Chinese retrenchment

Must-read article by a British policy wonk who flew to Beijing to sound out Chinese officials and intellectuals about… what else? Trump. Apparently the Chinese are smarter than their Western counterparts, because they have no trouble grasping what the president is up to, they understand the strategy behind his seemingly chaotic policy moves, and they are, quote, “awed.” If the article is to be believed, China is already considering a fundamental reset of its foreign policy and economic strategy in response to a sudden intensification of pressure from the US.

The Chinese view is that Trump is tearing up the existing world order as a prelude to renegotiating America’s relationships with other countries on more favorable terms for the US. Unchained by multilateral institutions, the US will be able to wield its still-superior clout to extract (more) concessions from China on a bilateral basis. This is scary to China. Also, Trump wants to bring Russia into alignment with the West in order to counter Beijing, essentially reversing Nixon’s policy of chumming it up with China to isolate the Soviet Union. (Instead of Nixon-goes-to-China, we have Trump-goes-to-Russia.)

The whole article is very telling, but here are a few key paragraphs:

My interlocutors say that Mr Trump is the US first president for more than 40 years to bash China on three fronts simultaneously: trade, military and ideology. They describe him as a master tactician, focusing on one issue at a time, and extracting as many concessions as he can. They speak of the skilful way Mr Trump has treated President Xi Jinping. […]

In the short term, China is talking tough in response to Mr Trump’s trade assault. At the same time they are trying to develop a multiplayer front against him by reaching out to the EU, Japan and South Korea. But many Chinese experts are quietly calling for a rethink of the longer-term strategy. They want to prepare the ground for a new grand bargain with the US based on Chinese retrenchment. Many feel that Mr Xi has over-reached and worry that it was a mistake simultaneously to antagonise the US economically and militarily in the South China Sea.

Instead, they advocate economic concessions and a pullback from the aggressive tactics that have characterised China’s recent foreign policy. They call for a Chinese variant of “splendid isolationism”, relying on growing the domestic market rather than disrupting other countries’ economies by exporting industrial surpluses.

Now, it’s interesting to consider this potential about-face in light of Edward Luttwak’s predictions in his 2012 book The Rise of China vs. the Logic of Strategy. Luttwak argued that the combination of China’s rapidly growing wealth, power and assertiveness would inevitably provoke increasing resistance from the rest of the world across the economic, military and diplomatic domains. The economic (or as he calls it, “geo-economic”) response to China could include trade barriers, investment restrictions, and technology bans. In Luttwak’s words:

[B]ecause of its inherent magnitude, quite independently of China’s conduct on the regional and international scene, the very rapid growth in its economic capacity and military investment must evoke adversarial reactions, in accordance with the logic of strategy.

Other things being equal, when a state of China’s magnitude pursues rapid military growth, unless the resulting shift in the power-balance passes the culminating point of resistance inducing the acceptance of some form of subjection, it causes a general realignment of forces against it, as former allies retreat into a watchful neutrality, former neutrals become adversaries, and adversaries old and new coalesce in formal or informal alliances against the excessively risen power.

A Chinese pullback in the face of growing international resistance led by the US would certainly put an intriguing twist on the dynamic outlined by Luttwak. On the one hand, it would reduce the perception of threat that is driving the anti-China coalition, thus slowing or even reversing the adversarial reactions to China’s rise. In the short term, this would ease international tensions and would be welcomed by almost everyone. Paradoxically though, this outcome could enable China to grow its economy and build up its technological prowess with less interference from its global peers — thus putting China in an even stronger position over the long term.