President Donald Trump has wasted no time getting down to business as US commander in chief, but few countries in the world will be watching his moves as closely as China.
Since his election in November, President Trump has challenged Beijing over its military build-up in the South China Sea, slammed its currency and trade policies and, perhaps most controversially, upended decades of diplomatic protocol by questioning a longstanding US policy towards Taiwan.
He’s also handed key jobs to people with controversial views on China, not least his choice for Secretary of State Rex Tillerson, who has suggested that Beijing be blocked from accessing its artificial islands.
The leaders in Zhongnanhai, the gated compound that is China’s equivalent to the White House, want to know how seriously they should take such statements. Will they translate into policy? And within Trump’s inner circle, whose voice will prevail?
“They (China’s leaders) might be willing to give up something but if Trump asks too much, China is willing to fight,” says Zhang Baohui, a professor of political science at Lingnan University,
Here’s four ways China could try to handle the Oval Office’s unpredictable new occupant.
1. Play the long game
Trump’s bluster could be just that. There’s a long history of US presidents taking a tough stance on China only to moderate it once in office.
President George W. Bush came to power vowing to treat China as a “strategic competitor” only to default to engagement. President Ronald Reagan said he would cut off diplomatic links with Beijing. Two years after he was elected, he visited China.
Jon Huntsman Jr., a former US ambassador to Beijing, says Trump’s fiery talk on China fits that pattern.
“This is kind of a replay of what we’ve seen before. Trump at some point is going to have to say ‘I’ve gotta sit down and do business with the Chinese,” he told CNN.
Trump has already moderated one of his key stances on China. In an interview with the Wall Street Journal, he walked back on an earlier pledge to name China a currency manipulator on day one of his administration.
However, analysts say this strategy is risky for China. If President Xi Jinping stays too quiet in the face of Trump’s provocations, it makes Xi, who has built his credibility on being a strong leader, look weak.
This could trigger protests — something Xi is unlikely to want in a year that will also see some leadership changes in Beijing when the Chinese Communist Party holds its once-every-five-years congress.
“Xi definitely doesn’t want relations with the US to stir up trouble. He’s anxious not to allow nationalistic young men and women to demonstrate against the US,” says Willy Lam, an adjunct professor at the Centre for Chinese Studies at the Chinese University of Hong Kong.
2. Cozy up and negotiate
Many Chinese observers stress Trump’s background as a business man and believe his posturing over Taiwan and the South China Sea is simply an opening gambit in advance of real business negotiations.
“I don’t think Trump and his team will carry out the bulk of their threats,” says Lam.
“We need to remember that Trump is a shrewd businessman. He’s raising an extreme position from which he might do a bit of climbing down if the Chinese were amenable to making other compromises.”
China has been busy behind the scenes reaching out to people close to Trump, says Zhang Baohui, a professor of political science at Lingnan University,
Many saw the meeting between Trump and Jack Ma, Alibaba founder and Asia’s richest man, as an example of this outreach.
“They will first try and shape his China policy by trying to work with him,” says Zhang.
“They’ve floated the idea of trying to invest in US infrastructure. The Chinese fundamentally think he is a businessman who wants to create jobs — even if he’s willing to play dirty tricks over things like Taiwan.”
It’s a strategy that’s worked well elsewhere for Beijing, with China building and forging infrastructure deals in Africa, Eastern Europe and southeast Asia.
3. Get personal
Personalities count, especially in China where connections or guanxi are viewed as key to getting anything done.
Zhang says that many in China want a meeting between Trump and Xi as soon as possible, with some suggestion that Trump could be invited to a multilateral meeting on China’s “one belt, one road” initiative in May.
Another opportunity would come in July when the G20 meeting is held in Germany or November when Vietnam hosts APEC — the Asia Pacific Economic Cooperation summit.
“When they meet directly and have glass of Maotai together over dinner, Xi could disarm Trump. He’s a good diplomat,” says Zhang, referring to a popular Chinese liquor.
China may also use Trump’s pick for US ambassador to Beijing, Iowa governor Terry Branstad, to cement ties between Xi and Trump.
Branstad and Xi have known each other since 1985, when Xi visited Iowa as a provincial official on a state exchange program during Branstad’s first term as governor, and have maintained a friendship of sorts.
4. Make Trump’s life difficult
Of course, China could make life difficult for Trump if it wants to. Lam at the Chinese University of Hong Kong says China is already quietly preparing for a trade war.
“The Chinese commerce department has drawn up a meticulous list of possible retaliatory measures — which US companies would be hit with what kind of tariffs should the US (fire) a salvo in a trade war,” he says.
It’s not something to take lightly, especially for a US president who’s staked his legitimacy on delivering jobs and an economic revival, says Jing Ulrich, Managing Director and Vice Chairman of Asia Pacific, JPMorgan Chase.
“Remember Boeing has projected selling in the next 20 years $1 trillion worth of aircraft into China. If tariffs were put on that would be very damning to an iconic US company. And that’s just one example,” she says.
China could hit back in other ways. It could choose to squeeze Taiwan economically, become more aggressive in the South China Sea or shore up its ties with North Korea.
Shen Dingli, a professor of International Relations at Fudan University in Shanghai, says he believes that China is willing to negotiate with the US and the two should be able to resolve their differences on trade — but Taiwan is a red line for China’s leaders.
“We cannot do Taiwan as a bargaining chip,” he says.
“If Trump still plays the Taiwan card then China and the US would have a very serious confrontation. This is hopefully not what Trump wants to have.”
