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Sustaining High Expectations
Global uncertainties present an opportunity for China to spell out its new vision and positive impact
By Kerry Brown | NO. 50 DECEMBER 13, 2018

A plane flies over the Costa Salguero Convention Center in Buenos Aires, the venue of the G20 Summit, on November 27 (XINHUA)

The two-day Group of 20 (G20) Summit in Argentina, which ended on December 1, has been presented in much of the press commentary as a gathering more striking for the discord among its members than for any harmony. Topmost of these issues was the looming escalation of the trade conflict between the largest of the partners, the United States and China.

In addition, there were the ongoing problems with Russia and recent clashes with its neighbor Ukraine, and the argument over Brexit and its impact on the rest of the European Union with the UK due to depart at the end of March 2019. There was also the issue of Saudi Arabia and the controversy over the disappearance and murder of a journalist in October in Turkey who had been critical of Riyadh.

The launch of Air China's Beijing-Houston-Panama City route is held in Beijing on March 22 (XINHUA)

Forging consensus

With all these issues clouding the atmosphere, in the end the full communique was a more positive declaration than might have been expected. It was absent of any particularly sharp language about protectionism and trade barriers, but it did commit to a rules-based international finance system, and to addressing imbalances in growth between different countries and within them. It had lengthy sections on gender equality, and on the deeper utilization of digitalization and new technologies. It also specifically mentioned commitment to wider, and better-quality, education provision for all. These are laudable and lofty goals, and while readers might be skeptical about how much they can be implemented in the near future, the fact is that it is better to have them in a statement across so many important partners like this than absent.

If the G20 exists for any purpose at all, it is for the forging of consensus on what shared developmental, economic and political goals might be between such different partners, and how best to prioritize matters. This year, the sections on combating climate change--something that has become even more urgent in view of the latest findings of the International Panel of Climate Change who met in South Korea in October--had an oddly ambiguous tone about it. One paragraph clearly confirmed the unwavering commitment to the 2015 Paris Agreement and its full implementation. The other following simply recorded that the U.S. would continue to withdraw from the accord, as announced by President Donald Trump last year. Despite stating that the U.S. would seek to preserve the environment, the paragraph declared that it would do so while using all energy resources available to it.

It is probably this more than anything else that will mark the 2018 G20. It recognizes the increased isolation of the U.S., and of a deep fissure within American domestic opinion. In fact, many states and localities in America will abide by the Paris commitments. And there is recognition that going back to reliance on fossil fuels will not deliver the sort of economic benefits that Trump had once stated it would. It is hard to think of a more stark example of just how unorthodox and often jarring American relations with much of the rest of the world have become under the 45th president. The communique declares that economic growth in the last year has been strong. This is particularly true in the United States, and for China and India. Even so, the trade conflict between the first two, while not explicitly mentioned in the multilateral accord, was the most significant issue at the Buenos Aires meeting. And the bilateral meeting between Trump and Chinese President Xi Jinping was the most anticipated event.

Dinner diplomacy

The two, over a two-hour dinner on December 1, did agree to put the planned new tariffs threatened by Washington on hold. Earlier, Trump had announced that tariffs on Chinese goods worth $200 billion would be hiked to 25 percent from 10 percent after January 1, 2019. The agreement was made on the basis that, in Trump's words, China had committed to purchasing food and other products from American farmers and manufacturers.

Trump with his habitual love of the hyperbole declared this an excellent outcome. But he then went on to say that the decision would be reviewed in early 2019 and then assessed. This may therefore end up back at square one with new threats, new actions and new disturbances to the world economy.

Perhaps what has cooled down Trump's passion for such strong, unilateral action are the signs in the U.S. that the economy is starting to take a hit from the tensions with its largest trade partner, China. GM, the giant car manufacturer, announced at the end of November that it was planning to close some of its capacity in states that are hugely important to Trump and his support base. This outcome jars against his standard claim that he is the great supporter of domestic growth and secure jobs rather than someone who antagonizes that agenda.

The November midterm elections showed that already his opponents, the Democrats, had started to reap at least some rewards in the House of Representatives, taking back control of it. While facing down the Chinese might be good politics for Trump's supporters when the economy is doing well, if there is a dip then he can start to be portrayed as reckless and ineffective.

At best, the G20 agreement Trump and Xi have drawn up gives everyone breathing space. The brake has been put on a situation that appeared to be spinning out of control. But China is now aware that it is dealing with an administration that is mercurial, and can change from friendly and benign to hostile and antagonistic in a matter of hours. Trump's core advisors, John Bolton for national security, and Peter Navarro for trade, are people who have been consistently hawkish on China. Trump himself has been mostly occupied with the idea of trade balances. So with this sort of network in power in the U.S., China knows that it cannot be complacent. There is every chance that next year, the winds of fortune will change again, and it will be in the middle of more angry and accusatory tweets from Trump.

One thing that China has to do is to watch the growth trajectory in the U.S. The more unsettled and uncertain this looks, the more pressure will mount on Trump to start seeking again a target to blame his misfortune on. It is good therefore that in the next few months, China will start to at least undertake some actions to address the trade deficit. This might be symbolic, and it might be that most economists recognized that trade deficit is not the key issue. But at least it gives China a proactive story to tell back to its key accusers in the U.S.

Roots of U.S. fears

The deeper structural issue however does not go away. It is that as China's economy continues to grow and it reaches parity with the U.S., the desire to frame it as a direct strategic competitor by many in America will also simply grow. Already, antagonism and anxiety about China's success and prominence are intensifying. Many are finding threads of a narrative that paints China as an opponent, and one that needs to be confronted. U.S. fears over its loss of global preeminence and power have been around for a long time. But they seem to be growing more focused by the day.

Handling these will not be easy. Never before has pressure been put on China in this way to display proactive and positive international leadership. With the truce with the U.S. it now has the opportunity to spell out even more clearly the ways in which it has had, and will continue to have, a positive impact on the global economy and is a stakeholder in its sustainability.

For sure, Trump's move on China has been unsettling and aggressive--but it also presents an opportunity as never before for China to speak even more about the things that it offers and the new vision of partnership it wants to bring. America can't complain therefore if China is vociferous about this. It asked for an answer to what China has to offer and it got it. That would be the sort of opportunity coming from the current malaise that China should be keen to embrace.

The author is an op-ed contributor to Beijing Review and director of the Lau China Institute at King's College London

Copyedited by Sudeshna Sarkar

Comments to yulintao@bjreview.com

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