CHINAMacroReporter

First 100 Days: Do Not Provoke China

The First 100 Days interview series features Pacific Council experts addressing the top foreign policy issues facing the incoming Trump administration.: Warns of the potential for new conflicts if Donald Trump follows through with his campaign promises regarding China.
by

|

Pacific Council

December 7, 2016
First 100 Days: Do Not Provoke China

The First 100 Days interview series features Pacific Council experts addressing the top foreign policy issues facing the incoming Trump administration.

In this interview, Mr. Malcolm Riddell warns of the potential for new conflicts if Donald Trump follows through with his campaign promises regarding China. As an investment banker, diplomat, lawyer, Harvard academic, and CIA spy, or Riddell brings 40 years of experience working on China issues. He is CEO of RiddellTseng, a China-focused boutique advisory firm, and creator of CHINADebate and CHINADebateTV, which bring together leading China experts and decision makers for discussions of the issues that inform China and China-impacted decisions. Read more about his background.

Pacific Council: What should the next administration’s top foreign policy priorities be during the first 100 days?

Mr. Malcolm Riddell: The main thing the administration has to do is decide what their strategies and priorities are, and what the implications are if President Trump follows through on many of his pledges. If he brands China a currency manipulator and slaps on a 45 percent tariff and then says, "Oh by the way, we want some help with North Korea," then he’s going to get a less than favorable welcome. It wouldn’t have been hard to talk about the first 100 days if Hillary Clinton had won, but it’s awfully hard here because if Trump does so much of what he said he’s going to do, the landscape is going to change so dramatically.

If [Trump] brands China a currency manipulator and slaps on a 45 percent tariff... he’s going to get a less than favorable welcome.

The priorities are going to change based on what he chooses to do, and the crises that may arise. He needs to pull his team together and work through these issues and see what the implications are and where the balances have to be made. For example, if he’s determined that the United States is going to take a hard line virtually everywhere except with Russia, there will be huge implications on what crises bubble to the surface.

PC: If the Trump administration pulls the United States out of the Trans-Pacific Partnership as promised, will other countries join China’s version, the Regional Comprehensive Economic Partnership, and how does China stand to benefit from that scenario?

Riddell: Other countries already are negotiating with China on its version. Depending on who you listen to, the TPP and China’s version are either competitors or complementary. If we look at them as being complementary, then we probably would’ve had a good platform to be able to participate more actively in trade, and maybe have some influence on China as well. By pulling out of the TPP, there’s only one game left in town and we’re not in it.

By pulling out of the TPP,  there’s only one game left in town and we’re not in it.

Everything depends on the Trump administration’s execution. If the campaign pledges go through to start renegotiating all our trade positions — NAFTA, WTO — then I think America’s allies, who probably are not as prone to those sorts of changes, will see China as a leader, not just in Asia but perhaps in the entire free trade realm.

PC: Will China’s activities in the South China Sea continue during the Trump administration, and how will Trump respond to that situation?

Riddell: If China doesn’t further escalate its activities, there are limits on how much the United States can do in response, unless the incoming administration makes the South China Sea a U.S. foreign policy priority. If President Trump decides that the South China Sea is a priority and the United States is going to stop China, and maybe even try to push back in favor of our allies in the region, then we’re likely to see some action up to and including a minor shooting war.

My concern is that the United States might be the provocateur.

If China is smart, it won’t do anything provocative until it gets a feel for how the Trump administration will react. But my concern is that the United States might be the provocateur. We might escalate the situation, given the overall hard line tenor of Trump’s campaign rhetoric. The South China Sea could go from being a long-term slow boil to a hot spot very quickly.

PC: How will Beijing respond if President Trump declares China a currency manipulator?

Riddell: It will certainly put the kind of pressure on [China's currency] that President Trump will not want. In a broader sense, it will depend on what he does in addition to labeling China a currency manipulator. It’s pretty much agreed that in the last several years China has been just that, but they really haven’t been trying to maintain an advantage; they’ve been trying to prop the currency up. If President Trump follows through with his other pledge of a 45 percent tariff, then we’re in a trade war. I can’t see that being a good thing for anybody. I’m a hard liner on China, and certainly not a supporter of Mr. Trump the person, but when I see the possibility of my hard line ideas actually being put into place, I start to get very nervous.

The possibility that the United States is going to take an "act now and see what happens" approach is very frightening.

Long before Donald Trump and Bernie Sanders came along, the world order had started to go in a bad direction. It’s gotten over-organized to the point that many groups have been left behind. I’m in favor of a shakeup, but this is just not at all what I had in mind. I was hoping for a thoughtful and considered reevaluation of the world order, and careful negotiation and proposals between nations. The possibility that the United States is going to take an "act now and see what happens" approach is very frightening. It’s not so much how President Trump handles the individual crises and problems that we have, but how he reacts to the crises he provokes if he follows through on his promises.

More

CHINAMacroReporter

February 23, 2021
HSBC offers lesson in corporate realpolitik
‘HSBC’s Asia pivot is a lesson in corporate realpolitik. It is just as much a recognition of the new political reality facing every western company that is dependent on doing business with China. Businesses will have to choose between western markets and access to China, and between liberal and authoritarian value systems.’
keep reading
February 23, 2021
Germany Is a Flashpoint in the U.S.-China Cold War
'As goes Germany, so goes Europe — and that’s a real challenge for the U.S. Berlin leads a European bloc that could cast a geopolitical swing vote in the U.S.-China rivalry.’
keep reading
February 22, 2021
Remaking “Made in China”: Beijing’s Industrial Internet Ambitions
‘The Chinese government is placing large bureaucratic and financial bets on upgrading and digitizing its already dominant manufacturing base. Such efforts have coalesced around one key term: the “industrial internet” (工业互联网). The successful application of it across Chinese industry would prolong and elevate the “Made in China” era.’
keep reading
January 13, 2021
Kurt Campbell & Biden Asia Policy
In today’s issue: 1. Kurt Campbell: Biden's 'Indo-Pacific Coordinator' / 2. 'How America Can Shore Up Asian Order' by Kurt Campbell
keep reading
January 9, 2021
'Matt Pottinger resigns, but his China strategy is here to stay'
‘Even though Pottinger’s name was largely unknown to the public, his influence on U.S. foreign policy will be felt for years to come.’
keep reading
January 9, 2021
'The Relevant Organs' Pro Tip: 'You Definitely Need a Show Trial'
Spitballing here, GOP friends, but Josh Hawley, Ted Cruz, Ron Johnson and Marjorie Taylor-Greene would make an excellent Gang of Four, if you need a show trial.
keep reading
January 9, 2021
How the Chinese reacted to the incident at the Capitol
In this issue: 1. China Reacts / ‘On Double Standards’ - 'Chinese netizens jeer riot in US Capitol as "Karma," say bubbles of "democracy and freedom" have burst' - 'A Few Tweets from Hu Xijin 胡锡进, Editor of The Global Times' / 2. ‘Architect of Trump China Policy Resigns’ - 'Matt Pottinger resigns, but his China strategy is here to stay' / 3. A Pro Tip from 'The Relevant Organs' - 'Dealing with Insurrectionist Leaders the Chinese Way'
keep reading
January 9, 2021
'On Double Standards'
‘Besides, facts are there, beyond anyone's denial, regardless of whether they came up in the Chinese media reports or not.’
keep reading
January 6, 2021
'Mo money, Ma problems - Chinese trustbusters’ pursuit of Alibaba is only the start'
'Chinese trustbusters long resisted hobbling an industry seen as world-beating, and backed in Beijing. Now, as in the West, they fret that a few giants control indispensable services—e-commerce, logistics, payments, ride-hailing, food delivery, social media, messaging.’
keep reading
January 6, 2021
'Mo Money, Ma Problems'
In today’s issue: 1. Eurasia Group| ‘Top Risks of 2021’ / 2. Biden & the EU-China Investment Agreement / 3. The EU-China Investment Agreement: Pro & Con / 4. China's Antitrust Investigation into AliBaba
keep reading
January 6, 2021
PRO | 'The Importance of the EU, China Investment Deal'
‘But we should not have waited for the Biden administration to sort things out. Wait for what? We don't know if China will be more responsive if the three parties sit together. We don't have a timeline. Shall we wait another two or three years?’
keep reading
January 6, 2021
'China and E.U. Leaders Strike Investment Deal, but Political Hurdles Await'
‘China appeared eager to reach an agreement before Mr. Biden takes office in January, calculating that closer economic ties with the Europeans could forestall efforts by the new administration to come up with an allied strategy for challenging China’s trade practices and other policies.’
keep reading
January 6, 2021
'China’s Pro-Monopoly Antitrust Crusade'
‘But Chinese regulators are unlikely to stop at Alibaba; China’s entire private sector has a target on its back.’
keep reading
January 6, 2021
‘Top Risks of 2021’: CHINA
'Overall, this year will experience an expansion of a high level of US-China tensions.'
keep reading
January 6, 2021
CON | 'Europe has handed China a strategic victory'
“We’ve allowed China to drive a huge wedge between the US and Europe.”
keep reading
January 6, 2021
'With Concessions and Deals, China’s Leader Tries to Box Out Biden'
‘Mr. Biden has pledged to galvanize a coalition to confront the economic, diplomatic and military challenges that China poses. China clearly foresaw the potential threat.’
keep reading
January 5, 2021
'Sansha City in China's South China Sea Strategy: Building a System of Administrative Control'
‘Sansha City, headquartered on Woody Island in the Paracel Islands, has created a system of party-state institutions that have normalized administrative control in the South China Sea. This system ultimately allows China to govern contested areas of the South China Sea as if they were Chinese territory.’
keep reading
January 1, 2021
Competition With China Could Be Short and Sharp
‘The bad news is that over the next five to ten years, the pace of Sino-American rivalry will be torrid, and the prospect of war frighteningly real, as Beijing becomes tempted to lunge for geopolitical gain.’ / ‘Historically, the most desperate dashes have come from powers that had been on the ascent but grew worried that their time was running short.’
keep reading
October 7, 2020
'Rivers of Iron': Changing the Face of Asia
‘But what's happened now is that Southeast Asia is rich enough to contemplate such infrastructure and that the Chinese have the technology, money, and high-speed rail industry so that they can both finance or help finance and build it.’
keep reading
August 27, 2020
Why China's Economy is Growing Faster than Others
‘First is China's relatively aggressive and decisive measures on the COVID public health crisis itself that managed to get the pandemic under control much faster than the other large economies.’ ‘The relative success in controlling the pandemic translates into how much people are willing to go back to their normal lives, to their jobs, and the like.’
keep reading
May 20, 2020
The Chinese Communist Party Fears Ending Up Like the Soviet Union
‘The propaganda ministry - within four to six weeks - managed to turn China into a problem for Europeans. China’s standing in Europe is eroding by the day.'
keep reading
May 13, 2020
The Party is Infallible
'The Hong Kong demonstrations can never be because of policy mistakes by the Communist Party itself.’ During our interview, Tony Saich of the Harvard Kennedy School told me: ‘Hong Kong, with its responses to the demonstrations, and the Coronavirus are both illustrative examples of how the culture of the Communist Party and the traditions it's built up over almost a hundred years reflect the way it behaves when it's confronted by certain crises.’
keep reading
May 6, 2020
The Phase One Trade Deal
‘The good news is that 80% of our members said they thought the Phase One agreement was a good thing.' 'But only 19% said it was worth it.' 'What the 80% said they are happy about was that there no more new tariffs were coming immediately.’
keep reading
May 2, 2020
South China Sea & Taiwan
'It would not be accurate to say China claims the entire South China Sea as its sovereign territory because the Chinese are unclear about what exactly their claim is and what it is based on.'
keep reading
April 29, 2020
Why Inflation Should Not Be A Problem
‘This is a crisis where the first chair is held by the public health officials, and the second chair is held by the fiscal authorities. We at the Fed have the freedom to be able to move relatively quickly, but we're the third chair here, trying to help out where we can.’
keep reading
April 25, 2020
China, America, & the 'Jaws Syndrome'
‘Both Trump and Xi have a fundamental political divide problem that the COVID-19 epidemic has exposed and made more apparent – and made substantially worse.’
keep reading
April 22, 2020
Why We Need Stronger Global Institutions
‘The trade war was actually about the dissemination of knowledge, knowledge transfer, technological transfer.’ ‘A great irony. We need global institutions or arrangements to deal with trade, technology, and health because individuals, corporations, and national governments cannot.’
keep reading
April 18, 2020
The Pandemic's Impact on Trade
‘There are some people who would say that there was already a retreat from globalization underway.’ ‘The tools of globalization - enormous reductions in the cost of transportation and communication - remain.’ ‘But the marginal utility actually of further advances is declining – that would be one way to put it.’
keep reading
April 11, 2020
The Pandemic May Increase China's Economic Strength vis-à-vis the U.S.
‘Well, I think people around the world are rightly suspicious of the Chinese as they are probably equally suspicious of the Americans.'
keep reading
April 30, 2018
'Big lessons from the faulty analysis that spiked the Shanghai stock market'
ProTips from Andrew Polk, Trivium China On April 24, equity analysts interpreted a phrase used in a Politburo meeting readout to signal a new round of economic stimulus. And, the Shanghai stock market, one of the world's worst performers, spiked 2%. On April 25, having much earlier advised and protected clients, Andrew Polk of Trivium China published an analysis in Trivium's daily (and free) Later, Andrew and I talked about how he reached his conclusions. His explanation is a masterclass in how experience, discipline, and some tedious slogging, combined with a sound analytical framework, lead to good China analysis.
keep reading
April 18, 2018
New super-agency, National Supervision Commission—and China's massive government restructuring
'With government restructuring, the biggest thing is the creation of an entirely new branch of government: the National Supervisory Commission. Its entire job is to overlook every single public official in China. It is an institutionalization and deepening of the corruption crackdown that we've seen over the past few years.'In all, Andrew highlighted four major actions from the Two Sessions: 1.Chinese government restructuring 2.The policy roadmap 3.Personnel 4.The legislative agenda + the constitutional amendments
keep reading
April 16, 2018
The Chinese Government’s 9 Economic Policy Priorities in 2018 (and beyond)
[China Econ Observer] 1.Supply-side Structural Reform 2.Innovation 3.The “three critical battles” 4.Deepening reforms 5.Rural revitalization 6.The regional development strategy 7.Increasing consumption and improving investment 8.Opening up 9.People’s wellbeing
keep reading
April 10, 2018
U.S.-China trade dispute: Will China Weaponize the RMB and U.S. Treasury bonds?
U.S.-China trade war: collateral damageConsider the soy bean. 'China is threatened retaliatory tariffs on U.S. soybeans. The U.S. is one of the largest producers of soybeans. If China's not going to buy them, we're going to have an excess capacity.'' So, last week, we saw a soybean selloff.''But there was a complete dislocation in whole soybean supply chains. Downstream products, like soybean oil, didn't move at all in the same way.'
keep reading
April 5, 2018
Behind the U.S.-China trade dispute: 'The West's China gamble has failed.'
What's the root cause of the current friction between the U.S. and China? The West's disappointment that China did follow the western model but its own, argues Ed Tse, CEO of Gao Feng Advisory Company (a member of the China Analyst Network). [Ed's solution] look to the similarities between China and the West, especially in the tech sector, and be alert to China's evolution toward better IPR, market access, and other contentious issues, not just the remaining shortcomings. Below is a video of my discussion with Ed and excerpts from both the interview and his South China Morning Post op-ed, 'Chinese innovation with US characteristics? Maybe China and the West aren’t that far apart, in business at least.' Ed presents insights that differ greatly from the China Echo Chamber in the U.S. Let me know what you think.
keep reading
March 8, 2018
How Trump's tariffs impact China's trade/currency relations with Japan & Korea
[China markets update with TRACK's Bob Savage] 'The currency markets are embroiled in trying to figure out whether the Trump tariffs on steel and aluminum are good or bad for the U.S. economy and the U.S. stock market.'
keep reading

Heading

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat. Aenean faucibus nibh et justo cursus id rutrum lorem imperdiet. Nunc ut sem vitae risus tristique posuere.