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 4, 2021
Why Beijing Is Bringing Big Tech to Heel
‘Beijing’s recent antitrust efforts are motivated less by worries about the tyrannical nature of monopoly power than by the belief that China’s tech giants are insufficiently committed to promoting the goal advanced by the Chinese Communist Party (CCP) of transformative technological innovation—and thus may be undermining the effectiveness of Chinese industrial policy.’
keep reading
February 3, 2021
'Secretary of State Antony Blinken on U.S. Policy Toward China'
‘There’s no doubt that China poses the most significant challenge to us of any other country, but it’s a complicated one.’
keep reading
February 3, 2021
'Burma’s Coup and Biden’s Choice'
‘The top U.S. priority in Asia is limiting Beijing’s ability to control independent states like Burma, which is strategically situated in the Indo-Pacific. The U.S. response needs to take into account China’s regional designs.’
keep reading
December 30, 2021
Q&A 4 | Is China Exporting Inflation?
'‘China has its own issues. If you look at the CPI inflation, it looks more moderate. ‘If you look at the producer price inflation, it looks more severe.’
keep reading
December 30, 2021
Q&A 2 | Will the Gender Imbalance Keep Housing Prices Firm in the Medium Term?
‘The part of housing prices caused by gender-ratio imbalance is not going to go away in the medium term. But the government has ways to create volatility in the housing market.’
keep reading
December 30, 2021
Q&A 3 | Property 2022: Stabilization or Growth?
‘The goal is to stabilize housing prices while having housing sector grow.’
keep reading
December 30, 2021
Shang-jin Wei Presentation-3 | Analyzing the Gender Imbalance Data
‘Compare these with graph showing the impact of the same factors on rental prices...'
keep reading
December 30, 2021
Shang-jin Wei Presentation-2 | Gender Imbalance as a Driver of Housing Prices
‘Why does gender imbalance have such an outsize impact on China’s housing prices?'
keep reading
December 30, 2021
Q&A 5 | Will Xi Continue to Favor the State Over the Private Sector?
‘He wants to see a bigger role for the state in the economy. But in the last two years, he has done some course correction. For example, after talking up the role of state-owned firms and building stronger, bigger state-owned firms, he is talking about the equal importance for the private sector.’
keep reading
December 30, 2021
Q&A 7 | Why Did Beijing Ban Online Tutoring?
‘Each policy in isolation – whether its banning online tutoring or protecting data or enforcing anti-monopoly regulations or any other - has its rationale.’
keep reading
December 30, 2021
What Are Your Top of Mind Concerns?
I asked the participants what are their top of mind concerns about China.
keep reading
December 7, 2021
Getting (Xi Jingping's) Priorities Straight
How do you make investment or business decisions in the face of the uncertainties created by Xi Jinping's reshaping China's economy? In this issue, I'll give you a few different ideas on how you might deal with that uncertainty.
keep reading
December 7, 2021
Look Through the Rights Lenses
Getting down more to the nitty-gritty, if you’re evaluating a sector or a company, get your lenses right to get the details right.. Stonehorn’s Sam Le Cornu gives a good example of this in a Bloomberg interview.
keep reading
December 7, 2021
Sometimes You Just Have to Roll the Dice
Telling someone to align him or herself with Beijing's priorities still is generally good advice.And, when I tell you what those priorities are, I know I am right - until I'm not.
keep reading
December 7, 2021
Watch What Beijing Says - and Does
Besides listening to Xi Jinping, you can discern Beijing’s priorities and its likely actions through its big policies - and this is my point here.
keep reading
November 23, 2021
'Biden Has a Summit With Xi, but No Strategy for China'
‘Neither Taiwan nor strategic arms are a hot campaign topic, and China is not yet at the forefront of public consciousness. To ensure America’s eventual strategy is workable, political leaders need to debate the challenges so citizens can appreciate the implications of the choices they will have to make.’
keep reading
November 23, 2021
Xi Jinping's Leadership: 'The Inevitable Outcome of History'
Mr. Xi is the hero of a Resolution on the history of the Chinese Communist Party that painted his leadership as the inevitable outcome of history and all but gave him his third term. Tony Saich of the Harvard Kennedy School did a terrific analysis on this - you'll find it below, after my take.
keep reading
November 23, 2021
'Xi Jinping has made sure history is now officially on his side'
‘While there are murmurs of opposition, the historic plenary session would suggest that the future is in Xi’s hands. However, when politics is so deeply personalised and centralised, there is only one person to blame if things go wrong. Unless, of course, we get a new resolution on history that tells us who led the party astray, despite Xi’s earnest attempts to keep policy on the straight and narrow.’
keep reading
November 9, 2021
'America's China Plan: A Proposal' by Clyde Prestowitz
Outcompeting China and avoiding global extension of its authoritarian and coercive policies and practices is not really about China. It’s about America.
keep reading
October 27, 2021
Why China Won't Invade Taiwan - Yet
Forget Evergrande and the energy crunch. After the recent flurry of alarming headlines, here’s the question I get most often these days from CEO’s and institutional investors: Will China invade Taiwan in the next few years?
keep reading
October 17, 2021
An Energy Crunch. China's Latest Crisis. They Just Keep Piling Up.
‍‘Over the next six months or more, the energy crunch in China will be an even bigger challenge than Evergrande. Will make the Evergrande problem look tiny and has huge global implications. The lights go out in China!’ one experienced and very well-respected reader of long residence in China wrote to me in response the last issue on Evergrande.
keep reading
October 7, 2021
Just How Contagious is Evergrande?
Just as a personal crisis can lead you to dig deeper into yourself, so the rapid-fire events in China - with trillions of dollars of business and investment on the line - have led us to (finally) go deeper into how China works – and to come to grips with uncertainties caused by Xi Jinping’s recent moves to reshape the Chinese economy and the Party’s social contract with the Chinese people.
keep reading
September 27, 2021
'This Time Feels Different'
Just when we thought we were getting used to Xi Jinping’s tech reforms and social-engineering regulations, the Evergrande crisis heats up.
keep reading
September 19, 2021
AUKUS: A New World Order?
‍In case you passed over the news of AUKUS, the new strategic alliance among the U.S, the U.K., and Australia, here a few headlines to encourage a deeper look.
keep reading
September 7, 2021
Xi Jinping: Today, video games. Tomorrow, well ... just be good.
Today's issue is a heads up on what may be Xi Jinping's efforts to reshape Chinese society.
keep reading
August 28, 2021
The Taliban: 'China's Perfect Partner'?
Breaking through the blow-by-blow reporting that started when the Taliban began its sweep to victory are the geopolitical analyses of who gains and who loses in Afghanistan.
keep reading
August 15, 2021
'Xi’s Dictatorship Threatens the Chinese State'
‘Mr. Xi is determined to bring the creators of wealth under the control of the one-party state.’
keep reading
August 15, 2021
'Are you tired of losing yet, America?'
As I write this, Taliban forces have entered Kabul and are reportedly occupying the Presidential Palace.
keep reading
August 15, 2021
China Economy: Industrial Production Down, Demand Resilient
China’s industrial production down 10%. Demand resilient.
keep reading
August 15, 2021
'China Signals More Regulation for Businesses in Coming Years'
‘The State Council’s statement provides a guiding context to interpret current regulatory thrusts. The blueprint as an attempt by Chinese authorities to help investors understand the motives behind the regulatory push.’
keep reading
August 5, 2021
‘Global investors shocked to have discovered that China is run by Communists.’
‘Global investors are shocked to have discovered that China is run by Communists.’
keep reading
August 5, 2021
'Shocked Investors Scour Xi’s Old Speeches to Find Next Target'
‘While China’s policy moves can feel ad hoc particularly to foreign investors, the changes are quite targeted on certain sectors.’
keep reading
August 5, 2021
Don't Say Xi Jinping Didn't Warn You
‘Global investors are shocked to have discovered that China is run by Communists.’
keep reading
August 5, 2021
'China Wants Manufacturing—Not the Internet—to Lead the Economy'
‘Social media, e-commerce and other consumer internet companies are nice to have. But in his view national greatness doesn’t depend on having the world’s finest group chats or ride-sharing.’
keep reading
August 1, 2021
'Stock Market: China Doesn’t Care How Much Money Investors Lose'
‘Does Beijing not care how much money foreign investors have lost? Does the government really want to close China Inc.’s access to the deep pool of global capital? The short answer is, no, the government doesn’t care.
keep reading
August 1, 2021
'Xi's Four Pillars of Regulation'
‘Broadly, Beijing is concerned about four pillars of stability: banking, anti-trust regulation, data security and social equality. All of Beijing’s major interventions reflect these concerns.’
keep reading
August 1, 2021
China's Tech Crackdown: 'Nobody Saw It Coming.' — Huh?
‘Carnage in China's financial markets signals the beginning of a new era as the government puts socialism before shareholders, and regulatory changes rip apart the old playbook,’ writes Reuters’ Tom Westbrook.
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.