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AprThere is no turning back in the trade war between China and the U.S.. Does this mean that Sino-U.S. relations have fallen into the Thucydides trap?
In response to the question of ThePaper.cn, Song Wei, Research Fellow at the National Academy of Development and Strategy (NADS), RUC and Professor of the School of International Studies, RUC, bluntly said that from the perspective of China, we should not proactively fall into the Thucydides trap.
On April 6, Song Wei made an analysis to ThePaper.cn at the “Sino-U.S. Bilateral Trade Situation” symposium. He pointed out that the current situation in China does not fit the typical situation of the Thucydides trap, and that the correct approach to resolve Sino-U.S. economic and trade conflicts should be firmly defending China’s legitimate rights and interests while continuing to stay moderate and restrained. The Thucydides trap theory has two important premises. Firstly, the challenging country’s strength must reach 80% of the economic strength of its competitor, and the second is the intention threshold, that is, the challenging country is not satisfied with the status quo. Seen from the current situation, China does not meet these two conditions. China’s economic aggregate is only about 60% of that of the U.S.. Secondly, China is satisfied instead of being dissatisfied. It is a participant, defender, builder and beneficiary of the post-war international order. In other words, China has no intention to rewrite the rules. Therefore, from the perspective of China, we do not accept the Thucydides trap. What China needs to do is to try to maintain the big picture of China’s diplomacy and stabilize Sino-U.S. relations. The most important thing is to strive for a period of peaceful development and extend the duration of China’s international strategic opportunity. For now, we can fight back when we should. But the most important task is to develop China in a peaceful environment. “When our economic strength reaches 120% of that of the U.S., we shall then talk about other issues.”
The Trump administration intends to isolate China
Song Wei pointed out that this Sino-U.S. conflict is by no means a simple trade friction. Judged from Trump’s behaviour, the U.S. is more concerned with the issues of mandatory technology transfer, Chinese government subsidies, state-owned enterprises and intellectual property. It has two core concerns: firstly, China’s national development model poses a challenge to the U.S. under the existing free market economy system; the other is the competition in intellectual property, high-end manufacturing and technology industries.
The current trade conflict is essentially not only a trade war, but also an economic war. It also contains political implications. Song Wei believes that the latter two involve national development model and intellectual property protection, both of which are closely related to a country’s political system.
The fundamental reason why the U.S. provoked this economic conflict is out of political and strategic consideration. Although economic interests have also been considered, including trade deficit and the protection of domestic employment, they are not fundamental causes.
Song Wei said that the economic and trade relations between the two countries are in nature quite mutually beneficial and that the two countries have complementary economic structures. Either a trade war or an economic war will for sure do damage to both sides. The Trump administration has been very careful in distinguish between China and other countries and regions. It holds different attitudes towards China and its allies. For example, it granted exemption period to South Korea, Japan, Canada, and EU countries. They can solve problems through negotiation. This is a method to isolate China. At present, this trend is obvious. The EU is now clearly following up. The Canadian Prime Minister has expressed support for Trump’s stance on renegotiating the NAFTA. Therefore, the Trump administration consciously aims the spearhead at China in this economic conflict so as to isolate China.
The challenges facing Sino-U.S. relations will increase
In reviewing the the decline of the U.S. national strength since the financial crisis, Song Wei pointed out that the Sino-U.S. relations had been gradually undergoing essential changes since 2009, i.e., conflicts had been increasing. After Obama took office, he began to propose the “Asia-Pacific rebalance strategy.” The main purpose of this rebalance strategy is to establish China as its main challenger, and therefore it is necessary to deploy 60% of naval forces in the Asia-Pacific region.
The strategic position the U.S. attaches to China began to change substantially since 2009. However, this change had not been completely clear. On the one hand, Obama himself positioned China as a major potential competitor, but on the other hand, he also expressesed his welcome towards the peaceful rise of a powerful and prosperous China due to many reasons.
The period from 2009 to 2017 is a transition period for Sino-U.S. relations. After Trump took office, his foreign strategy has been basically in line with that of Obama, but with some development. As a realist, Trump has a very clear judgment that economic security is national security. On the basis of this judgment, the leadership position of the U.S. is determined by its strength advantages, and economic strength is the basis of everything. So, whether the U.S. can maintain its economic advantages can affect its national security and leadership position.
Song Wei believes that there are two main points in Trump’s foreign strategy: China is clearly positioned as a major strategic competitor. Economic security is national security. China’s real challenge lies in the long term, the “hundred-year marathon,” and the economic challenge China poses to the U.S.. The ultimate purpose of this economic war is to slow down China’s economic development and the speed of China’s rise, and to re-increase the strength gap between China and the U.S.. This is the fundamental political consideration behind economic and trade frictions.
Therefore, seen from this perspective, it is necessary for China to adopt some countermeasures. However, in the long run, there will be more and more frictions between the two sides in economic and trade relations. On the contrary, the challenges faced by China-U.S. relations in the economic area and other areas will also increase.
What should China do? Song Wei believes that we should try every possible means to extend the period of international strategic opportunity for China. Once the U.S. begins to clearly position China as a strategic competitor, such period will be basically over. However, under the current conditions, China still needs to treat both the symptoms and the root causes, and strive for a longer period of international strategic opportunity and a more favorable international environment for the rise of China.
Trump’s trump card
Trump’s trump card is that he knows China is more dependent on the U.S.. According to Song Wei, Trump is not afraid of launching trade war and economic war because he is sure that China will suffer greater in the war. His strategy and tactic is extreme pressure, forcing China to make maximum compromises by exerting the greatest pressure possible, hence weakening China’s development momentum and development potential. Although Trump has such a trump card and such confidence, Sino-U.S. economic and trade relations are, after all, mutually beneficial on a large scale. Therefore, in the face of Trump’s extreme pressure tactic, China must maintain its own principle and stance, and fight back as proper. China shall not concede without limits just because of its relatively disadvantageous position in the interdependency relationship between the two countries. This for sure will not work, because there will be more and greater pressure once China compromises. So, simply speaking, China can not be blackmailed.
What is more important is that we should find some common ground. First of all, we should find short-term common ground, continue to expand the situation of common interests in Sino-U.S. economic and trade relations, and minimize the level of friction and conflict. China and the U.S. do share quite some common ground. For example, Trump now wants a lot for the U.S. to become an energy exporting country. We can import more energy products from the U.S.; China should also continue to expand domestic reforms and external opening up, and create a more open business environment in the domestic market. These can mitigate the economic conflicts and the subsequent possible political conflicts between the two sides.
Trying to avoid misunderstanding between China and the U.S.
What exactly is the a new model of major country relationship? What exactly is the “Belt and Road” Initiative? Song Wei pointed out that the U.S. has indeed misunderstood China on these issues.
Many voices believe that China should learn from the experience of the Japan-U.S. trade war. Song Wei said otherwise. Song pointed out that we shall not completely draw on such experience since Japan and the U.S. share a military alliance. Although Japan and the U.S. had fierce trade frictions at the time, the security cooperation and political relations between the two countries were not hurt. The Japanese government has been working very hard to maintain its political relations with the U.S., which is also worth learning from by China. Despite the current economic conflict between China and the U.S., since China is still in the process of development, it shall still maintain the overall situation of Sino-U.S. cooperation. Unnecessary misunderstandings must be avoided.
Why did the U.S. have so much misunderstandings toward China after 2009? For example, the U.S. has never accepted the concept of “a new model of major country relationship” proposed by China; the “Belt and Road” Initiative has not been fully accepted by the U.S. and the EU. Currently, the Initiative does not seem like a good starting point for China-EU cooperation, because the EU, especially France and Germany, is now particularly annoyed with the close contact between China and the Central and Eastern European countries, believing that this challenges the integrity of the EU.
As the Trump administration has positioned China as a major strategic competitor in the end of 2017, how can China continue to maintain the big picture of Sino-U.S. strategic relationship politically or to a certain extent, change the conflict in this strategic positioning? Song Wei thinks there are still many things to be done. For example, the U.S. now positions China as a major competitor, but China is not the only country that is rising. If a trade war and an economic war break out, both China and the U.S. will suffer while other countries may gain. International relations are very complicated. Sino-U.S. relations are not completely without room for change. We should reduce misunderstandings and seek strategic common interests.
For China, the most fundamental thing is to gradually promote the transformation and upgrading of the economic structure and fundamentally reduce economic conflicts between China and the U.S.. we should continue to deepen internal reforms and external opening up so that China can ultimately grow on its own instead of staying as an export-oriented economy. It should be a future development direction for China to support a strong economy with domestic demand and a large domestic market.
(The author is a Research Fellow at the National Academy of Development and Strategy, RUC and a Professor at the School of International Studies, RUC)
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