Trump’s Protectionism Pushes US Allies in Asia Into China’s Win-Win Arms

Throughout much of the 20th century and well into the 21st, American economic/trading partnerships typically accompanied a “security partnership” even if the latter wasn’t necessarily required or even desirable for one of the parties. This has particularly been the case with South Korea and Japan, two countries eager to sign free trade agreements with the US, but where a powerful peace movement in each nation has always expressed scepticism regarding the US security partnership.

In recent years, America’s Cold War Vietnamese enemy has begun trading with the US at lightening pace while some in Hanoi have embraced an increased so-called “security relationship” with the US as Washington continues to use Vietnam as a tool in its wider regional provocations against China.

While Donald Trump campaigned on a broadly protectionist platform, few believed that he would actually break away from the free trade orthodoxy of contemporary US policy makers. When as one of his first Executive Orders, Trump withdrew the US from the Trans Pacific Partnership (TPP) all bets were off. Subsequent moves which saw Trump implement tariffs on steel and aluminium (though with some exceptions for allied nations) before proceeding to place $60 billion worth of tariffs on Chinese goods, saw the wider world economic community react with shock to Trump’s outdated hard-line on protectionism.

South Korea has already taken a dispute over the US accusing South Korea of dumping cheap goods on the US market to the World Trade Organisation (WTO), while at yesterday’s press conference Japanese Prime Minister Shinzō Abe could barely conceal his disappointment with Donald Trump’s refusal to wave tariffs that threaten Japanese industries.

By contrast, Chinese State State Councillor and Foreign Minister Wang Yi’s recent three day visit to Japan has produced promising results with both countries promising to expand bilateral cooperation and embrace an atmosphere of trust which in recent years has been plagued with suspicion that only served to arouse historic mistrusts.

Likewise, South Korea and China continue to increase trade as bilateral relations look set to achieve a new high under Moon Jae-in, a President who appears to understand Chinese sensitivities to the American hyper-militarisation of the Korean peninsula, while also being a leader who accepts that if Trump seeks to continue shutting South Korea out of the US market, that China is an even larger market and one that looks eager to engage in intensified trading with Seoul.

In Vietnam, China has recently usurped the US to become Hanoi’s biggest market for exports while Chinese imports continue to dominate others within Vietnam. While tensions between Vietnam and China still remain high,  a recent meeting between Wang Yi and General Secretary of the Communist Party of Vietnam Central Committee Nguyen Phu Trong saw both countries pledge to avoid hostilities over disputes in the South China Sea. This could well serve as an early indication that Vietnam is moving away from a confrontational model with China and towards a Duterte style win-win approach to the South China Sea.

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Vietnam Moving Towards a Duterte Style Win-Win Solution to the South China Sea Issue

For the Philippines itself, President Duterte began pivoting his country to a more non-aligned approach to all three superpowers even before Trump took office. While Japan and South Korea remain tied to the US security apparatus, The Philippines has developed a model of neutrality which can be applied across ASEAN, especially given that for all ASEAN members, including Thailand and Indonesia, China is becoming the central focus of bilateral trade. Thus, it is now not only US ships that dock in Manila harbour but also those bearing weapons from Russia and China.

In de-coupling US trading relations from US security relations, Donald Trump has inadvertently invited countries throughout Asia to consider their long term position vis-a-vis Washington. Many countries in the region only acquiesce to lopsided US military partnerships in order to gain access to the large domestic markets in America. If this opportunity is no longer a given when signing agreements with the US, many nations will come to view China as a far less restrictive alternative to making deals with the US in which Washington imposes its will on Asian countries but wherein Asian countries will not gain more access to US markets.

The elephant in the room when such discussions are had is India. Far more than any other nation, India’s current government has engaged in a propaganda driven Sinophobic campaign that has seen India attach itself to the US at the expense of many older partners. While India continues to buy overpriced US military hardware as opposed to far more affordable Russian alternatives which traditionally comprised the bulk of India’s military equipment, New Delhi is currently banking on the US becoming its economic advocate in the wider world.

Apart from shamelessly remaining the Asia-Pacific region as the “Indo-Pacific” in official statements, India may find that the US will make no more allowances for Indian products in the US markets than it is for decades old Asian allies like South Korea and Japan. Chinese commentators have noticed that India is taking some minor steps to tone down some of its Sinophobic rhetoric in recent months. Author Liu Zongyi wrote the following in China’s influential Global Times:

Since the end of last year, there have been frequent exchanges between high-level officials of both sides. In December, Chinese Foreign Minister Wang Yi and State Councilor Yang Jiechi visited India within half a month of each other. In February, Indian Foreign Secretary Vijay Gokhale visited China. External affairs Minister Sushma Swaraj will visit China later this week to participate in the foreign ministers meeting of the Shanghai Cooperation Organization (SCO) during which she will also hold talks with her Chinese counterpart Wang Yi. Such exchanges between China and India indicate that bilateral ties are gradually warming.

There are three reasons why India has changed its China policy. First, given the series of diplomatic setbacks of the administration of Indian Prime Minister Narendra Modi, debates are going on within the country about its foreign policies, the core of which is its China policy. 

At regional and global levels, India has made unprecedented moves by getting closer to Western countries such as the US and Japan, which not only violates its non-alignment principle, but also worsens its ties with China and Russia. 

As for the Indo-Pacific strategy, India is dissatisfied with the US definition of the strategy and disappointed with the strategy’s lack of financial support. It has also noticed China’s concern about the strategy. India has realized the huge gap between China and India and worries that China will take even tougher measures against India which may hinder India’s domestic development. 

Second, the most important task for Modi in the coming two years is the next general election. Regional stability and diplomatic achievements are vital for his reelection. Improving India’s relations with China and Russia, and even bargaining with China over the Belt and Road initiative will garner diplomatic points for Modi. 

On global and regional issues, India has to rely on China. Against the backdrop of the US’ abandonment of multilateralism, opposition to free trade and breach of the global trade system, India hopes that it can cooperate with China on globalization and free trade and strengthen cooperation on climate change, the SCO and the Asian Infrastructure Investment Bank. 

Last, India faces economic dilemmas. The Indian economy has become more closely connected with the global economy. Rising interest rates of the Federal Reserve and anti-deflationary measures of developed economies will obstruct India’s currency and financial policies, affect the stability of the financial market and hinder the development of foreign trade. 

India worries that it may be affected by the trade war launched by US President Donald Trump and his America First doctrine. 

It is also concerned about global capital flowing back to the US. The Indian government lacks funds. New Delhi carried out a deficit financing policy to promote economic growth. The rising deficit has made the market worry about the financial condition of the Indian government. 

With challenges from within and without, India’s economic development will not be smooth. India has been expecting China’s investment to help with its infrastructure. Some in India’s strategic and economic circles hope that India can join the Belt and Road initiative and believe China’s development is an opportunity for India. But the changes of India’s China policy are only tactical, not strategic, as India’s traditional hegemonic and Cold War mentality has not changed. The Modi government thinks that India should become a leading country rather than simply a balancer. India believes that China is India’s geopolitical rival. 

India has been striving to balance or even contain China’s rise and pushing forward the so-called Indo-Pacific strategy with the US, Japan and Australia. It has always been unsettled about China’s economic cooperation with the Maldives, Sri Lanka, Nepal and Pakistan. 

But India has changed its understanding of its strength gap with China. In the past few years, India had believed its hardline stance would propel China to compromise and it engaged with China by wooing the US. It also provoked China on the Taiwan and Tibet questions. Whether these diplomatic moves will change remains to be seen”.

While India has done much to further damage relations with China under the extremist rule of Premier Modi’s BJP, China’s door remains open to India once the leadership in New Delhi realises that the US won’t simply throw money at the Indian economy or even open up doors of opportunity in the US market for India, simply as a token reward for India’s policy of hostility towards its largest neighbour.

While Japan and South Korea are ultimately pragmatic powers and while Vietnam looks to be taking positive steps towards much welcomed de-escalation, India remains a wildcard in the wider Asian deck. Ultimately, if Indian leaders do not have the foresight to balance their uneven relations with a Chinese rapprochement that India’s old partner Russia would be happy to mediate in, the economic relatives of being a subservient Asian partner of the US will soon hit home in India. While it won’t be too late for China to welcome an about face from New Dheli at such a point, damage to the Indian economy will by then have been so great, that a rapprochement with China would have to be done as a form the perspective of damage control rather than the win-win compromise that China continues to be happy to facilitate.

 


 

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