This week, the Trump administration also dismissed suggestions by China and South Korea for a freeze on U.S.-South Korea joint military exercises in exchange for a North Korean freeze on its nuclear and missile tests. This idea has been criticized by practically every American analyst on all sides of the political spectrum. A similar deal was tried in 2005, and North Korea broke the deal in 2006. So it’s no coincidence that North Korea still supports it. Indeed, also on Wednesday, North Korea’s ambassador to India, Kye Chun-yong, said his country was willing to consider such a freeze.
Trump’s next step is anyone’s guess, but it’s clear that the administration is considering what none of his predecessors had dared to do — penalizing the numerous Chinese companies that are violating U.N. sanctions on North Korea and facilitating its nuclear-weapons program. Over the course of the Obama administration, only one such Chinese company was sanctioned.
Problems are also simmering when it comes to Taiwan. Before President Barack Obama left office, the State Department had prepared an arms sales package to the island, but it had yet to be finalized. Wanting to gauge China’s response to North Korea and other issues, the Trump administration had delayed approval. With China failing to step up on North Korea, those who back the arms sale within the Trump administration will be emboldened to get this package back on track.
In addition, for years, China has been lobbying the United States to agree to a “fourth communique” on U.S.-China relations. The Chinese want to push the United States for a cutoff date for arms sales to Taiwan and to support China’s claim to the island of 23 million people. Since 1972, the U.S. position, which successive U.S. administrations have called America’s one-China policy, has been that while it understands that China wants to annex Taiwan, it takes no position on Taiwan’s sovereignty. China hopes to change that and earlier this year, Tillerson instructed Brian Hook, the State Department’s director of policy planning, to draw up a memo on the advisability of a fourth communique. I’m told the memo laid out the case why a new communique was a horrible idea, a position further strengthened by China’s apparently unwillingness to go the extra mile on North Korea.
Finally, trade and investment issues appear destined to move from the sidelines of the relationship to center stage. During the campaign, Trump promised to slap a 45 percent tariff on China’s exports to the United States and to label China a currency manipulator on “day one.” Once in office, Trump reversed course and promised better treatment for China if it helped out more on North Korea. Now that the prospects for such help appear to be vanishing, a new toughness on the economic side of the relationship is emerging.
Testifying before Congress on Wednesday, U.S. Trade Representative Robert Lighthizer made the case that any decision to label China a “market economy” would have “cataclysmic” consequences for the World Trade Organization. The next day, Lighthizer voiced his disapproval of the Ford Motor Company’s announcement that it planned to move production of its Focus model to China and to export the cars back to the United States. Lighthizer also told U.S. senators that his office would be intensifying its enforcement action against Chinese businesses in a variety of cases. Speaking about China’s efforts to obtain advanced American technology by forcing U.S. companies to share their trade secrets with potential Chinese competitors in exchange for a piece of China’s market, Lighthizer was blunt: “It’s another example of China trying to take control of a critical industry … there is no ‘reciprocity’ at all, as Chinese companies face nothing like this in the U.S.”
Trump’s “let’s make a deal” approach to China provided Beijing with opportunities for significant wins in its relations with the United States. But Beijing so far appears unwilling to embrace Trump’s central argument — that the relationship has been skewed in China’s favor for too long and needs to be reworked.