The G20 sideshow

Ryan Hass, who is a David M. Rubenstein Fellow in the Foreign Policy program at the Brookings Institution, where he holds a joint appointment to the John L. Thornton China Center and the Center for East Asia Policy Studies, has written an insightful article on the Brookings website in which he suggests that “Anticipation has been building for weeks over whether President Trump and President Xi Jinping will achieve a breakthrough on trade tensions when they meet on the margins of the G-20 summit later this week in Argentina … [and] … President Trump and his staff have at various times stoked such expectations, suggesting that China wants a deal … [but, he says] … As significant as the trade discussion will be—particularly for investors, farmers, factory workers, and consumers sensitive to price increases on goods—it may end up being a sub-plot to a larger story. The lasting import of the meeting between Trump and Xi may be whether it leads to a resetting of ties between the world’s two largest powers, or whether it serves as a way-station toward entrenched enmity.” My bet, given that Donal J Trump is involved is on the latter outcome.

Mr Hass might agree with me because he says that “Recent trends in the bilateral relationship do not provide cause for optimism. The U.S.-China relationship arguably is more strained now than at any point since the normalization of relations in 1979. In recent months, the relationship has accelerated along a continuum from rivalry toward adversarial antagonism.

Ryan Hass explains that “In the United States, a policy shift on China has been propelled by a sense that China is winning and America is losing in a 21st-century competition for global preeminence. To arrest this perceived trend, the Trump administration has adopted an increasingly publicly confrontational and zero-sum approach,” which I have discussed more than once in these pages. he also suggests that “From Beijing’s perspective, Washington’s actions reflect the predictable pattern of a declining power trying to hold back the rising power. Many Chinese experts have been forecasting for decades, and particularly since the global financial crisis, that Washington would resist China’s rise. Other Chinese experts have linked the Trump administration’s hawkishness on China to its inability to solve societal challenges at home, such as stagnant wages, growing income inequality, and political polarization. They argue that China presents a useful diversion for Trump away from problems closer to home.” That seems, to me, to be a petty fair assessment of the two sides’ positions.

Against this backdrop,” Mr Hass says, and I agree that “it is not surprising that there have been notably few breakthroughs borne of bilateral negotiation on issues of importance to the United States since President Trump assumed office. This, in turn, has fueled frustrations in Washington, contributing to a growing sense within parts of the Trump administration that negotiating with the Chinese is fruitless. American proponents of the view have had their hand strengthened by reports that Beijing has backslid on past pledges, including its commitment to refrain from government-sponsored, cyber-enabled economic espionage for commercial gain.

Mr Hass says that what he calls “intensifying antagonism and diminishing confidence” has created a situation that is ripe for miscalculation and consequential conflict. “Already, there have been instances,” he says, “when the United States has taken actions—for example, with respect to Taiwan—it has seen as incremental, but which Beijing has interpreted as significant.” He says that same works in reverse and the Trump administration regards some Chinese tactics, such as advertising against American tariffs in newspapers in districts that voted for Trump in 2016 as being overtly hostile.

There could be a bright side, Mr Hass suggests, but “At this point, nothing short of leader-level intervention will arrest the current downward trend in the relationship. If Trump and Xi are to do so on the margins of the G-20, both leaders will need to gain confidence in the direction the other seeks to take the relationship … [and, he suggests] … They both could do so while allowing for a highly competitive bilateral relationship. As long as competition is undertaken within mutually understood parameters, it need not be destabilizing … [but, he adds] … Those parameters do not currently exist, and as a consequence, there is growing risk of mutual miscalculation leading to unintended escalation.

It remains to be seen,” Ryan Hass says, “whether Trump and Xi will be up to the task of identifying the need to develop parameters around acceptable competition, and in the process, setting a constructive tone and direction for the relationship …[but] … President Trump has in the past shown a propensity to breezily declare victory on problems in the absence of agreement on details (e.g., Trump-Kim summit in Singapore) … [therefore] … It is possible that Trump could act on such impulses again, for example by declaring a truce with Xi on escalation of trade tensions … [but, he cautions] … Even a trade truce, though, likely would have a short shelf-life, absent an overarching commitment to reset the bilateral relationship.” This view, it seems to me, is predicated on President Trump having a very short attention span, which might be true, but he and his advisors seem to have a special fear and loathing of China and while Xi Jinping, it seems to me, would welcome a short term respite from the trade wars, he is focused on a longer game.

Mr Hass concludes that “If, instead, Trump doubles down on Pence’s recent public demands for wholesale changes to China’s economic and governance models as the price Beijing needs to pay to avoid a new Cold War, and Xi … [as he almost certainly will] … dismisses Trump’s demands as the insecure posturing of a declining power, relations between the world’s two most powerful countries likely will get even bumpier in the months ahead. In such a scenario, trade likely would not be the only area of the relationship to experience an escalation of tensions.

I think that’s the most likely outcome of the “sideshow” at the Buenos Aires G20 meeting that starts in a few hours. Oh, and Justin Trudeau is going, and so is Mohammed bin Salman and Emmanuel Marcon and Theresa May, but they are all just window dressing as we watch the fate of Cold War 2.0.

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