1/18/2020

What to make of the new U.S.-China trade deal?

"The U.S. has established its seriousness as a counterweight to China, something lacking since it largely overlooked China’s various territorial encroachments in the 2010s. Whether in economics or foreign policy, China now can expect the U.S. to push back — a very different calculus. At a time when there is tension in North Korea, Hong Kong, Taiwan and the South China Sea, that is potentially a significant gain.

…Currently the U.S. is working hard to keep Huawei equipment out of the forthcoming 5G networks in many countries. (Imagine letting the KGB run the American phone network in say 1980, and you can see what is at stake here.) For that campaign to succeed, even partially, the U.S. needs some credible threats of punishment, such as withholding intelligence or even defense protection from allies. The course of the trade war has made those threats more plausible. If you are Germany, and you see that the U.S. has been willing to confront the economic and military power of China directly, you will think twice about letting Huawei into your network.

A third set of possible benefits relates to the internal power dynamics in the Chinese Communist Party. For all the talk of his growing power, Chinese President Xi Jinping has not been having a good year. The situation in Hong Kong remains volatile, the election in Taiwan did not go the way the Chinese leadership had hoped, and now the trade war with America has ended, or perhaps more accurately paused, in ways that could limit China’s future expansion and international leverage. This trade deal takes Xi down a notch, not only because it imposes a lot of requirements on China, such as buying American goods, but because it shows China is susceptible to foreign threats."