Dealing with China: Tough Engagement and Managed Competition

Sino-American relations are the major overarching factor in Asian international relations (many would argue internationally). As the broad trajectory of the relationship in recent years has been toward increasing frictions and comprehensive competition, simply managing the competitive dynamic so that it does not bleed into a fully adversarial relationship should be a principal goal. The relationship could get worse—much worse—but that is not in the national interests of either country.

Building cooperation where possible is a twin objective but should not be an end in itself. For example, the two governments engage in nearly one hundred bilateral dialogues, but these exchanges are quite pro forma and yield limited tangible benefits for the United States. The new Trump administration should “scrub” them from top to bottom—beginning with the Strategic and Economic Dialogue (S&ED)—and radically reduce them so as to maximize tangible outcomes and minimize the expenditure of time, money, and bureaucratic resources. The Chinese government has managed to freeze and trap the U.S. government in a panoply of diplomatic processes, while Beijing assiduously maneuvers worldwide to expand its own presence and influence.

There is a deep reservoir of frustration and disillusion in the United States concerning China—some of which emerged during the presidential campaign—and a seeming consensus exists that Washington needs to get tougher with Beijing on a broad range of issues. Donald Trump tapped into this sentiment concerning business outsourcing, but it runs far deeper into a variety of issue areas. But despite Trump’s emphasis on the economic element of the relationship, the big change in U.S.-China relations is that security issues are now as or more important than economic issues, and as a result, the economic ballast is not as important as before. A big part of this reality is that American business has been experiencing a much more difficult environment in China.¹

The United States’ growing frustrations with China lead to the temptation to “get tough” with Beijing. But this may prove difficult given the interdependencies between the two countries and China’s own ability to retaliate against and inflict pain on U.S. interests. Moreover, the relationship is at something of a geostrategic inflection point—with China’s power and influence growing regionally and globally, while the United States’ power appears to be declining relatively. While tempting for Washington, getting tough at such a time can be provocatively dangerous. Power-transition theorists are quick to remind us that this is precisely the most unstable and vulnerable period in relations between established powers and rising powers—i.e., when one or the other misjudges its own relative position and takes preemptive actions against the other. The United States remains far stronger than China across a range of indicators,² but the Chinese leadership may overestimate both China’s strengths and the United States’ weaknesses. For its part, the Trump administration may underestimate China’s sensitivities and capacity to retaliate against U.S. interests.

Under such conditions, mature management of a volatile relationship is mandatory—bounding the negative dynamics while working to expand the areas of positive cooperation is the principal challenge for both governments. With this broad maxim in mind, the balance of this essay assesses the state of the relationship that the Trump administration inherits and the deeper variables that will affect its evolution in the future.

Looking Back to Move Ahead

In anticipating how the Trump administration may move in its dealings with Beijing, it is first useful to take stock of the state of U.S.-China relations and the China policy that the administration will inherit. Of course, no new U.S. administration must continue the policy of its predecessor—although continuity is reassuring, particularly to markets. But Trump has already rattled the relationship prior to assuming office by breaking two core tenets of all eight previous U.S. administrations: speaking by telephone with Taiwan’s president Tsai Ing-wen and questioning why the United States has to be “bound” by the one-China principle. During a December 11 television interview, he also stated...