Biden's Big Task: Improving U.S. Relationship with China

The incoming president faces a barrage of challenges that will require re-engagement with allies and other countries that Trump has alienated.
Mark MelnicoeNov 21,2020,17:26

One of President-elect Joe Biden’s thorniest tasks will center on how to improve America’s relationship with China, which became toxic under four years of President Trump’s sledgehammer policies and rhetoric.

Trump managed to not only alienate the Chinese, he utterly failed to accomplish his goal of reducing the trade deficit when he set tariffs on half a trillion dollars’ worth of the country’s goods, starting in 2018. Even before the COVID-19 pandemic, when America’s economy was strong through last year, the U.S. trade deficit with China grew to about $575 billion a year from $500 billion previously.

All Trump’s tariffs did was raise costs for American importers and consumers. Now, it turns out that Biden’s election may do more to help sell American goods to the Middle Kingdom than any so-called phase one trade agreement can. That’s because currency rates matter, and the yuan has soared against the dollar since November 3. Why? I would argue that Trump’s trade war and brash, unpredictable policies created a crisis atmosphere that caused the dollar to appreciate in a “flight to safety.” That made U.S. goods more expensive to export. Now, China’s consumers and businesses - powered by a yuan that has strengthened to less than 6.6 to the dollar – can afford suddenly cheaper stuff from our shores.

It’s early, of course, and currencies ebb and flow every day, affected by a torrent of different factors. But it appears Biden will at least start with a more level currency playing field simply by not being Trump.

In truth, currency rates will be the least of Biden’s problems in dealing with China. By taking turbocharged actions to deal with some legitimate longstanding American grievances, Trump has sabotaged the relationship to the point where the world’s two superpowers have crept toward a cold war. This won’t be easy to undo.

Sino-U.S. issues are well-known and numerous. The two countries differ over trade and technology; human rights; China’s increasingly aggressive actions on Hong Kong, Taiwan and the South China Sea; handling of each other’s media; travel between the two nations; and, increasingly, the race for global influence.

Cooperative Action Critical for Global Economy

Biden likely will start by getting the U.S. back into some key international institutions and agreements from which Trump either severed ties or threatened to do so. The U.S. should leap into the Trans-Pacific Partnership, a massive and high-quality trade deal that encompasses the main countries along the Pacific Rim. That wide-ranging accord was negotiated painstakingly during the Obama administration, but Trump, among his first actions, stepped away from it.

Such a move would be especially important now that the Regional Comprehensive Economic Partnership (RCEP) has just been signed. The global economy is shifting east to Asia, and RCEP embraces countries that already cover 30 percent of the globe’s people and economic activity. It includes China, Japan, South Korea, Australia, New Zealand and all 10 of the Association of Southeast Asian Nation (ASEAN) countries. By most accounts, it’s the biggest trade bloc in history, and the U.S. loses by going it alone.

Trump also has begun a move to withdraw the U.S. from the World Health Organization – a ludicrous move amid the biggest pandemic in a century – because he is ticked off that the WHO didn’t blame China for the coronavirus outbreak. Speaking of the pandemic, another smart move by Biden would be to restore the personnel Trump inexplicably removed from the U.S. Centers for Disease Control and Prevention office in Beijing. That was part of a gutting of science and health experts because Trump – well, you know the story.

Biden no doubt will overhaul the State Department and re-engage in robust diplomatic communications not only with China but with our allies. In that vein, you can count on Biden to corral other countries to take collective action regarding China – a big contrast to Trump’s mostly go-it-alone approach. Again, that won’t be easy because of the damage Trump has inflicted on relations with our European and other friends.

But it’s critically important. So says no less an authority than Henry Kissinger, who as secretary of state paved the way for Richard Nixon’s journey to China in 1972 that opened the door to establishment of diplomatic relations. Kissinger, now 97, argues that damage control after Trump is in order.

“Unless there is some basis for some cooperative action, the world will slide into a catastrophe comparable to World War I,” he warned at the Bloomberg New Economy Forum this week.

Biden will engage China where he can in a bid to improve the atmosphere. But he won’t go easy on it as he protects U.S. national security interests. He’ll just go about things in a different way, including eliciting help when opposition to China is necessary. He will tone down the rhetoric and may try to negotiate an end to the tariffs, which help no one. But he will seek concessions from China in return.

In short, Biden will change the tone – a much-needed first step on what looks like a long road to a more sustainable relationship with China.

Topics:U.S.-China relations, Biden, Trump, trade, tariffs