With lavish pageantry and an uncharacteristic personal flourish, Chinese President Xi Jinping on November 8 rolled out a red carpet welcoming US President Donald Trump at the Forbidden City, the ancient home of China’s emperors. President Trump, who is under fire in the US due to Russian meddling in the presidential elections, paid a visit to China during his five-nation official visit to East Asia. The importance of this visit can be gauged from this fact that both assertive China and the steadily declining US are immersed in a ‘potential cold war’ in certain parts of the globe, especially in South and East Asia.
It is important to mention that Uncle Sam is fully acquainted that ‘every rise has a fall’ and China has braced itself for the US fall in order to assume world’s leadership role as the sole superpower. Though there are some sane voices playing critical roles in the US foreign policy, it still seems that Washington’s global power will further decline under the Trump administration owing to the impulsive and imprudent behavior of President Trump. As The Thucydides Trap suggests, there will be some likely confrontations between China and the US when Beijing overtly challenges Washington’s leadership role in the world. Presumably, realism will continue to be the dominant theory in international affairs in the foreseeable future.
President Trump’s visit was the first by a foreign leader since the end of a key Communist Party congress last month when XI cemented his power. As widely predicted the pressing issues of North Korea and trade dominated most of the discussions between the world’s two most powerful leaders.
What is interesting in international affairs is to note that countries sign trade accords worth billions despite mounting security and political issues. Chinese and US companies signed a range of trade agreements during President Trump’s visit to China, these deals could be valued as much as $250 billion, though some have been long in the pipeline and many are non-binding. The following are some the main accords signed:
China Energy Investment Corp, the world’s largest power company by asset value, has signed a memorandum of understanding (MOU) to invest $83.7 billion in shale gas, power and chemical projects in West Virginia.
China’s top state oil major Sinopec, Bank Of China (3988.HK) (601988.SS) and China Investment Corp CIC.UL agreed to help develop a $43-billion natural gas project in Alaska.
Boeing Co won orders and commitments worth $37 billion at list prices for 300 jets, including 260 narrow-body Boeing 737s and a total of 40 wide-body 787s and 777s from state purchasing agency China Aviation Supplies Holding Co.
General Electric Co (GE.N) signed three commercial deals with Chinese partners worth a total of $3.5 billion.
Qualcomm (QCOM.O) signed three non-binding agreements to sell $12 billion of semiconductors to Xiaomi, Oppo and Vivo over the next three years.
Ford Motor (F.N) and China’s Anhui Zotye Automobile (000980.SZ) have agreed to invest a combined $756 million to set up a 50-50 joint venture in China to build electric passenger vehicles.
Delfin Midstream has reached a preliminary 15-year sales deal to supply 3 million tonnes a year of liquefied natural gas (LNG) to city gas distributor China Gas Holdings (0384.HK) from 2021.
Goldman Sachs & Co [GSGSC.UL] and CIC announced a strategic agreement to establish a China and United States industrial cooperation fund. The fund will target $5 billion in commitments to invest in U.S. companies in the manufacturing, industrial, consumer and healthcare industries that have or can develop China business connections.
The United States soybean industry has signed letters of intent worth $5 billion with Chinese importers covering the purchase of an additional 12 million tonnes of soybeans in the 2017/18 marketing year.
Air Products and Chemicals (APD.N) signed an agreement with Yankuang Group for a $3.5-bln coal-to-syngas production facility in China.
JD.Com Inc (JD.O) said it would purchase more than $2 billion of U.S. agriculture and food products over the next three years, including at least $1.2 billion of beef from Montana Stock Growers Association and pork from Smithfield Foods Inc. [SFII.UL].
Bell Helicopter, part of Textron Inc (TXT.N), reached a deal to sell 50 additional Bell 505 helicopters to Reignwood International, with Reignwood also being named the craft’s exclusive reseller in China.
Terex Utilities Inc. and Xuzhou Handler Special Vehicle (300201.SZ) signed a strategic letter of intent for Xuzhou Handler to by 5,000 insulated aerial devices from Terex over five years’ worth $250 million.
Vironment signed an agreement with Hangzhou Iron and Steel worth $800 million addressing textile and sewage sludges for over 800 plants. Vironment also signed a $100-million agreement with Guangye Guangdong Environmental Protection Group to address sewage sludge solids disposal requirements in South China.
Honeywell (HON.N) said it signed agreements with Oriental Energy to adopt Honeywell products for projects to convert propane into propylene and with Spring Airlines (601021.SS) to use Honeywell cockpit technologies and auxiliary power units in aircraft.
Dow Chemical Co (DOW.BN) and Shanghai-based bike-sharing firm Mobike signed a memorandum of understanding to develop lighter-weight and more environmentally-friendly Mobikes.
Drylet LLC agreed to form a joint venture with Nanjing Hoyo Municipal Utilities Investment and Administration for wastewater treatment in China. Hoyo Municipal Utilities Investment and Administration will also become an equity investor in Drylet.
Software company SAS signed a cooperation agreement with Shenzhen Zhenghong Technology to establish the Big Data Innovation Center for Smart Manufacturing in Shenzhen.
Caterpillar, Inc. (CAT.N) and China Energy Investment Corporation signed a five-year strategic cooperative framework agreement covering future agreements for mining equipment sales and rentals, technology applications and product support.
Cheniere Energy Inc (LNG.A) signed a memorandum of understanding (MOU) with China National Petroleum Corp [CNPET.UL] for long-term LNG sales and purchase cooperation.
Westinghouse Electric Co. signed contracts with China’s State Nuclear Power Technology Co. to build six AP1000 nuclear power plants in China.
The Digit Group signs three contracts worth a combined $1.9 billion.
It is interesting to note that President Trump threatened to limit Chinese exports to the US by means of gradual imposition of tariffs on Chinese products. He has often displayed such tone and tenor during his election campaign, in his campaign event in Bluffton, SC – July 21, 2015, he said: “I beat the people from China. I win against China. You can win against China if you’re smart. But our people don’t have a clue. We give state dinners to the heads of China. I said why are you doing state dinners for them? They’re ripping us left and right. Just take them to McDonald’s and go back to the negotiating table.”
Moreover, President Trump has long raised an accusing finger toward China for perpetrating one of the “greatest thefts in the history of the world” when it comes to trade with the US and promised he would have his Treasury secretary label China a currency manipulator.
President Trump has lately changed his mind and has started blaming his predecessors for the increasing trade deficit between the US and China. What is certain is that he has come to realize that the US is unable to unilaterally strangulate China economically and weaken it militarily. But while visiting China, Trump took a softer line and said the country was not responsible for trade imbalances with the US. “I don’t blame China,” Trump said in Beijing. “After all, who can blame a country for being able to take advantage of another country to the benefit of its citizens?” Instead, Trump pointed the finger at his predecessors for “allowing this out-of-control trade deficit to take place and to grow.”
What should not be forgotten is that the burgeoning Sino-US trade relations do not mean that the US has changed its disruptive policy of containing China in East and South Asia. Washington has recently strengthened its partnership with India, Japan and Australia with the view to blocking China so that it does not become capable of carving out its sphere of influence in the region. The US is perturbed over the increasing sway of China in war-torn Afghanistan.
The Trump administration is rather apprehensive of the rapid Chinese economic and military rise in the region. CPEC, One Belt One Road Policy and pearl of string strategy of China have worried US policymakers. If China succeeds it will outweigh the US economically and militarily in the world. On the Chinese regional rise, American, Indian and Japanese interests largely converge with one another. The Trump administration will, therefore, employ all means, fair and foul to obstruct Chinese access to the Middle East and Africa via the Gwadar Port.
The Trump administration is also concerned about the robust Sino-Pak partnership in the region. Washington is apprehensive that China will bank on this partnership to dominate Afghanistan and CARs through CPEC in the foreseeable future. The US wishes to contain China in South Asia, Central Asia and in the Middle East, while India wants to dominate Afghan and Central Asian energy resources and landlocked economies. To achieve these grand objectives, the US has expedited its efforts at providing India unimpeded access to Afghanistan and to the international nuclear market so as to obstruct China.
Whatever the US does with regard to containing China in Asia will not make strides due to the peaceful economic rise of Beijing in the region. So, the Trump administration should discard its obstructive trade policies and aggressive military posturing towards China. This will help both countries maximize their economic and security objectives across the globe. Any confrontation will prevent the two powers from achieving their foreign policy goals, thus making the world less cooperative and more anarchic.
