China’s preparation for conflict with the US

　International situations surrounding China have been changing at a rapid rate lately. As soon as President Trump of the US decided to meet the North Korean leader, China and North Korea suddenly initiated friendly relations, although the relationship between them had been deteriorating. On the other hand, the Trump administration has become even more hawkish toward the trade issue with China, and the tension is escalating. Because of the Trump administration’s unpredictable behavior, Chinese diplomacy has been forced to become reactive. The current article examines these recent changes in the international environment surrounding China from the perspective of Chinese policy makers: How do they view these issues and what responses are they planning?

　Since the announcement of the US-North Korea Summit, the China-North Korea relationship, which had been deteriorating, has seen remarkable improvement. Kim Jong-un visited China in March and May and also in June right after the US-North Korea Summit; three summits within such a short period of time is unusually frequent. In addition, China has shown a kind of consideration that cannot be expected in a normal inter-state relationship, such as offering a chartered plane for Kim Jong-un, who was travelling to the meeting in Singapore. At the conclusion of the Summit, though “complete, verifiable, and irreversible denuclearization (CVID)” was not clearly stated in reference to North Korea’s nuclear program, after the Summit, President Trump announced that the US-South Korea joint military drills would be suspended. Following the Summit, the Chinese State Councilor and Foreign Minister, Wang Yi, evaluated it as being “congruent with the goals China has been expecting and making efforts to achieve, and China naturally welcomes and supports the outcomes.” [1] In addition, a Foreign Ministry spokesperson was self-congratulatory; since China had been arguing for the suspension of both nuclear development by North Korea and the US-South Korea military exercise, this proved that the Chinese argument was rational and feasible. [2] Therefore, as far as the outcome of the Summit is concerned, China can be expected to welcome it, but we cannot be optimistic about the future course of the US-North Korea relationship when we take into consideration the history up to this point.
　In the first place, since the start of the Kim Jong-un era, the leaders of China and North Korea had not met even once, and the traditional friendly relationship between the two had already become something like a huge burden to China. [3] Not only because of the escalation in nuclear and missile experiments but also because of the execution of Jang Song-thaek—North Korea’s go-between with China—and the poisoning of Kim Jong-nam, whom China had helped to protect in the past, it is assumed that Xi Jinping had very little trust in Kim Jong-un. Against this backdrop, the recent rapid rapprochement between the two should not be seen as a revival of traditional friendly relations but as being derived from an instrumental and practical intent based on the national interest of each country. By building a relationship with the US through direct negotiation, North Korea can relatively reduce its reliance on China. At the same time, by improving its relationship with China, it can also increase its bargaining power vis-à-vis the US, compared to which North Korea is overwhelmingly inferior. On the other hand, China cannot accept the emergence of a new order in the Korean Peninsula without its involvement. In particular, the Chinese had deep anxiety about Kim Jong-un, whom they had not trusted at all, embarking on solo negotiations with the US because this could lead to an important agreement. From the Chinese point of view, as long as it is committed to denuclearization, the best-case scenario for North Korea is to continue surviving within the Chinese sphere of influence, [4] and there is thus no need to urgently insist on CVID.
　When taking into consideration China’s anxiety and frustration about the US-North Korea Summit and based on the Summit’s outcome, we cannot come to the simple conclusion that China is the winner as the third party in the quarrel between the two nations. In fact, the way the US-North Korea Summit was reported in its immediate aftermath in Chinese official media was very restrained—in stark contrast to the enthusiastic manner of reporting in other countries. Here, we can see through the Chinese authorities’ deep interest (and anxiety) regarding future developments.
　On the other hand, from a long-term point of view, the direct contact between the US and North Korea has started in earnest with the Summit as the catalyst, and it has major significance for the US-China relationship. Conventionally, for the US-China relationship, the Taiwan problem has been the most contentious issue in East Asia; in contrast, the North Korea problem has acted like a magnet to bring the US and China together. In other words, as the problem of North Korea’s nuclear development has worsened, the US and China have kept in touch with each other, confirming that they are moving in the same direction and—in a sense—that the US expects China to play a certain role. However, since the second China-North Korea Summit in Dalian, from the US point of view, this composition has changed; now, China, staying behind North Korea, intervenes with the negotiations between the US and North Korea. In other words, the positioning has changed to one where the US opposes China, and North Korea stands in the middle. Therefore, with regard to the North Korean problem, the US can no longer rely on China as much as it used to do.

　In this regard, it is interesting to note that the US attitude toward China hardened further after the US-North Korea Summit in June. Needless to say, President Trump’s fixation with the trade deficit with China had been known since his presidential campaign. However, at that time, China had assumed that, in contrast to former Secretary of State Clinton, whose unfavorable view of China had been well known, President Trump would be easier to deal with because, as a businessman, he was only interested in trade issues. It appears that China had an optimistic view that he would be within the scope that it could deal with; while President Trump prided himself on his deal-making skills, China had many bargaining chips. To start with, conflict in the field of low politics, such as trade, is not a zero-sum game, as seen in the field of security; because both are mutually dependent, ultimately, both stand to lose in a conflict involving trade. In this regard, until about May this year, in the negotiations, the Chinese side was represented by Vice Premier Liu He, who is trusted by Xi Jinping, and the US side was represented by Treasury Secretary Mnuchin. Secretary Mnuchin is a former investment banker, who worked for Goldman Sachs, an investment bank. Because his background was in finance, a field that China has a stake in, it was assumed that, just like Treasury Secretary Paulson of the Bush administration, he would adopt a friendly attitude toward China.
　However, the Trump administration’s attitude toward China suddenly hardened in June. While China is trying to resist this with a retaliatory tariff, it is not easy to deal with this. Domestically, the Chinese government cannot afford to be seen as weak against the US. On the other hand, while the US economy is doing reasonably well at the moment, the Chinese economy with its structural fragility is most likely to suffer huge losses if the US-China conflict escalates further. There is a view that the Trump administration’s hardline attitude with regard to trade is for the domestic audience, in view of the mid-term elections this fall. Further, Trump often adopts the negotiation tactic of deliberately showing a hardline attitude to make the subsequent negotiations easier for himself, as seen in his dealing with North Korea. Still, from the Chinese point of view, there are aspects that China would rather ignore: the US’s heightened sense of alarm over the rise of China and the struggle for hegemony in the form of trade friction.
　In the National Defense Strategy Report published in January 2018, the US had already issued a strong warning that it could no longer tolerate China’s unfair economic practices. [5] Recently, from the end of July to August, the US government decided to invest 113 million dollars in order to support infrastructure in the Indian Pacific Area and then offered 300 million dollars for security co-operation with ASEAN. [6] These policies are clearly part of the US response to China. In particular, the sense of alarm over China’s rapid catching-up in the field of industrial technology, such as AI, which is directly linked to national security, is rising, and Kissinger, who knows China well, has also commented on the possibility that a dramatic development in AI could exert a destructive influence on international relations. Using the example of the once prosperous Inca Empire, which went extinct in an instant because of its encounter with a completely different enemy—the Spaniards—and small pox, he has pointed out that the developments in AI, which has nothing to do with norms related to humanity, could become a major challenge for liberal western civilization. While not naming China, he has sounded a warning that, since there are states that fully support the development of AI, the US should take some measures so that it will not lag behind. [7]
　So far, the US has adopted a policy of involvement on the basis that a prosperous and stable China is conducive to US national interests. Consequently, as western countries, including the US, have intended, China has established itself as an important player in international society and has come to exert a large amount of influence across the world. Ironically, however, the US today has begun to think that a powerful China could be a strategic threat. [8] From the Chinese point of view, it appears that western countries, led by the US, have ceased to welcome development in China because of their own agendas and have started to shift their policies; naturally, it cannot accept the US attitude, which appears to be aimed at containing China.
　For the time being, China wants to resist the US by focusing on the Trump administration’s protectionism, while exploring international collaboration; on the other hand, the more free trade is emphasized, the more light will be shed on its own unfair economic practices. The fact remains that, while China has been benefiting from the free trade system, it has preserved unfair economic practices, including forced technology transfer when a foreign company enters the Chinese market, regulations on investment ratios by the sector, restrictions on foreign companies’ entry into the Chinese market, violation of intellectual property rights, and the granting of subsidies, all of which distort the free market.
　In response to the US’s hawkish attitude, which appears to be never-ending, the Chinese government seems to be attempting to respond in a restrained manner for the time being. However, in China, relatively free and active discussions are already taking place among researchers, and we can have a glimpse of a number of viewpoints. For instance, there is a view that points out that the sense of alarm against China has been heightened not only in the Trump administration but also in the Congress, media, and think-tanks in the US and that, in addition to the US, the attitudes of Australia and Germany, with whom China used to maintain a relatively good relationship, have also hardened recently; this then sounds an alarm regarding the changing attitudes of all the western countries. [9] The Renmin University of China’s Shi Yinhong, an international relations scholar, points out that what is problematic now is that, while serious contradictions between China and other parts of the world (including the US) with regard to the distribution of wealth have emerged because only China has been enjoying huge profits in the international economic and trade order, China has not been aware of it. From this perspective, he argues that China needs to make a degree of concession in the trade friction with the US. [10]

　Under these circumstances, the Central Foreign Affairs Commission met on June 22-23 in Beijing, where Xi Jinping delivered an important speech. Xi told the meeting that “we need to plan great power relationships carefully and promote the construction of a framework of great power relationships that is generally stable and develops in a balanced manner” and that “we need to engage with neighborhood diplomacy seriously in order to make our neighboring environment more friendly and more advantageous.” [11] It is not easy to interpret what he really meant from the document published at the meeting; nonetheless, this appears to reflect the Chinese understanding regarding the situation in an international environment where the Trump administration’s China policies are oscillating wildly, and their future has become unpredictable. At the same time, given the state of their relationship with the US, we can see their intention to stabilize their relationships with neighboring countries even further.
　As for the relationship between China and ASEAN with regard to recent South China Sea issues, as China has agreed to conclude the legally binding “Code of Conduct (COC)” as soon as possible, a step that it had long been reluctant to take, a framework draft was written up in May last year by the countries involved, and the negotiation on the wording started in March this year. This means that there has been a limited degree of progress in this regard. [12] On June 25-27, the fifteenth high level meeting of China and ASEAN member states regarding the implementation of the “Declaration on the Conduct (DOC)” was held in Changsha, Hunan Province. On the following day, June 28, the Chinese Foreign Ministry stated at the press conference that “the meeting had positive outcomes” and emphasized the co-operative approach toward other countries. [13] In addition, during the talk with US Defense Secretary Mattis, who visited China on June 27 (during the same period), Xi Jinping stated “the Pacific Ocean can accommodate the US, China, and other countries,” while maintaining the conventional stance on territorial disputes. In this statement, “other countries” was newly added to the conventional view of dividing the Pacific Ocean between the US and China; this appears to show some consideration toward the countries involved. [14]
　In this context, China can maintain an attitude of developing a positive relationship with Japan. Since Premier Li Keqiang’s visit to Japan in May, exchanges between China and Japan in the form of working-level consultations between the two governments, visits to China by Japanese Members of the Diet and opposition parties, and visits to Japan by Chinese ministerial class officials have been taking place frequently. As for a future roadmap, it is envisaged that having facilitated Prime Minister Abe’s visit to China, Xi Jinping’s attendance at the Osaka G20 meeting at the end of June in 2019 will be used to facilitate his state visit to Japan. We need to note that China’s Japan policies had started to improve before the Trump administration started to harden its policies toward China. Stabilizing relations with Japan, which had deteriorated badly, is one of the most important diplomatic priorities for China and, ever since the Japanese government declared their support for China’s “One Belt One Road” initiative in June 2017, it became easier for China to make progress in its relationship with Japan. Moreover, before that, the 2016 ruling by the Permanent Court of Arbitration on territorial claims in the South China Sea—in which the Court almost completely denied the validity of the Chinese claim—served as a catalyst for it to review the hardline foreign policies it had been formulating; thus, strategic adjustments for a generally more moderate diplomacy had begun.
　On the other hand, Chinese diplomacy had not been merely passive; China held the Shanghai Cooperation Organization Summit on June 9-10 in Tsingtao and on July 27, and Xi Jinping participated in the BRICS Summit held in Johannesburg. Furthermore, in September, the seventh ministerial meeting of the Forum on China-Africa Cooperation will be held in Beijing. We should note that, while its relationship with the US is facing difficulties, from a global point of view, China has acquired considerable abilities to conduct active diplomacy.

　Successive US presidents have repeated a pattern; while assuming a tough stance toward China during the election campaign, one or two years after inauguration, they revert to realistic China policies. Although the US and China are potential rivals, they are also highly mutually dependent with regard to economics, and now, we have witnessed China proposing a high value purchase of US goods at the summit in order to maintain the relationship. A similar approach was tried during Trump’s visit to China on November 1 last year. However, China has started to sense the possibility that the structure that had thus far supported the US-China relationship has begun to change under the Trump administration. What the Chinese are most troubled about is whether the current hardline China policies are due solely to the Trump administration or whether they signal a fundamental change in the US’s attitude toward China, which could continue after the Trump administration. In opposition to the Trump administration’s protectionism, the Chinese government is attempting to forge alliances with other countries by adhering to free trade, but as mentioned earlier, other western countries have recently begun to feel a growing sense of alarm with regard to China because it has unilaterally benefitted from the open international system while utilizing an authoritarian regime. Under these circumstances, while preparing for further confrontation with the US, China is trying to strengthen its relationships with neighboring countries and other developing countries by continuing to use economic power as a leverage and conducting cautious diplomacy. It is assumed that, in order to make the international environment surrounding itself beneficial in any manner possible, China will continue to adopt a strategically moderate attitude for the time being.

（Dated Aug 13, 2018）