trade war between the two giants had begun.
As 2018 continued things only got worse. Tariffs come out in mass from both sides. Vice President Mike Pence affirmed the Trump administration’s firm stance against China saying that the United States would support “competition over cooperation” by utilizing tariffs to defend against “economic aggression.” He listed all of America’s griefs with China, most of which started well before Trump was president: Growing Chinese military aggression, especially in the South China Sea, censorship and religious persecution by the Chinese government, cyber theft of American intellectual/business property, and interfering in U.S. elections.
As unpopular as Trump’s trade war was, it could be argued as a direct response to China’s growing threat as an aggressive and unfriendly super-power. No country’s hands are clean on the world stage of global politics, and China had proven it wasn’t an exception to this rule. Had Hillary been elected President, the same woman who gave a nod to the growing threat of China during her time as Secretary of State, her response may have been just as strong as Trump’s, (albeit more graceful). It’s simply arguable that China had it coming with its increasingly aggressive behavior.
And it doesn’t stop there. Enter Huawei; the Chinese telecom and electronics corporate giant. After arresting their chief financial officer, Meng Wanzhou, in Canada, The U.S. Justice Department accused Huawei of committing fraud while violating trade sanctions against Iran. China reacted harshly with arrests of their own, citing America’s actions as serious political mistakes. Trump affirmed this, despite US officials promising an “unbiased and apolitical legal process”, by suggesting that Meng’s charges could be used as leverage in trade negotiations.
The battle with the telecom giant continued. In 2019 Huawei sued the United States as a whole. This was in response to the Trump administration having banned all U.S. federal agencies from utilizing the company’s equipment to build 5G networks while warning the rest of the world to follow suit. He later expanded on this to include not just federal agencies, but all American companies. The U.S. Commerce Department also added Huawei to its “foreign entity blacklist”. Trump boldy defended his actions, claiming that the Chinese government could use Huawei to spy on anyone using their technology. With China’s cases on cyber espionage still fresh in America’s minds, denying these allegations was difficult for China and gave arguable justification for Trump’s actions.
Then we go back to the trade war, which went from a red alert to a full-blown meltdown as trade talks proved to be meaningless. Instead, in an effort to continue muscling China into submitting to US power and into negotiating favorable agreements across the board, the Trump administration raised tariffs more than double what they were before. They soared from 10 to 25 percent, covering approximately $200 billion worth of Chinese products. This was then increased event further after China’s central bank heavily weakened the yaun, resulting in the Trump administration officially denouncing China as a “currency manipulator” for the first time since 1994. Although the title was only symbolic, it came at the same time Trump imposed even higher tariffs, finally covering everything the United States imported from China. Beijing did not back down, increased tariffs of their own, and gave a strong warning that the United State’s actions would “trigger financial market turmoil”.
Trumped continued to scoff at China’s retaliations, and added insult to injury by officially supporting Chinese protestors as they revolted against their government. He, along with a large majority of congress, passed the Hong Kong Human Rights and Democracy Act which authorized the US to sanction human rights violators in Hong Kong. China had little defense against these actions but still condemned them, making sanctions of their own on several American organizations while halting all U.S. warship visits to Hong Kong.
Finally, China buckled under the pressure. They reopened talks with the Trump administration that were able to bear fruit for the first time in two years. The deal eased off some of the stronger U.S. tariffs on Chinese imports and removed the “currency manipulator” title. In return the deal would tie China to a two year commitment of purchasing $200 billion in American exports while also agreeing to protect the US from further cyber theft. This was a start, Trump said, but he implied that much more would come in further negotiations. This is easy to believe considering that the agreement holds onto most of the tariffs imposed by his administration.
As of now talks between the US and China have not moved forward from there. It’s tenable that Trump’s stern actions toward China have curbed them as a superpower in the best interest for American political and economic strength. Any president elected in 2016 would have been expected to do the same. Clearly, the degrees of severity would have been different for each candidate, and Trump’s was more than likely to be the strongest given his brass attitude. The question then becomes; is that good for the US or not? So far Trump’s overwhelming strength and arrogant flexing of authority has whipped what once was thought to be an unstoppable growing power into submission.
The consequences thus far have been market related, with no military retaliation or other aggressive action. It seems China was more bark than bite when it came to investing in it’s military and cyber capabilities. Should this be counted as a lucky break for the US and a calm level-headed attitude by the Chinese? Or is China not as strong as they are made out to be and simply can’t afford the risk of larger-scale retaliation? Either way, the next president, be it Trump or not, will have the hot potato in their hands. Let’s hope they don’t drop it into America’s lap…