No Trade, Even Less Real War with China as Taiwan Is But a Bargaining ChipPosted: December 16, 2016
Reuters’ report today titled “Targeting U.S. automaker signals possible China retaliation over Trump talk” quotes a pessimistic former senior U.S. official as saying, “Trump has basically guaranteed that the first year in the China relationship will be a combative, competitive one, and the question is how bad it will get… The Chinese now are basically putting together their list on how to retaliate.”
Reuters says that the US has more than $500 billion business interests in China. That is true. If you travel in China, most likely you will ride a Boeing airliner. In China, you will find lots of US cars, fast food restaurants, soft drinks, fruits, etc.
I believe that Trump’s priority is to improve US economy. He certainly will not start a trade, even less a real war with China. He only wants concessions from China for better access to China’s vast market.
Therefore, Trump’s questioning of the one-China policy is but a posture. He will never take any real measures to help Taiwan.
China’s pressure on US firms in China is also a posture only. China certainly wants to maintain its access to its major market, the US market.
Therefore, I believe US-China ties will improve after Trump has become US president.
Confrontation with China, whether economically or militarily, will only hurt US interests. Trump, as a shrewd businessman, certainly will not do that.
Comments by Chan Kai Yee on Reuters’ report, full text of which is reblogged below:
Targeting U.S. automaker signals possible China retaliation over Trump talk
By Arshad Mohammed, Matt Spetalnick and Benjamin Kang Lim | WASHINGTON/BEIJING Thu Dec 15, 2016 | 11:02am EST
Pressure on other U.S. companies, such as Boeing Co (BA.N) and General Electric Co (GE.N), with large interests in China could be one of the most tangible tools of retaliation, together with new limits on access to the country’s huge markets. U.S. business interests in China are estimated at more than $500 billion.
Wider economic steps – such as China, America’s biggest creditor, selling a significant part of its $1.16 trillion of U.S. Treasuries, or weakening its currency – seem unlikely, the first because it would slash the value of China’s U.S. bond portfolio and the second because it could accelerate capital flight, experts said.
Beijing could speed up a military build-up that had begun to slow along with Chinese economic growth, carry out naval exercises close to Taiwan – which it regards as a renegade province – and withhold diplomatic cooperation on issues such as Iran and North Korea’s nuclear programs.
“Taiwan policy is what China considers a core interest … and it’s prepared to go to great lengths to defend it,” said Eric Altbach, senior vice president at the Albright Stonebridge Group consultancy in Washington and a former deputy assistant U.S. trade representative for China affairs.
A ROCKY FIRST YEAR?
The consensus within the Obama administration is that Trump, who irked China by taking a phone call from Taiwan’s president, was not fully aware of the potential backlash from Beijing over his questioning of the “one China” policy, a U.S. official said, speaking on condition of anonymity.
The hope is that by the time Trump takes over from President Barack Obama, he will recognize that China has advanced so far economically, diplomatically and militarily that it is unwise to pick fights with Beijing over such a bedrock principle, he added.
A former senior U.S. official took a more pessimistic view.
“Trump has basically guaranteed that the first year in the China relationship will be a combative, competitive one, and the question is how bad it will get,” he said. “The Chinese now are basically putting together their list on how to retaliate.”
There are at least three ways in which the matter could play out, U.S. China experts said. Trump could backtrack over time, much as former U.S. President George W. Bush did.
A second track would be if Trump goes on questioning the “one China” policy without taking concrete action. The third, considered unlikely by U.S. officials past and present, would be a drift toward military confrontation.
‘JUST CAUSE TO DISPATCH TROOPS’?
Asked if Trump’s “one China” stance could lead to this, a source with ties to the Chinese leadership told Reuters: “We will see what Trump says and does after he becomes president.”
A second source with leadership ties said they expected tensions with the United States over Taiwan. But the source said Chinese President Xi Jinping, who has sounded a more nationalistic line than his recent predecessors, could also use the issue to further cement his grip on power.
“If (Taiwan) is emboldened by the U.S. support and does something drastic, it could be an opportunity for us. There will be just cause to dispatch troops,” the second source said.
While the possibility of Taiwan declaring independence and hence triggering a Chinese invasion seems low, the mere softening in the U.S. commitment to the policy would likely play out in China’s defense posture.
“It will alter Chinese defense priorities. I think that’s inevitable now,” said Dennis Wilder, a former CIA China analyst. He said Xi may increase Chinese military spending for 2017 and place new emphasis, over time, on gaining the amphibious capabilities necessary to actually invade Taiwan.
“Xi Jinping has to respond to this internally, domestically, and while he doesn’t want an open fight with Trump, he will have to show … resolve,” he said, citing higher military spending, more defense exercises and tougher rhetoric on Taiwan. “We can anticipate that unless this issue is taken off the table.”
(Additional reporting by Ben Blanchard in Beijing and Patricia Zengerle in Washington; Editing by Howard Goller and Lincoln Feast)
Note: This is Reuters report I reblog here for readers’ information. It does not mean that I agree or disagree with the report’ views.