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Trump, China’s Geographic Realities And The Risks Ahead

Business, China, Company Strategy, Economics, Europe, Taiwan, US
By John Richardson on 27-Jan-2017


By John Richardson

DONALD Trump doesn’t read that many books. But one book that he should read (assuming he hasn’t done already,and so apologies in advance if I am wrong) is Tim Marshall’s excellent Prisoners of Geography.

The chapter on China, for instance, argues that:

  • China’s ‘Nine Dash Line’, which in 2013 became ten dashes with the inclusion of Taiwan, involves China’s territorial claims over 200 tiny islands and reefs in the South China Sea. Over the last few years China has built 11 new islands in this region through reclaiming land from the sea. These islands have been militarised.
  • This is a maritime passageway that provides access to the world’s most important shipping lanes.
  • In peace time, this is not an issue as these routes are open to every country. But any nation has to plan for war, and in war time these routes could be blockaded – unless, of course, they are under Chinese control.

Mr Trump should then turn to Marshall’s chapter on the US. In that chapter, he details how the US is blessed with great geography as its contiguous land mass provides access to both the Atlantic and Pacific Oceans.

This means the US has access to fantastic trading lanes, and, in the event of a war, it would be impossible to blockade America. Further, this maritime access has enabled the US to project its military and so its economic power during peacetime through its global naval defence umbrella.

China doesn’t enjoy such lucky geography. This explains why the Nine/Ten-Dash Line is so vital to its interests.

Perhaps if Mr Trump had read this book, and taken on board its message, (and apologies again if I am wrong) he wouldn’t have questioned the “One China” policy that has been in place in the US since 1979.

The policy is US acceptance that Taiwan is part of China, and can thus never become independent of the mainland. Autonomy is fine implies the policy, but not independence.

But on three occasions since his election, Trump has questioned “One China”. A sign of China’s unwillingness to negotiate on this point, partly for the reasons highlighted above, was its decision to fly a nuclear-capable bomber outside its borders in early December. This was interpreted as a warning to Mr Trump.

Rex Tillerson, nominee for US Secretary of State, should read through the same book and consider its message on China – again, if he hasn’t already,.

This comment, during his confirmation hearings earlier this month, suggests that Marshall’s book might not have made its way onto his reading list:

We’re going to have to send China a clear signal that, first, the island-building stops and, second, your access to those islands also is not going to be allowed.

White House press secretary Sean Spicer might also be advised to read this same book. Earlier this week, he said:

The US is going to make sure that we protect our interests there. It’s a question of if those islands are in fact in international waters and not part of China proper, then yeah, we’re going to make sure that we defend international territories from being taken over by one country.

The White House has not detailed how it would block China’s access to islands where it has already built airstrips and installed weapons. But the New York Times interpreted the White House’s comments as indicating a willingness to consider an American military blockade. The newspaper writes:

While Mr Obama tried unsuccessfully to leverage American allies in the region to compel China to back down, Mr Trump seems willing to abandon them and face China on his own.

That go-it-alone attitude has raised alarms at the Pentagon and among American Navy experts, who said such a blockade would be tantamount to war. The idea has also alarmed America’s allies.

The Art of Diplomacy Versus The Art of The Deal

The timing of these geopolitical tensions could hardly be much worse because:

  1. They are in addition to the economic tensions of a potential US-China trade war that would quickly become a global trade war. You can easily imagine a scenario where China’s heavily debt-burdened and so very vulnerable economy virtually collapses, with the blame placed squarely on the new US trade policies.
  2. Xi Jinping, China’s President, cannot afford to appear weak right now. The reason is this year’s 19th National Congress that takes place in the autumn. In the build-up to the Congress, Xi must maintain economic and political credibility. Professor Minxin Pei of California’s Claremont McKenna Colleges says this is because: a.) Xi wants to ensure he has enough influence at the Congress to avoid his successor being named during the event. If that was the case he would become a “lame duck” president during his remaining five years in office; b) he wants the Congress to support his nominees for China’s top governing body – The Politburo Standing Committee.

This is incredibly worrying. You can easily see how “sabre rattling” by both sides might get out of hand.

In Mr Trump’s 1987 best-selling book, The Art of The Deal, he writes:

My style of deal-making is quite simple and straightforward. I aim very high, and then I just keep pushing and pushing to get what I’m after. Sometimes I settle for less than I sought, but in most cases I still end up with what I want.

This has of course worked superbly well for Mr Trump in his business dealings. But in nation-to-nation dealings, neither side usually ends up with exactly what it wants. Both sides have to compromise. The reason is that no country’s leaders can go back to the people that they represent empty-handed. This is unless a country goes to war in a bid to get exactly what it ideally wants.

Sure, Mr Trump’s new to approach to diplomacy might work – and I again I must stress that this not political commentary. It is instead meant to help you avoid the kind of dangerous complacency that assumes a “business as usual” outcome for the global economy in 2017.