Nov 14, 2017 12:35 PM

Editorial: Why Trump’s Visit Marks a New Chapter for Sino-U.S. Relations

By Hu Shuli

U.S. President Donald Trump’s trip to China last week — billed as a “state visit plus” — has drawn world-wide attention. The grand reception for the first foreign head of state to visit the country after the key Communist Party meeting last month showed that China attaches great importance to its relationship with America. Trump took to Twitter to praise the “incredible” welcoming ceremony, his “unforgettable” trip to the Forbidden City and his meetings with Chinese President Xi Jinping, which he termed “productive.”

Xi said that Sino-U.S. relations are "at a new historic starting point," during discussions with his U.S. counterpart. This year marks the 45th anniversary since the two countries resumed diplomatic ties. This relationship has withstood several challenges in the past half-a-century and both sides continue to focus on how to manage disputes or differences, while sustaining mutually beneficial cooperation. This issue is even more important at a time when the gap between the two countries in terms of national strength is narrowing.

The two not only need to draw lessons from their past, but also be creative to jointly tackle future challenges. Both sides are willing to avoid the Thucydides trap, in which conflicts are inevitable between an established power and a rising power. But the crucial point is how both sides choose to act.

Before Trump — who often acts in an unconventional way — set out for China, many observers were nervous about how he would handle the issues of North Korea and the trade imbalance during his meetings with Chinese leaders. Any slip of the tongue on the thorny issues could have resulted in a setback to bilateral ties. The result turned out to be better than expected. The mutual trust between the two leaders has increased and the visit has paved the way for a “new blueprint” on Sino-U.S relations.

During the meetings, Xi emphasized cooperation in security and diplomacy, business and trade, people-to-people and cultural exchanges and law enforcement. These four important areas of cooperation were first identified for regular dialogue when Xi met Trump in April at his private Mar-a-Lago resort in Florida. These high-level channels build upon previous exchanges and explore new developments.

The highlight of Trump’s visit is the signing of $250 billion worth of investment and business deals, indicating the indispensable role played by trade in balancing China-U.S. relations. The deals are mainly in the energy, manufacturing, agriculture, aviation, electronics and automobile sectors, which show that the two economies are highly complementary. It also fits China’s requirements as it restructures its own economy.

China has also promised to loosen restrictions on financial services, including easing access to its banking, securities and insurance sectors. This is something which the U.S. has been lobbying for over the past years, and may help correct the trade imbalance between the two countries.

In recent years, China has seen a rise in financial risks, largely as a consequence of long-standing restrictions that have prevented the financial sector from developing to its full potential. Further opening up this industry is in line with China's long-term interests.

On Friday, the same day Trump wrapped up his three-day visit, the Chinese government announced a major policy shift, saying it will allow foreign firms to own a majority stake in Chinese companies dealing in securities, funds and futures. This breakthrough in China’s opening up process will become a lasting mark left by Trump’s visit.

However, the “new start” in China-U.S. relations does not mean old issues will automatically disappear. As China gravitates toward the center of the world stage, more disputes are inevitable. The U.S. has resisted China’s move to establish the Asia Infrastructure Investment Bank and initiate the Belt and Road initiative, with some skeptics saying China is attempting to challenge the global order dominated by the U.S. since WWII. In the early days after Trump came into power, Sino-U.S. relations were rattled when he received a phone call from Taiwan leader Tsai Ing-wen. Such communication has been a taboo since U.S. resumed diplomatic ties with the Chinese mainland in 1979. Uncertainties still remain, as the White House hasn’t reached an agreement on how to deal with China.

Trump and other officials in his administration have recently been floating the idea of an “Indo-Pacific” region, trying to incorporate India into the so-called democracies camp that also include Japan, South Korea and Australia. This is reminiscent of the military alliance in the Asia-Pacific in the Cold War era.

It is clear that China’s rise is being viewed with suspicion. To solve these “growing pains,” China has to deepen its economic reform efforts and further open up. China-U.S. ties will rely on the efforts of both sides, but China’s future trajectory will have a major influence on it.

China has become the world’s second largest economy, four decades after it embraced a market system. Its international influence has also changed rapidly. As the Trump administration advocates “America First” policies and shows less interest in international affairs, some people in China have been discussing whether Beijing will “fill the void” left by Washington. These people need to stay cool-headed about China’s role as a “responsible major player” in the world stage. President Xi said at the Communist Party’s 19th National Congress last month that China is still at the primary stage of socialism, and it is still the world’s largest developing country. China has no intention or capability to challenge and overthrow the existing international order. It is only shouldering more responsibilities to be more active on the world stage, as it gains more strength. But people in China or the U.S. should stay calm about China’s rise, not being too excited or too alarmed.

The relationship between China and the U.S. is one of the most important bilateral relationships in the world with implications on regional and world peace, stability and prosperity. As China enters a new stage of development, decision makers’ wisdom will be tested on how they deal with lingering issues affecting China-U.S. relations and emerging problems. To become a mature power, the nation requires confidence and self-respect, while guarding against conceitedness and arrogance.

Hu Shuli is the editor-in-chief of Caixin Media.


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