Trump is now a moderate when it comes to China policy

As the candidates vying for the Democratic Party nomination in China lay out their stalls, it appears that Donald J Trump is the China moderate now.

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  1. Garry White

China’s favoured presidential candidate – Michael Bloomberg – stumbled last week as he took the stage in the Democratic debates. Attempting to present himself as the only candidate that could beat Donald Trump, he clearly failed to complete that task. The rest of the Democratic field will further antagonise and worsen relations with China should they win the Oval Office. So, it appears Beijing may have found itself in the strange position of needing to root for Donald Trump.

Last week, Mr Trump pulled his own administration’s punches as Washington hawks tried to tighten the screws on Beijing. In a series of tweets, the president excoriated officials who proposed raising barriers that would hurt American exporters. “We don't want to make it impossible to do business with us. That will only mean that orders will go to someplace else,” Mr Trump tweeted. "As an example, I want China to buy our jet engines, the best in the World!"

This uncharacteristically reasonable position followed a leak of proposals that Trump deemed a step too far. A plan to block sales of jet engines to China – developed by a joint venture between General Electric (GE) and France’s Safran – by officials in his administration was deemed too economically destructive – even for the self-declared ‘Tariff Man’.

Barriers hamper business

Despite using the excuse himself to raise barriers to Canadian steel and aluminium, as well as threaten European car imports, Mr Trump said that “national security” was being used too often to limit American companies’ ability to do deals. Washington hawks feared the GE engine could be reverse-engineered as part of Beijing’s usual tactic of technology transfer – or stealing the US’s intellectual property.

The move was a clumsy attempt to prevent a competitor to Boeing emerging in China. Boeing is the US’s number one exporter and its current shutdown due to the 737 Max debacle is likely to shave about half a percentage point off annualised US GDP growth at a time when the president needs expansion to be as high as it can possibly be. This tweet was a rare concession that his administration’s trade policy can have a negative impact on growth at home.

The American semiconductor industry also reacted with relief, as there had been suggestions that the chip sector would be targeted too. “As we have discussed with the administration, sales of non-sensitive, commercial products to China drive semiconductor research and innovation, which is critical to America’s economic strength and national security," John Neuffer, president and chief executive of the Semiconductor Industry Association, said.

Democratic radicals

Bernie Sanders and Elizabeth Warren, the two most radical candidates seeking the Democratic nomination, want to confront authoritarianism and networks of corruption around the world. They are also keen on clean-climate solutions that target China. They would also seek to punish Beijing for its mass detentions of Uighurs in its Xinjiang region.

In Wednesday’s debate in Las Vegas, Mr Bloomberg was noticeably soft on China. He has already faced criticism that he would not be tough enough on the regime because of his business ties to the country. He downplayed China’s contribution to climate change, arguing that the superpower has “slowed down” its pollution in recent years. He also attempted to shift the blame for poor air quality onto India –highlighting his Achilles heel for all to see. Mr Bloomberg is out of step with many – perhaps most – Americans when it comes to China policy.

Bloomberg’s Achilles heel

Mr Bloomberg is particularly vulnerable because he has form. The former Republican faced criticism after his organisation pulled a story at his eponymous financial news organisation, to the benefit of the Chinese regime. In 2013, the business platform was accused of not publishing stories about the misdeeds of members of Chinese president Xi Jinping’s family. “In China, they have rules about what you can publish. We follow those rules. If you don’t follow the rules, you’re not in the country,” he was later quoted as saying. This is not exactly speaking truth to power – and is one of the many vulnerabilities his rivals can exploit in the next few weeks.

Of course, Mr Bloomberg is a wealthy man and will spend the next fortnight before Super Tuesday using his mooted $64bn (£49.6bn) net worth to buy advertising to try and raise his support. However, his performance last week does not inspire much confidence. With Mr Trump appearing to soften his tone on China since his “win” with the phase-one trade deal, it looks like officials in Beijing will be keeping their fingers crossed for a Trump victory later this year.

As long as Donald Trump can be seen in Beijing as a tempering force on some of the more hawkish in Washington, China is likely to quietly approve – and do nothing to upset the applecart with his trade-deal win. The impact of the novel coronavirus is an excuse that can be used to explain why targets are not being met. But, as soon as possible given the dire situation, more soybeans are likely to be on the move from Midwestern farms to ports in China. Donald Trump will have got a part of what he wanted – and can blame coronavirus for the delay in shipments of the rest.   

The dispute between the world’s two current superpowers is not going to be a short-term issue for markets, whoever wins the White House in November. There is a genuine clash of civilisations going on – and this new Cold War is here to stay. Indeed, with the Democrats, it is likely to get much, much worse.

A version of this article appeared in Friday’s Daily Telegraph.

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