Trump Speaks With China's Xi Jinping, Other Leaders On North Korea Threats

Demetri Sevastopulo and Shawn Donnan in Washington

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Donald Trump will accuse China of engaging in “economic aggression” when he unveils his national security strategy on Monday, in a strong sign that he has become frustrated at his inability to use his bond with China’s President Xi Jinping to convince Beijing to address his trade concerns.

Several people familiar with the national security strategy — a formal document produced by every US president since Ronald Reagan — said Mr Trump would propose a much tougher stance on China than previous administrations.

The release comes a month after he met Mr Xi in China, and eight months since he first welcomed the Chinese leader to his Mar-a-Lago resort.

“The national security strategy is likely to define China as a competitor in every realm. Not just a competitor but a threat, and therefore, in the view of many in this administration, an adversary,” said one person. “This is not something that they just cooked up. Mar-a-Lago interrupted the campaign rhetoric, and Xi Jinping took a little gamble and came here and embraced Trump. Trump said ‘fine, do something on North Korea and on trade’, but that didn’t work out so well.”

Mr Trump castigated China repeatedly on the campaign trail. But in office, and particularly since his Mar-a-Lago summit with Mr Xi, he had taken a less combative stance, partly because the US believes Chinese pressure on North Korea is crucial to tackling the nuclear crisis.

Over the past few months, however, Mr Trump has grown more irritated at the lack of progress in tackling the US trade deficit with China. He hinted at a return to a harder position at the Apec summit in Vietnam when he said he would no longer tolerate “chronic trade abuses” by Asian nations.

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HR McMaster, US national security adviser who oversaw the strategy, this week said China — along with Russia — was a “revisionist power” that was “undermining the international order”.

The inclusion of the tough language on China heralds a rockier period for Sino-US relations next year. It also marks a departure from previous national security strategies, which did not incorporate trade and economic issues so prominently. The White House National Security Council did not respond to a request for comment. The Chinese embassy in Washington also did not respond.

“The national security strategy is the starting gun for a series of economic measures against the Chinese,” said Michael Allen, a former Bush administration official at Beacon Global Strategies. “It is sort of the Rosetta Stone for translating campaign themes into a coherent governing document.”

Some people familiar with the strategy said it would be the most aggressive economic response to China’s rise since 2001 when the US backed its entry into the World Trade Organization. It points to the waning influence of Gary Cohn, the White House National Economic Council head who many people believe will leave the administration next year, and the growing power of Robert Lighthizer, the US trade representative, and other China hawks in the administration.

“It’s like a Peter Navarro PowerPoint presentation,” said one person, referring to the provocative economist and author of “Death by China” who is now a White House official.

Democrats, unions and other trade hawks have criticised Mr Trump for not following through on his campaign threats to take on China. The NSS comes as controversial China-oriented trade investigations on steel and intellectual property practices launched over the past year are expected to come to fruition. All could lead to the imposition of tariffs and sanctions against China.

Many of the pending actions have divided the US business community, with many companies reliant on imports for supply chains.

Mr Lighthizer, an unapologetic economic nationalist, has long advocated a more muscular trade policy toward China. Critics worry that if the US pushes too hard, it may provoke a trade war that could have devastating consequences for US business and the global economy. Former officials said accusing China of economic aggression and labelling it a strategic rival was likely to lead to carefully calibrated retaliation by Beijing, with US companies bearing the brunt of any response.

“The concern about Chinese economic policy and practices is serious and real but the question is how you deal with it,” said Evan Medeiros, a former Asia adviser to Barack Obama now at Eurasia Group. “Unilateral trade enforcement mechanisms are not going to do it. You need systemic tools that shape the economic environment around China in order to reshape their incentives.”

While the NSS will lay out a more aggressive approach towards China, it comes as the Trump administration puts pressure on Beijing to take more assertive action towards Pyongyang to convince Kim Jong Un to abandon his nuclear weapons programme. The administration is considering imposing sanctions on big Chinese banks that they believe are facilitating North Korean trade and financial flows. So far, the US has only sanctioned one small Chinese bank.

Dennis Wilder, a former CIA China analyst who served as the top Asia adviser to George W Bush, said the administration would be taking a “sizeable risk” if it sanctioned major Chinese banks.

“It will provide those in the Chinese leadership who do not wish to co-operate with the US on North Korea ammunition to say that Washington is not sincere in wishing to work with China to resolve the nuclear problem,” said Mr Wilder.

Follow Demetri Sevastopulo on Twitter: >@dimi


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Source : https://www.ft.com/content/1801d4f4-e201-11e7-8f9f-de1c2175f5ce

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