Between Business and War: A Vital Choice for the United States and China

Dr. David Lai,Mr. Frederick J. Gellert

In January, Donald J. Trump was sworn in as the 45th President of the United States. Determined to fix America’s festering domestic and international troubles, the new President put forward his manifesto:

For many decades, we've enriched foreign industry at the expense of American industry; subsidized the armies of other countries, while allowing for the very sad depletion of our military. We've defended other nations' borders while refusing to defend our own.

We assembled here today issuing a new decree to be heard in every city, in every foreign capital, and in every hall of power. From this day forward, a new vision will govern our land. From this moment on, it's going to be America first.

The President’s call signaled a return from the international idealism of President Woodrow Wilson that has guided U.S. foreign policy for much of the last hundred years to the political realism of George Washington, Thomas Jefferson, and the populist nationalism of Andrew Jackson. Under President Trump, national interest—centrally focused on the security and economic well-being of the American people—not ideology—will be the guiding principle for U.S. foreign policy.

Many may find the President’s call objectionable as Americans have become accustomed to Wilsonian idealism. Nonetheless, this nationalist foreign policy vision may be what the United States needs at this historical juncture. A nationalist foreign policy allows for the crafting of a workable strategy for meeting America’s challenges. Such a pivot will have major and significant impacts on U.S. foreign policy. The most salient case in point lies with America’s relations with China, especially with regard to the Asia-Pacific region.

A Businessman’s Take on China

During the campaign, Candidate Trump spoke often of China. He tweeted against huge trade deficits with China, charged China with currency manipulation, and threatened to apply a 45 percent tariff against all China-made goods. President-elect Trump surprised many by accepting a congratulatory phone call from the “President of Taiwan” (the Republic of China in formal terms), questioning the U.S. longstanding One-China policy, while also surrounding himself with several tough-on-China senior advisors. By many measures, a firestorm was in the making for U.S.-China relations.

Yet the President’s political realism has begun to take root. On January 10, the President-Elect met with China’s online commerce tycoon Jack Ma. The two discussed Ma’s Alibaba, currently the largest online retailer in the world, moving to the United States, potentially creating a large number of jobs. On February 9, President Trump had a constructive phone conversation with Chinese President Xi Jinping. Before then, President Trump had also made positive overtures toward China such as nominating Xi’s long-time friend, Iowa Governor Terry Branstad, to be the U.S. Ambassador to China, sending daughter Ivanka and granddaughter Arabella to celebrate the Chinese New Year at the Chinese Embassy in Washington D.C., and having his then-National Security Advisor Mike Flynn call his Chinese counterpart in Beijing. More recently, the Trump team has met with the visiting Chinese State Councilor Yang Jiechi, who has reportedly discussed summit meetings between Trump and Xi at an early date. During his recent visit to China, Secretary Rex Tillerson ostensibly conveyed to his Chinese hosts that the meeting could take place possibly in April at Trump’s Mar-a-Lago resort in Florida. Such developments indicate that the President views the Chinese as business soulmates than as deadly adversaries. Indeed, the Chinese come to the United States to do business, not to promote communism.

China has an annual trade volume of over $600 billion with the United States, and China-made products fill American stores. It is the top foreign holder of U.S. Treasury bonds at over $1 trillion. In recent years, Chinese investment has also come to the United States in large volumes, first purchasing real estate and now turning to acquire U.S. industries. Before long, China might well follow the footsteps of Japan and South Korea to have its products “made by China in the United States.”

In the meantime, more than 300,000 Chinese students are enrolled in U.S. universities and colleges, the most of any foreign country. Some Chinese parents send their children to attend U.S. high schools and elementary schools while paying tuition and living expenses for what is a privileged U.S. life style and something of an economic boon to local communities. In 2016 more than 100 million Chinese traveled the world with many visiting the U.S. and spending generously. China’s growing wealth is rekindling interest in China’s historic dream: holding a rightful place in the world. President Trump’s promise to make America great again and the Chinese dream for world leadership can be viewed as dangerous conflicting visions, yet they are, in fact, unlikely to generate deadly quarrels.

Of immediate concern in the Asia-Pacific are territorial disputes between China and its land and maritime neighbors. Territorial disputes are one of the oldest reasons nations go to war. The United States and the European powers have all gone through such fights. China is an old civilization; yet it is a young nation and has unfinished nation-building business, particularly with regard to territorial security issues. Unlike the United States, which has two peaceful land neighbors and two buffering oceans, China is surrounded by 14 land neighbors and six on sea (if one includes the U.S. presence off China’s coast) yet it has settled most territorial disputes with her neighbors.

Settling the disputes may simply be part of China’s growing pains. The Obama Administration, however, may have overreacted to China’s moves, raising them to the level of a contest for international order. President Trump’s political nationalism may allow a fresh interpretation. During his first visit in the region, Secretary of Defense James Mattis stated that the United States has no need for dramatic military moves in the South China Sea, but will rely on diplomatic efforts for dealing with any issues. Such an opening sets the stage for Secretary of State Rex Tillerson to chart a new course in potentially troubled waters.

Another major concern is China’s growing military power. Current projections suggest that while China is a decade or more away from being a global military power, its regional capability has improved to a point that could threaten various Western Pacific nations, some of them U.S. allies and partners. The good news is that the U.S. and Chinese militaries have regular exchanges on rules of engagement and crisis management. Moreover, the Chinese military looks at the U.S. military as a role model, and Washington has much it could offer Beijing in helping develop its military professionalism—something that President Trump should seek to leverage.

Nonetheless, China’s challenge to the United States is multifaceted and unprecedented. While the two nations have a number of seemingly intractable challenges, they also have many intertwined common interests. Getting it right with China is vital for the United States and the Asia-Pacific writ large. A sound strategy must take into account the following fundamentals. First, The United States should stop thinking of China as an existential threat. Second, the strategy should not seek to thwart China’s rise, but rather focus on maintaining U.S. leadership in the world order. This will require using all aspects of national power and some tough negotiations throughout the region. Third, the United States should approach U.S.-China relations as a business opportunity, rather than a military threat. Those who advocate launching a preemptive war against China to short circuit its ascendance should consider the difference between winning a battle and losing the war. To this end, Secretary of State Tillerson recently responded positively to Chinese President Xi’s model for great power relations, which was largely muted for several years by President Obama. Xi’s proposal has three simple points, with the first being that war is not an option for either country. Ironically, President Trump’s much ignored or dismissed call—“We will seek friendship and goodwill with the nations of the world, but we do so with the understanding that it is the right of all nations to put their own interests first”—can be a blessing for this nationalist strategy. Furthermore, ongoing events in the South China Sea, Taiwan, and North Korea provide three additional, very important, opportunities for the Trump Administration to apply its nationalist strategy to the Asia-Pacific.

South China Sea: Give China the Benefit of the Doubt

The United States has experienced direct confrontation with China in the South China Sea in recent years. Increased naval and air patrols by both parties has raised the specter of military confrontation in the Western Pacific. However, two particular actions by the Obama administration contributed to heightened tensions. First, the Obama team mistook China’s efforts to deal with the South China Sea territorial disputes as attempts to change the international order and, consequently, initiated counter-moves. Second, Obama officials considered the Freedom of Navigation (FON) of commercial shipping at potential risk and raised concerns about the need to protect free use of the seas. This is understandable given that more than $5 trillion of commerce traverses the South China Sea annually and the United States has a stake in that lifeline. The Obama team, however, seemingly failed to recognize that China accounts for much of that $5 trillion business and interrupting commercial FON was neither their intent nor aligned with their economic best interests. While commerce issues may be of some concern, the real rub between China and the United States centers on military activities and China’s claimed Exclusive Economic Zones (EEZ).

The Trump Administration has sent mixed signals to China regarding the South China Sea region. During his confirmation hearing for Secretary of State, Rex Tillerson controversially suggested the possibility of blocking China’s access to the South China Sea islands. This was followed by White House Press Secretary Sean Spicer’s assertion of the U.S. right to defend the “international waters” around the disputed South China Sea islands. It was only Secretary Mattis’ statements during his Asia trip that calmed the situation.

However despite perceptions, China is currently willing to negotiate to solve its disputes. Despite China’s rejection of the July 2016 ruling of the United Nations Convention on the Law of the Sea (UNCLOS) Arbitration Tribunal findings in favor of the Philippines, China extended an invitation to the Philippines to negotiate. As the Chinese put it, at the end of the day the Philippines still has to sit down with China to negotiate the disputes. Yet almost no U.S. media outlet picked up this story; all took it for granted that China would punish the Philippines and close the door on negotiation. Currently, China has an agreement with members of the Association of Southeast Asia Nations (ASEAN) for a two-track approach for South China Sea (SCS) affairs, allowing China to negotiate settlements with disputants while working with ASEAN as a whole to maintain broader peace and stability in the South China Sea.

Chinese officials point to China’s historical record of settling territorial disputes peacefully and fairly. A Chinese government White Paper published the day after the arbitration ruling stated that China seeks peaceful resolution with the SCS states. China has the largest number of land and maritime neighbors in the world, and for centuries China has not had clearly delimited borders. Today, China has amicably settled border agreements with 12 of its 14 land neighbors. The most notable is with Vietnam. At the border, where China and Vietnam fought a war in 1979, China has given more to Vietnam. Overall, China has agreed to receive 48 percent of the disputed territories while Vietnam has 52 percent. In addition, China and Vietnam divided up the Gulf of Tonkin evenly, where China could have demanded more if China were to bully a smaller neighbor like Vietnam.

Chinese officials have proclaimed the SCS constructed land features will be used for peaceful activities serving to benefit all. In January 2017, China and ASEAN made headway in negotiating the Code of Conduct. This framework will eventually commit all stakeholders in Southeast Asia and China (including Taiwan) to peaceful and fair settlement of disputes in the SCS and the surrounding region. This rather positive development failed to surface in any U.S. news headlines.

Given these developments, the United States should take the moral high ground by giving China the benefit of the doubt. Let China negotiate agreements with the disputants while the U.S. supports SCS nations and checks military actions in the region. In this regard, the United States should vigorously protest any additional land reclamation by all parties in the SCS and U.S. Navy FON operations should be conducted throughout the region, not just in areas that impinge on Chinese claims. Additionally, the United States should accelerate the coordination and emplacement of crisis management mechanisms with China. Military exercises and visits, diplomatic engagements, and economic activities will encourage China and the other SCS nations toward building mutual trust and cooperation such that agreement violation is less likely. Additionally, should trouble occur, the U.S. and the international community can initiate appropriate responses, including, if necessary, military actions.

Taiwan: Don’t Let the Tail Wag the American and Chinese Dogs

The China-Taiwan-United States dynamic is complicated and concerning for all. China was divided into two entities in 1949, with the Communists establishing a People’s Republic of China (PRC) on the mainland and the Nationalists retaining the Republic of China (ROC) on Taiwan. The United States supported the “China” on Taiwan while refusing to recognize Red China on the mainland. This changed in 1972 when President Richard Nixon made an historic visit to mainland China and signed the Shanghai Communique that created the One-China policy whereby: “The United States acknowledges that all Chinese on either side of the Taiwan Strait maintain that there is but one China and that Taiwan is a part of China. The United States does not challenge that position.” President Jimmy Carter normalized relations with mainland China in 1979 and reduced the U.S.-Taiwan relationship to an unofficial status. Congress, however, was not pleased with Carter’s move and passed the Taiwan Relations Act (TRA) which defined U.S. commitment to Taiwan as follows: The future of Taiwan will be determined by peaceful means; any effort to determine the future of Taiwan by other than peaceful means is of grave concern to the United States; to provide Taiwan with arms of defensive character; and to maintain the capacity to resist any forceful attempt to change the status of Taiwan. Congress did not endorse the One-China policy as a provision in the TRA and consequently, the One-China Policy is not a law but rather a presidential commitment subject to reaffirmation with each new president.

Much has changed since 1979. Taiwan has become a democracy with an openly-pro-independence party, the Democratic Progressive Party (DPP). The DPP has won general elections to govern Taiwan twice. While DPP government hinted at pushing for formal independence, mainland China made unification a core interest and promised to use force if peaceful means failed to bring Taiwan into the PRC. In 1995, the Taiwan Strait crisis broke out. The Clinton Administration sent two aircraft carrier battle groups to the troubled waters, staging the largest show of force in the Western Pacific since the end of WWII. Unable to confront Washington militarily, Beijing backed down. China’s inability to respond to the U.S. show of force prompted the PRC to jump start its military modernization program. Over time, China has developed a formidable anti-access and area denial capability that could challenge U.S. intervention should a serious crisis with Taiwan arise. With none of the parties predisposed to war, the China-Taiwan-U.S. problem has settled into a status quo that balances and tests the judgment and willpower of all three parties.

However, the Taiwan situation is once again stirring. Some reports describe the Trump-Tsai phone call and President Trump’s later remarks as well-prepared and not a misunderstanding as characterized by some. According to die-hard Taiwan supporters, Taiwan is strong and is in a position to help the U.S. economy. Also, it is argued, Taiwan is a democracy and thus deserves U.S. support, especially when compared to authoritarian leadership that dominates mainland China. While these points are true, the U.S. must be cautious with respect to how it supports Taiwan. President Tsai has an agenda and is seeking U.S. support. If the United States goes too far in supporting her efforts, the result could be a potentially deadly confrontation with China. This situation, if left unattended or mismanaged could become a perfect example of the tail wagging the dog leading to potentially grave and ill-advised consequences.

According to opinion polls in Taiwan, most Taiwanese prefer the current status quo—no outright push for full independence or hasty unification with the mainland. Importantly, China is not pressing for unification at this time. The United States, therefore, has no reason to rock the boat and should continue to honor the Taiwan Relations Act that promotes developing economic relations and support for a more mature democracy in Taiwan while preserving peace and stability in the Taiwan Strait.

North Korea: Time to Get Rid of the Insane Policy

Insanity has been described as doing the same thing again and again, while expecting a different result each time. This truism aptly characterizes U.S. dealings with North Korea over the last 7 decades. Indeed, the United States has stationed military forces in Northeast Asia to deter North Korea, held countless shows of force, and imposed intractable economic sanctions against North Korean. None of these measures has meaningfully impacted the Kim regime, nor have they stopped the development of their nuclear and missile capabilities. North Korea’s nuclear capabilities and missile programs are growing. Shortly before New Year’s Day, 2017, North Korea announced its intent to test missiles capable of reaching U.S. military bases in Japan and eventually the U.S. home land. President-Elect Trump tweeted his vow to punish North Korea if it dared and told American public that that capability “won’t happen.” On February 11, however, while President Trump and Japanese Prime Minister Shinzo Abe were meeting in Florida, North Korea test-fired a missile into the Sea of Japan. On March 6, North Korea sent four missiles aloft, reaching a range of 1,000 kilometers (621 miles), and landing in waters close to Japan. President Trump and the Japanese Prime Minister Abe condemned the February test as “absolutely intolerable.” In response to North Korea’s provocative missile test in March, U.N. Ambassador Nikki Haley released a sharp condemnation, stating “it’s time to hold North Korea accountable, not with our words, but with our actions” and “we are not ruling anything out.” Unfortunately, Americans have heard this variety of “tough talk” before, but have yet to see any “tough walk.” And, not surprisingly, there has been neither a reduction in the North Korean nuclear program nor in their periodic provocations.

Following any North Korean provocation, the United States usually calls for emergency U.N. meetings to consider possible new sanctions while seeking assistance from China. Assorted policy analysts and news commentators call upon China for assistance in disciplining North Korea—to what has become little more than a repetitious narrative. Many seasoned Korean experts, China observers, and U.S. leaders believe that China can and should put more pressure on North Korea, including economic pressure. But, alas, China has many reasons for doing little or nothing.

First and foremost, China has no interest in damaging its relations with North Korea for U.S. interests. The Chinese understand the old saying that a nation’s immediate neighbor is its natural enemy, and Korea has had plenty of quarrels with China throughout the centuries. Americans may come and go, but the Chinese and Koreans are stuck as neighbors and the Chinese do not want a hostile neighbor should the Americans someday depart. Second, from the Chinese perspective, North Korea is a U.S. problem, pure and simple. What many U.S. leaders and analysis do not understand, however, is that when North Korea rattles its nuclear weapons and missiles only the United States and its allies, South Korea and Japan, are the likely targets. China has concerns with possible radioactive fallout from North Korea’s nuclear tests, but China itself is not a target of North Korea’s nuclear warheads. Chinese have said time and again that “whoever starts the trouble should end it” (“解铃还须系铃人”); thus from the Chinese perspective, the United States must solve this problem on its own. Chinese Foreign Minister Wang Yi reiterated this position during his meeting with Secretary of State Rex Tillerson in Beijing.

Finally, China does not have as much influence with North Korea as is frequently assumed. Five years into his reign, Kim Jong-un has not met with Chinese President Xi despite being just next door. Moreover, China, like the United States and many others, appears to have been caught completely off guard by North Korea’s nuclear and missile tests.

Secretary of State Rex Tillerson arrived in Japan on March 16 and his agenda was richly focused on the North Korea problem. Tillerson said that past approaches have not worked. Many would agree. The Obama Administration’s so-called “strategic patience” during the past eight years has done almost nothing to discourage or diminish North Korea’s nuclear weapon and missile development programs. As former Director of National Intelligence James Clapper put it soberly, the U.S. policy of trying to persuade North Korea to give up its nuclear weapons “is probably a lost cause.” Tillerson suggests it is time for the United States and allies try something new, something fresh. Absent of a direct military attack on U.S. and/or allied forces, a U.S. military option is not likely and that intimates a possibility for diplomatic and/or economic options. Giving President Trump an opportunity to move forward with his nationalist perspective. First, answer North Korea’s call for direct contact. North Korea has time and again requested direct talks with the United States, typically through the North Korean mission to the United Nations. The U.S. response has been dismissive. Second, secure three objectives: (1) end the Korean War Armistice, (2) sign a peace treaty ending all hostilities and 3) normalize relations between the two countries—all without the precondition of North Korea denuclearization.

Some may ask, how can the United States justify doing anything that effectively rewards North Korea, which normalization would seem to do? Normalization should not be viewed as a reward, but rather as a standard diplomatic practice that is long overdue. In 1991, shortly after the end of the Cold War, Russia and China both normalized relations with South Korea and sponsored both Koreas to full UN membership. The United States should have followed suit with North Korea, but refused. North Korea was furious with Russia and China for normalizing relations with South Korea. Feeling insecure in the face of perceived continued U.S. hostility and the loss of protection from Russia and China, North Korea turned to the pursuit of nuclear weapons to address its security concerns. Had the United States normalized relations with North Korea when China and Russia did there is a distinct possibility that North Korea would have had little interest in pursuing a nuclear weapons initiative.

Pursuing pro-active initiatives with North Korea has the potential to accrue numerous benefits for the United States. First, a hostile and simmering environment for well over seven decades will cool and become more manageable. Second, North Korea will have no reason to continue pursuing nuclear weapons nor pointing missiles toward the United States and her allies. Assuming, both South Korea and Japan would quickly follow the U. S. lead and normalize relations with North Korea. Precedent for rapid normalization exists. When President Richard Nixon made his historic visit to China in 1972, Japan aptly sensed the wind was blowing the other way and immediately moved to normalize relations with China. It took the United States another seven years to do so. Third, if relations were to normalize, the United States would not have to shoulder the burden of the North Korea nuclear weapons problem. Once the United States is no longer perceived as a threat by North Korea, the denuclearization of North Korea, which is a China-led principle and initiative, will follow. Until fully resolved, United States could easily step back as an “off-shore balancer” well positioned with ample strategic flexibility.

A move toward normalization is a much better, more viable strategic option than continuing with the long-held and ineffective position that North Korea must dismantle its nuclear weapons program before the United States will consider taking any positive steps. Nations pursue policies of arms escalation in the face of a perceive threat. They are inclined to lay down weapons and pursue other initiatives when a perceived threat is removed and peace and prosperity are at hand. Insisting that North Korea must disarm first is a nonstarter and locks both nations into a vicious stalemate as has been the case for decades.

Some may argue that the United States must address North Korean human rights issues before normalizing relations. Significant human rights abuses occur in North Korea. General starvation, political prison camps, and outright murders are well documented and a seemingly routine part of the Kim regime’s modus operandi. In practical terms, however, the U.S. will be in a better position to both track human rights violations and influence the North’s human rights choices through diplomacy aided by much needed economic incentives.

Normalizing relations with North Korea will effectively undercut a key reason for the existence of the Kim dictatorial regime. The Kim family has used U.S. hostility as rank justification for ruling for three generations across nearly seven decades. The Kim’s proclaim they are defending the North Korean people from the evil Americans. If the U.S. threat is removed, the Kim regime will have to seek new ways to survive. One positive option would be for them to invest in much needed infrastructure as well as advancing social and human welfare programs. Such a change would have lasting positive effects inside the country while exerting a stabilizing influence in the region.

Overcoming the Political Correctness

This analysis counters current policy and practice, flies in the face of conventional political correctness and is, frankly, somewhat risky. One might ask, for example, upon what grounds can the United States reward North Korea with diplomatic recognition? Why deal with the “Kim thugs” in a favorable way? How can the United States not support Taiwan’s self-determination and how can the United States abandon its long-held opposition to a rising Asian hegemon? Can the United States trust China to settle internal and regional disputes peacefully and fairly? Will China’s rise effectively supplant the United States as the primary force for stability and order in the Asian-Pacific? Excellent questions all!

President Trump, a political nationalist grounded in business operations, will have little difficulty in dealing with such questions. As he has stated on numerous occasions: “I think the big problem this country has is being politically correct.” Indeed, President Trump has a history of opposition to so-called politically correct rules on all fronts, be it domestic policy or international business. The odds-on bet is that his no nonsense political pragmatism will carry him and the United States past concerns rooted in traditional conventions and political niceties.

The United States foreign policy has been historically driven by lofty Wilsonian ideology with a sustained desire, wish, and even emotional commitment to re-shaping other peoples and nations, especially since the end of WWII. America supports those governments that either copy or seek to emulate the American success story. Consequently, the United States has long been inclined to engage other nations along ideological lines and emotional terms rather than through the realistic pursuit of U.S. national interests. With new pragmatic nationalism guided by business savvy unchained from a historic practice of over indulgence in the politically correct, the United States will be positioned to pursue a fresh, new strategy in the Asian Pacific. Indeed, the United States should look beyond the “Kim thugs” and move to normalize relations with North Korea. Doing so will benefit the peoples of both Koreas, Japan, and the United States. A peaceful Korean peninsula will be beneficial to the region while adding a potential economic powerhouse and a prosperous partner with the United States. Similarly, an increasingly constructive U.S. relationship with China can advance the interests of both nations.

A fresh mindset coordinated with the change in U.S. administrations creates an opportunity for positive, long-term negotiations rather than a continuation of what is near-term crisis management. To be sure, there will be provocations and likely some missteps by all. Economic sanctions, diplomatic maneuvers, and military deterrence efforts will necessarily continue to be elements of the U.S. strategy. But diplomacy, negotiations, trade and economic investments, cultural exchanges, and in due course mil-mil engagement must be a part of a viable, long-term strategy. Cooperative approaches will be beneficial to all and as the world leader and the strongest power in the Asia-Pacific, the United States is well positioned by leadership and history to initiate a fresh strategy in the region. Breaking from the conventional U.S. foreign policy mindset regarding the South China Sea, Taiwan, and North Korea will enable the Trump Administration to advance a strategically sound Asia-Pacific policy. The goal of such a national strategy will be, of course, to keep “America First” without becoming “America Only.” For President Trump, overcoming political opposition to the strategy approach characterized here will take leadership, campaign perseverance, and careful negotiation. Yet clearly, it may well be time for a change. As Candidate Trump’s stated during his campaign for the U.S. Presidency “What do [we] have to lose by trying something new?”

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