The Future of U.S.-China Relations Depends on North Korea

The Future of U.S.-China Relations Depends on North Korea
AP Photo/Wong Maye-E, File

Jacob L. Shapiro is the Director of Analysis at Geopolitical Futures. This piece is part of a special RCW series on the U.S.-China geopolitical relationship. The views expressed here are the author’s own.

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Donald Trump’s election has not heralded a new phase in U.S.-China relations.

President Trump has gone from saying China cannot be allowed to continue to “rape” the United States to tweeting about how he plans to offer Beijing a trade deal in return for solving the North Korea problem. Trump did not label China a currency manipulator as he had promised to do, and the U.S. president accepted the “One China” policy despite prior intimations that he would not. U.S. activity in the South China Sea is not appreciably different to what it was under former President Barack Obama’s administration. Trump’s about-face is rooted in both countries’ imperatives and constraints. The United States and China have a cooperative and at times contentious relationship. This is because of geopolitics and does not depend on who sits in the Oval Office.

The Phases of PRC-U.S. Relations

Since Mao Zedong declared the founding of the People’s Republic of China in 1949, U.S.-China relations have moved through three distinct phases. The first phase lasted from 1949 to 1972. The main feature of the relationship was that the United States and China were on opposite sides of the Cold War. The second phase lasted from 1972 to 1991 and amounted to a complete reversal. China feared the Soviet Union, and the United States was reeling from the Vietnam War. The two countries solidified a more cooperative relationship grounded in a shared geopolitical interest in limiting Soviet power. The third phase began with the Soviet Union’s fall in 1991 and continues to the present. This phase has two defining features. The first is economic interdependence. The second is the absence of the Soviet Union as a common enemy and the re-emergence of opposing interests.

Since these two features define current relations between the United States and China, it is worth addressing them in more depth, starting with the interdependent relationship. China grew to become the second-largest economy in the world by relying on exports. Its substantial population allowed China to produce large amounts of goods at a lower cost than most countries. The result was that companies moved their production and assembly operations to China to drive down costs. This had many consequences, but three are of geopolitical importance. First, the United States became the largest destination for Chinese exports. Second, China became the largest source of U.S. imports. Third, millions of American workers lost their jobs because factories in the United States relocated their operations to China.

 

The intertwining of the U.S. and Chinese economies created new constraints on both sides of the relationship. For China, domestic economic considerations play a larger role than foreign policy disagreements when it comes to relations with the United States. China has reached the limits of export-based high growth because the price of labor in the country has gone up. The problem for Beijing is that Chinese growth peaked before its benefits spread to all segments of society. Hundreds of millions of people have been lifted out of poverty since 1980, but as of 2010, more than 360 million people in China still lived on less than $3.10 a day. Furthermore, these Chinese citizens face uncertain prospects at best for finding better-paying jobs. China’s problem now is not specifically poverty, but the drying up of a predictable path to economic prosperity.

China is attempting to shift the focus of its economy toward domestic consumption. But people must have money to consume, and hundreds of millions of people in China do not. This means two things. First, China must prolong export-led growth for as long as it can. It needs to preserve access to the U.S. market, which remains the largest market for Chinese goods in the world. Second, China must find new markets. This is the real goal behind the vaunted One Belt, One Road initiative. China will spend massive amounts of money on infrastructure in other countries if those countries can become markets for Chinese goods in the future. The problem with this strategy is it assumes that infrastructure in a region like the Caucasus can be made secure and that countries like Uzbekistan and Armenia will consume large amounts of Chinese goods.

In the United States, economic interdependence with China has also created constraints. Trump won the U.S. election by securing the votes of lower- and middle-class Americans who either lost their jobs or saw stagnant growth in their earnings. For these voters, “Make America Great Again” meant that they would get their jobs back and that their children would be able to find well-paid work. But Trump cannot snap his fingers and make those jobs reappear. Furthermore, anything Trump does to try and bring those jobs back to the United States will harm the very people who need help the most.

 

American consumers are addicted to cheap imports from China and other countries. More than 20 percent of all U.S. imports come from China. Trump could try to raise tariffs and enact protectionist policies, but he faces two problems. First, the president has relatively limited power to raise tariffs except during times of war or when the country’s national security is at stake. Trump would have a difficult time making that argument. He has already experienced the judiciary’s power to check the authority of the executive. Furthermore, his own party has long been the party of free trade, and Trump’s low approval ratings do not give him the power to compel congressmen to fall in line.

The second constraint holding back Trump from enacting protectionist policies is the effect it would have on the class of Americans who elected him. These voters enjoy the benefits of having goods produced cheaply overseas. Introducing tariffs would raise costs for consumers. American production could not replace imports overnight, and once it did, the price of goods would increase. That does not work for Trump. Midterm elections are a year and a half away, and Trump must be able to show results to his constituents. A trade war with China would not help him do so.

The second defining feature of the current U.S.-China relationship is the absence of a common enemy. The United States and China set aside their differences over Taiwan in 1972 because it was more important for both countries to cooperate when it came to the Soviet Union than it was to squabble on a comparatively minor issue. The collapse of the Soviet Union and the general weakness of its successor, the Russian Federation, eliminated one of the main strategic interests the United States and China shared.

Charades on the Peninsula

The collapse of the Soviet Union also changed the geopolitics of the situation on the Korean Peninsula. Both China and the Soviet Union had treaties with North Korea, but the fall of the Soviet Union increased China’s influence in Pyongyang. Here the United States and China also have divergent interests. Beijing wants to see a pro-China Korean Peninsula. That is beyond its grasp, so instead it seeks to maintain the status quo: a divided Korean Peninsula, with the North in Beijing’s sphere of influence. The United States wants to see a unified, pro-U.S. Korean Peninsula. But in the absence of that, Washington will accept a secure South Korea and a regime in Pyongyang without nuclear capabilities. The situation on the Korean Peninsula became another point of friction as well as cooperation between the United States and China in the 1990s and 2000s. But Kim Jong Un’s progress in the development of a deliverable nuclear weapon over the last two years has elevated the importance of North Korea in the U.S.-China bilateral relationship.

Recent events in North Korea challenge the U.S. imperative to see a denuclearized Korean Peninsula. The United States would prefer that China manage this problem in a way that maintains the status quo. If China will not or cannot do this, the United States has threatened to take steps to ensure its interests on the Korean Peninsula are secured. This is a game of charades that has been played multiple times since 1991. China uses North Korea to increase its leverage at the bargaining table with the United States when it comes to issues like trade. Washington protests, and China gets North Korea to fall back in line. But now, Beijing’s control over Pyongyang is questionable. If China is unable to influence the North Korean regime, the United States will be more willing to intervene.

The hope is that Beijing’s influence remains strong enough to rein in Pyongyang, but hope is not a solid basis for action. When Kim executes family members with anti-aircraft guns and seems to be making progress in developing not just a nuclear weapons program but also a deliverable nuclear weapon, it raises doubts about China’s level of control and Pyongyang’s intentions. The question of how much power Beijing has over Pyongyang is now at the center of U.S.-China relations. China’s ability to sway the North Koreans will determine whether these relations remain within the current pattern or revert to an earlier form. The most likely scenario is that China will play its part and North Korea will find some way to back down. The United States has sent an aircraft carrier strike group in the western Pacific to remind both Pyongyang and Beijing what could happen if they don’t.

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