By Alexander Zwagerman

As Trump slapped another 10 per cent tariff on roughly US$200 billion in Chinese exports, his administration also issued an invitation to China to come and talk about trade.

Those talks are probably not going to happen for now, since both sides profoundly distrust one another. American suspicions centre around China becoming both an economic and military threat.

US President Donald Trump and China President Xi Jinping. File photo: White House.

The United States has written and guaranteed the playbook for these two areas. This has resulted in the longest period of sustained economic progress and the longest period of world peace in human history. China, however, has been undermining and subverting that rules-based order in its protected home market and in, for example, the South China Sea.

Meanwhile, Xi Jinping’s advisors have warned him about China’s dangerous dependence on Western technology and goods. This fear is the reason behind the Made in China 2025 plan, an ambitious program to shift Chinese consumption away from high-end foreign manufacturers and to subsidise domestic companies.

The second fear is always in the minds of Beijing’s paranoid ruling elite: they fear that regime change is actually the hidden agenda behind the trade conflict. This comes at a time when even the most ardent defenders of China’s peaceful rise have given up on China becoming freer through greater economic ties with the west.

East Nanjing pedestrian street. Photo: Wikicommons.

Metaphors are always dangerously inadequate. But since everyone is calling this conflict a war anyway, I would suggest that it is less like a war and more like a divorce. One partner is upset with the other for not following the rules of a relationship. The other partner refuses to change.

Some of us have been there and many of us have seen it happen. And when a couple you know breaks up, you often end up being friends with only one of them.

Beijing’s doubling down on the Belt and Road as well as celebrating closer investment ties in Africa is less about sound economics and more about buying friends. If anyone doubts this, look at the most recent recipient of China’s generous loans: the inept Socialist kleptocrat running Venezuela.

The Silk Road Economic Belt is the overland interconnecting infrastructure corridors based on the original Silk Road. The 21st Century Maritime Silk Road is the sea route corridors. Photo: Wikicommons.

Meanwhile, countries more firmly in the American camp have been reconsidering their reliance on Chinese telecom-equipment makers for rolled out wireless networks, scrutinising Chinese strategic investments and more often combining trade talks with a little criticism of China’s myriad of human rights abuses.

The break-up is only accelerating earlier trends. Trump’s stated goal is to bring manufacturing back to the United States, but it is highly unlikely that Apple will start making iPhones in the United States. However, South Korea’s Samsung has shown in Vietnam that it is possible to limit dangerous reliance on China.

Photo: Marco Verch/Flickr.

Manufacturing at home is not an option, considering high salaries and powerful unions. If Washington really wants to reduce its dependence on China, it needs better trade with allied countries – putting tariffs on products from developing countries will only drive those countries into Beijing’s arms.

Representatives from China and the White House have talked officially of resolution. But realistically, the red lines laid out by both sides make it difficult to see any space for a negotiated settlement. The Trump administration requires much broader market access and more changes to China’s Socialist model than Beijing is willing to grant. Amicable divorce talks are the best that we can hope for at this moment.

This article was originally published in the monthly Dutch column Nederlands Dagblad, in which the author focuses on trade, China and the global disorder of our times. It has been translated into English.


Alexander Zwagerman

Alexander is a lecturer at the Arnhem Business School in the Netherlands and a fellow of the Sima Qian Foundation, advising governments and businesses about how the rise of China affects the global economy. With over ten years of work experience in China, he has written extensively about Chinese business and how free market solutions would solve many of China's problems. He has published books and articles in Dutch and English. On Press Freedom Day 2016 a Dutch collection of his essays was published by Pharos publishers and the proceeds were donated to HKFP.