Setting the Tone in U.S.-China Relations
By: Analysis | Stratfor.comApril 6, 2017

Summary

When U.S. President Donald Trump hosts Chinese President Xi Jinping for their first face-to-face visit, discussions on trade and North Korea's nuclear weapons program likely will top the agenda. While the leaders will strive to make progress on those issues and other important points of contention, the extent and fundamental nature of the disputes are certainly beyond the limits of a two-day summit to solve. Instead, a major goal for the initial meeting between Trump and Xi will be to set the diplomatic tone that will guide U.S.-Chinese relations in the near future.

Analysis

Xi will arrive at Trump's Mar-a-Lago estate in Florida on April 6 for his second trip to the United States as China's president. His meetings with Trump come at a time of change and uncertainty for both countries — and of change in their bilateral relationship. Washington is reassessing its global interests and commitments as Beijing, struggling with economic restructuring and political consolidation at home, takes on a more active global role. Any talks they have over trade or North Korea will involve discussions on other tangential issues, including ongoing territorial disputes and Chinese activities in the South and East China seas, and U.S.-Taiwanese relations. Indeed, both leaders will seek to use their positions and relative advantages on some issues to gain leverage in negotiations over others.

Like most inaugural meetings between heads of state, the summit's first order of business will be to establish a personal connection between the two leaders. Mutual respect, of course, would help to ensure that the fundamental differences between China and the United States do not escalate into open and potentially unmanageable conflict. But it won't actually resolve the differences themselves, for in some cases the interests of these two countries are simply incompatible. And even if their interests at least partly converge on some issues — for example, preventing North Korea from developing a nuclear weapon without outright destroying the government in Pyongyang — contradictory interests on other related issues will impede cooperation. The U.S. commitment to bolstering South Korean, Japanese and Taiwanese security against North Korea, for example, butts up against a rising China.

Troubled Trade

In the lead-up to the summit, the Trump administration said that it would address the U.S. trade deficit with China that Trump has blamed on unfair trade practices and currency policy. That drive was a theme of Trump's presidential campaign and has featured centrally in his pledges, both before and after election, to transform the U.S. economy by restoring manufacturing jobs. Though senior economic officials such as U.S. Treasury Secretary Steve Mnuchin have shied away from charges of Chinese currency manipulation, the administration broadly agrees on the need to address the U.S.-China trade imbalance, Beijing's longtime (if often indirect) subsidization of domestic exporters and other trade-related concerns.

The Trump administration has refrained from publicly outlining explicit demands on China in trade and currency matters — perhaps opting first to see what Beijing may offer and leaving room to demand concessions or secure promises of support in other areas. For his part, Xi is unlikely to go to Mar-a-Lago empty-handed. In recent weeks, reports have emerged that China is preparing an investment package tailored to the Trump administration's interests in domestic jobs creation and infrastructure development. Though little is known about this prospective package, it's safe to assume, given China's resources, the value of the investment pledges will match or exceed those offered by Japanese Prime Minister Shinzo Abe in February. Meanwhile, anecdotal reports indicate that China in recent months has devoted growing resources to cultivating lower-level business ties with various U.S. states (such as Washington, Texas and Iowa) in an effort to create additional leverage in trade negotiations with Washington.

But while the Trump administration will likely welcome investment from China, it is unlikely to let the issue of Chinese trade and currency practices end at that. It has already threatened to unilaterally impose punitive measures on China — including by defying the World Trade Organization if it rules in favor of China's petition to be recognized as a market economy. Moreover, Washington has signaled its desire to parlay its leverage on trade to win concessions from China on other issues.

Risky Linkages

As the two leaders move on to those other issues, however, their negotiations are likely to become much more tangled. More important for Trump, China will have more leverage as the conversation drifts from trade to issues like North Korea's nuclear weapons development, maritime security in the South and East China seas or U.S.-Taiwanese relations and the "One China" policy. For example, the United States may threaten to increase military activities in the South and East China seas to gain concessions on trade or North Korea from Beijing. But it is unclear what Washington could do, or would be willing to do, to coerce China without risking a costly and unwanted conflict.

In some ways, managing North Korean nuclearization would seem to be one area in which Washington and Beijing share at least some broad interests, making cooperation more feasible. Neither country wants Pyongyang to attain a full-fledged nuclear deterrent. Likewise, neither wishes to see the Kim Jong Un government collapse overnight. Both countries have reasons to work together to persuade or compel Pyongyang to halt its nuclear weapons program without taking military action. Yet even here, any effort at cooperation will be clouded by both countries' attempts to link North Korea to their other disagreements.

Even without outside issues clouding cooperation on North Korea, the United States and China will struggle to find common ground over the Korean peninsula itself. Beijing will be reluctant to take any action against Pyongyang if the United States does not delay or halt the South Korean deployment of the Terminal High Altitude Area Defense (THAAD) missile systemwhich China perceives as a threat. At the very least, Beijing will seek to limit the reach and power of THAAD radar systems. But more likely, Beijing will aim to delay full THAAD deployment until after a new (and, Beijing hopes, less hawkish) South Korean government is in place this summer. At the same time, without a meaningful commitment from Beijing to rein in North Korea, neither Washington nor Seoul have much incentive to dial back the defense system and make South Korea more vulnerable to a North Korean attack. More fundamental but less advertised is Washington's interest in using THAAD as a hedge against future Chinese military aggression by ultimately deploying it regionally.

In an April 2 interview with the Financial Times, Trump said the United States is willing to exert unilateral pressure on Pyongyang if Beijing refuses to cooperate on North Korea. This most likely would entail increased sanctions on the North and even secondary sanctions targeting Chinese companies that do business in the country. U.S. actions could also take the form of covert action to disrupt North Korean missile tests, supply chains and power and communications networks. However, such direct measures could easily push the North to speed up its nuclear weapons development. More disturbingly, it is unclear what steps China could take to alter North Korea's current path given that for Pyongyang nuclear weapons are no longer a bargaining chip but rather a fundamental pillar of the country's security policy.

Apart from these more targeted issues, China will likely try to use the summit to gain U.S. affirmation of Beijing's broader foreign policy goals and rhetoric. For example, Xi may seek Trump's support for his signature strategic catchphrase, "A New Type of Great Power Relations," and with it a tacit endorsement of China's claim to its own sphere of influence in the Asia-Pacific. If U.S. Secretary of State Rex Tillerson's adoption of similar Chinese keywords during his March visit to Beijing is any indication, the Trump administration may be willing to trade such verbal and symbolic endorsements for concrete concessions on trade or North Korea. For its part, Beijing will push for any and every opportunity to visibly affirm the equal standing of the two leaders (and countries) ahead of the Communist Party Congress, at which Xi is set to further consolidate his grip on the country's political system.

The Trump-Xi summit is unlikely to provide definitive answers to the major questions surrounding the United States and China. Instead, it is the opening salvo in what is will likely be the most consequential and potentially contentious diplomatic relationship throughout both leaders' terms in office. And so their summit will be primarily focused on laying a foundation for future cooperation and creating channels for noise-free communication.

This article originally appeared on Stratfor.com