The two powers are more dependent on each other than Trump wants to admit.
As the Trump administration prepares to take a tougher trade stance on what it sees as unfair Chinese trade policies, China has signaled that it won’t accept such measures lying down, saying it will “ resolutely safeguard ” its economic interests. It’s the practical pushback to President Trump’s now years-long verbal jabbing at China, from “They’re ripping us off, folks,” to “So much for China working with us — but we had to give it a try.”
This week Trump reportedly told President Xi Jinping that the U. S. trade deficit with China isn’t sustainable. But the crux of this standoff will be whether Trump understands that while the United States has some leverage, its relationship with China is one of mutual dependence that can’t be disrupted without doing damage to both sides.
To wit: A report last week that China’s government is contemplating reducing its purchases of U. S. Treasurys briefly rattled financial markets. Against the backdrop of rising trade tensions between the two countries, it was widely seen as a not-so-subtle warning that aggressive American action on trade might jeopardize the willingness of China to subsidize the spending of the U. S. government.
China is now, and has been for almost a decade, the largest foreign buyer of U. S. debt, with Japan a close second. Holding nearly $1.2 trillion in Treasurys, China hasn’t actually increased its investment all that much over the past few years, and there have been several times where the Chinese central bank has halted new purchases and sold old holdings, each time triggering concerns in the United States that a new and dangerous era for U. S.-China relations was about to dawn.
For now, China and the United States have navigated their relationship with relatively little friction. But expectations of an eventual conflict, hot or cold, are widespread, from defense policy analyst and Harvard professor Graham Allison explaining a “ Thucydides trap ” that portends war between incumbent powers and their challengers, to a recent essay by Edward Wong, the New York Times’s former Beijing bureau chief, that concludes: China’s “Communist Party embraces hard power and coercion, and this could well be what replaces the fading liberal hegemony of the United States on the global stage. It will not lead to a grand vision of world order. Instead, before us looms a void.”
[ China’s rise didn’t have to mean America’s fall. Then came Trump.]
For now, these are theories. Yes, there have been intermittent policy spasms, such as President Barack Obama confronting China over human rights in Tibet or the Trump administration opening an anti-dumping case directed at China’s sheet metal industry.
