GAME CHANGER

The Trump Administration’s protectionist stance on trade is already reaping benefits for Asian nations, including the US’s great rival, China .Sun Xi assesses the present and future impact

More than one hundred years ago the West, including the United States, used two Opium Wars and other military actions to force the then closed-door Qing Dynasty to open the Chinese market to facilitate free trade with them.

Nowadays, it is China which is presenting itself as a strong advocate of international free trade and globalisation. President Xi Jinping has repeatedly encouraged multilateral cooperation with countries around the world, and likes to contrast this with the Trump Administration’s ‘America First’ approach, which he suggests is steering US geopolitical strategy back towards protectionism, unilateralism and isolationism.

The longer the ongoing US-China trade war continues, the greater the impact will be on the future economic and political order of our world.

In America, President Trump hopes his tough line on China will rally the public behind him and set him on a course to win the presidency again in 2020. The US economy grew by 4.1 per cent in the second quarter of this year, its best showing since 2014.

In many parts of Asia, the US is being perceived as aggressive and offensive. Within China itself, criticism of the United States in the media is quite muted. This is because the state-owned media is discouraged from allowing the conflict to escalate through a war of words.

One often hears the view among China-watchers that President Trump’s trade war is ultimately aimed at curbing China’s technological development – particularly its ‘Made in China 2025’ strategy, which outlines its ambition to become a world leader in a number of tech sectors.

As the ‘world’s factory’, China is a key trading partner for over a hundred countries, including many in Asia. Notably, more than 60 per cent of the modern international trade happens in intermediate goods, with China as a key link in global value chains. Asian nations including South Korea, Japan and Singapore, as well as Hong Kong and Taiwan, are worried that if global supply chains are disrupted, their domestic business environments will be destabilised. No wonder Singapore’s Prime Minister Lee Hsien Loong announced that ‘nobody wants a trade war’.

China is a key trading partner for over a hundred countries, including many in Asia

On the other hand, the dispute between the US and China presents opportunities. For example, sales of Japanese cars such as Toyota have risenin China as Chinese consumers shun American automotive brands.

This trade dispute also has implications for China’s international relationships. Beijing is strengthening its ties with many parts of Asia. In June 2018, India and Pakistan joined the Shanghai Cooperation Organisation (SCO) summit as full members for the first time in Qingdao, China. This September, China will host the Forum on China-Africa Cooperation (FOCAC) Summit in Beijing again. And in November, the first China International Import Expo (CIIE) will be held in Shanghai, a significant attempt to demonstrate China’s commitment to globalisation.

Reflecting on the lessons from the trade war, China is re-evaluating its national capability and re-thinking its development strategy, and it will likely become more vigilant and cunning when dealing with the US in the future. The short-term pain may be proved necessary for achieving the eventual ‘Chinese Dream’.

President Trump believes the trade war will be broadly supported by his base in the US and could benefit American companies which are in competition with the Chinese or are trying to expand their market share in China. However, his credibility is under pressure. In particular, other Asian countries may turn to China for leadership, rather than supporting an alliance with the United States, which they regard as leading towards nationalism and isolation.

George Washington,the founding father of the US, once said: ‘Observe good faith and justice toward all nations. Cultivate peace and harmony with all.’

It is hard to see how the Trump Administration’s approach to Asia could do anything but create disharmony in the region. China may be the beneficiary as a result. As Deng Xiaoping, the chief architect of modern China, wisely predicted: ‘The China-US relationship can never be too good or too bad.’


Sun Xi, a 1980s China-born alumnus of the Lee Kuan Yew School of Public Policy at the National University of Singapore, is an independent commentary writer based in Singapore. He is also founder and CEO of ESGuru, a Singapore-based consultancy firm specialising in environmental, social and governance issues

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