Posted on 08/05/2017

Is the US’s trade relationship with China becoming more stable?

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Remedying political tensions

From the outset of Trump’s campaign, he has adopted an aggressive and accusatory stance towards China, labelling Beijing the “grand champion” of currency manipulation. Relations were further aggravated when Trump took the unusual move of holding a direct phone conversation with Tsai Ing-wen, President of Taiwan, back in December. This signalled the first contact in four decades between a current or incoming president and a leader of Taiwan. As predicted, the move incensed China and risked jeopardising the countries’ trade dealings as well as China’s support in handling relations with North Korea.

In recent weeks, however, Trump has shifted stance in a seeming U-turn, ruling out another call with the Taiwanese President without first consulting China. He recently told Reuters.

“Look, my problem is I have established a very good personal relationship with President Xi. I really feel that he is doing everything in his power to help us with a big situation,” referring to possible efforts by China to avert any new missile or nuclear test by North Korea.

“So I wouldn’t want to be causing difficulty right now for him,” Trump added. “I think he’s doing an amazing job as a leader and I wouldn’t want to do anything that comes in the way of that. So I would certainly want to speak to him first.”

A growing military threat

The escalating situation with North Korea has been the most pressing national security concern for the US since Trump took office, with the US President recently stating that a “major, major conflict” between America and North Korea was possible.

North Korea has conducted numerous missile tests in recent months and is threatening to hold its sixth nuclear test soon. It also held a vast military parade in what’s being seen as a show of strength. Upon being elected, Trump stated that China wasn’t doing enough to temper North Korea’s behaviour. However, that seems to have changed in recent months and Trump has since praised China’s President Xi Jinping for his actions towards the troubled country.

According to US Secretary of State, Rex Tillerson, China has again advised North Korea not to carry out more missile tests. Furthermore, China has adopted a firmer stance in sanctioning the errant country, banning coal imports from North Korea – which is one of its most vital exports.

Promises and threats

With China and the US putting on a more concerted global front, it seems trade relations between the two nations are also improving, with Trump offering China the promise of stable trade relations in return for support in reining in North Korea. The US President said of a recent conversation with President Xi:

“We talked trade, we talked a lot of things, and I said the way you’re going to make a good trade deal is to help us with North Korea, otherwise we’re just going to go it alone, that’ll be all right too, but going it alone means going with lots of other nations.”

Trump is being clear about his carrot and stick approach. However, China provides North Korea with key supplies – likely in part because it prefers Mr Kim’s provocative rule to a regime collapse that would see an influx of refugees heading to China and a growth in regional US power. So, it remains to be seen how much Trump’s trade promises will influence China’s approach in the crucial few months ahead, particularly with China’s economic data taking an optimistic turn in recent months.

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