Saturday, November 26, 2016
Sieren's China: Trump's opening gambit with Asia
Donald Trump doesn't want a Trans-Pacific Partnership. America's withdrawal will give China far greater scope in Asia, but this clearly doesn't interest him, says DW columnist Frank Sieren.
They didn't have to wait long. Just two weeks after his election, Donald Trump has managed to confirm the reservations the Asian Pacific nations had about him. Even before he takes office, he has let it be known that the United States will not be joining the Trans-Pacific Partnership – TPP for short – during his time in office. Outgoing president Barack Obama spent seven years negotiating the biggest free trade agreement in the world, which was signed by the participating countries in February – but not all of them have ratified it yet.
TPP was always very politically charged because the twelve trans-Pacific countries wanted to conclude a trade agreement that excluded one of their most important neighbors: China. The aim of the agreement was clear: to weaken China's dominance in the region. TPP was part of America's "Pivot to Asia" strategy, through which Washington wanted to secure its influence in Asia.
Trump clearly has no interest in this scheme, and turning his back on it is a snub to Japan and Australia in particular. The Japanese prime minister, Shinzo Abe, made a special trip to the United States last week to try to change Trump's mind. It was in vain. The US president-elect now wants to negotiate bilateral agreements with individual countries with the aim of getting better deals for Americans. But this will take time. And whether he will actually succeed is another question altogether. In one respect it's a clever political move. Formally, Trump is doing what he promised, while buying himself time to work out the fine print. Whether the result really will constitute an attack on free trade is impossible to predict.
American withdrawal frees things up
At any rate, Beijing can use this freedom to hammer out its own free trade pact. This doesn't interest Trump because it doesn't have anything directly to do with the United States. In the Regional Comprehensive Economic Partnership (RCEP) it would be the ASEAN countries together with Australia, China, India, Japan, South Korea and New Zealand that would cooperate. China hopes to win over its biggest rival, India, for its version of a free trade agreement. Unlike the United States, Beijing's emphasis is on integration rather than the exclusion of its most powerful competitor. This is clever. Because, as the undisputed top dog, Beijing could now pursue a different route.
As the Chinese president Xi Jinping has emphasized: "China won't close its doors to the outside world, it will open them wider." The West should remind him of this if new regulations are re-introduced that make access to the Chinese market more difficult. China may currently be profiting from Trump's success, but their pleasure over this will have its limitations. Because what is now also clear is that it will be harder for China in future to sell its products to the United States. Long, difficult negotiations lie ahead.
A copy of the local Chinese magazine Global People with a cover story that translates to "Why did Trump win."
China wants to cooperate
Last week, in his first telephone call with China's leader and head of the Communist Party, Xi Jinping, Trump did make clear that "cooperation is the only correct choice for China and the US." Lending weight to his words, China's Global Times newspaper, which is close to the ruling party, announced the same day that China would "take countermeasures" if the USA were to implement the punitive tariffs Trump has threatened. The "gigantic" trade between China and the US would be "paralyzed" by high tariffs, the newspaper said; and China's reaction to the protectionism Trump has announced would therefore not be limited to punitive tariffs alone. "US soybean and maize imports would be halted," it said. Boeing orders would be replaced by Airbus, and "US auto and iPhone sales in China will suffer a setback." The paper speculated that a "shrewd businessman" like Trump would not be "so naïve" as to launch an all-out trade war against China.
For his part, Trump wants to prevent Chinese imports from disadvantaging domestic US workers. But he will have to take care that products "Made in China," as well as the new ones "Made in the USA," don't become more expensive. Because that will have a direct effect on Americans' purchasing power. If the consequence of Trump's policies is that Americans have to pay more money at Walmart in future for "Made in China" products subjected to higher tariffs, or that the products "Made in the USA" can't be produced as cheaply as the Chinese ones, the prevailing mood could quickly turn against him. In that sense, the cancellation of the TPP is a fairly simple opening gambit. But Trump is very far from winning the game.