By David Marsh, MarketWatch
BEIJING (MarketWatch) — President Donald Trump’s relationships with Russia and his sympathies, real and alleged, with President Vladimir Putin have attracted much attention. Another plausible candidate for a “friend of Trump” accolade is President Xi Jinping of China. Many of Trump’s actions since his inauguration on Jan. 20 are likely, directly or indirectly, to strengthen Beijing’s international position.
Trump’s decision to pull out of the Paris climate-change accord weakens overall momentum behind lowering carbon emissions and quelling global warming. But the U.S. move to retreat from leadership in this and other spheres like trade may end up reinforcing China’s ability, through a variety of “soft power” measures, to move forward.
While advocating “America First,” Trump may become instrumental in promoting China to a more effective position on the world stage.
Can White House Make Progress Amid Russia Probe?
Former FBI Director James Comey testifies this week about the bureau's probe into Trump associates' ties with Russia. WSJ Gerald F. Seib asks if the White House can tune that out and make progress on key issues such as health, infrastructure, and taxes. Photo: Getty
One big problem for Trump is that Asia is now starting to emerge, across a variety of fields including defense cooperation — to deal with the many political and security hot spots throughout the region. By apparently ditching long-held American principles in favor of a case-by-case “transactional approach” in trying to resolve policy dilemmas, Trump may be responding to U.S. domestic pressure for a more hard-nosed attitude towards “free-riding” allies and partners.
But he is opening himself to the charge that America cannot be trusted over the longer term — and giving China a gigantic opportunity to move across Asia into a leadership role from which it will not easily be supplanted.
In anti-climate change efforts, China will not be seeking to move overtly to the front. Instead it will be advancing stealthily in broad spheres using traditional multilateral diplomacy backed by grants, credits and technological commitments.
As one Beijing official describes it, “There is a vacancy, there is a place [for China]. The world has to move forward.” He adds: “Climate change is financially and technically very complex. China cannot simply take over. The U.S. and China have been working together. China alone can’t do that. We need Europe, we need emerging markets — we need a set of proper governance measures.”
Many commentators and politicians have pointed out that America’s step back from a liberal approach to international commerce opens a vacuum that China is trying to fill. Trump’s withdrawal from the 12-nation Trans-Pacific Partnership has been widely interpreted as giving China a new instrument to forge closer trade ties with countries in its region — and even to supplant the American role in the Pacific Rim.
In a similar way, Trump’s climate-change pronouncement provides China with additional direct and indirect leverage. One possible route for China is analogous to the multidimensional policy it is forging over the “Belt and Road” initiative — a move to develop infrastructure primarily across Asia and Europe, also spreading to Australasia and East Africa, encompassing around 60 countries.
This goes beyond a giant program to build continental-scale roads, railways, ports and other trade facilitation structures, involving investment over several decades and from a variety of sources of between $4 trillion and $8 trillion. As Chinese officials make clear, the initiative is designed, too, to encourage further international use of the yuan /zigman2/quotes/210561989/realtime/sampled USDCNH -0.0943% as an investment, payments and transaction currency that will one day challenge the dollar /zigman2/quotes/210673925/realtime XX:BUXX -0.03% .
Furthermore, the Chinese also aim to build up a Chinese-style financial regulatory and banking system in countries in the “Belt and Road” program. This meets a threefold objective: to strengthen economic and financial systems; to safeguard Chinese credits and investment across this widespread region, ensuring, for example, that repayments are made on time; and to provide opportunities for Chinese expansion in financial services.
On climate change, China could now take a similar multidimensional approach by pushing forward with efforts to harmonize regulatory standards in fields ranging from green-bond issuance to solar- energy installations. Europe and China have agreed a “green alliance” to push forward the climate agenda.
There is room for China to propel forward a United Nations commitment to reduce emissions by 26% from 2005 levels by 2025. Michael Bloomberg, the former New York mayor, said after meeting French President Emmanuel Macron last week that U.S. cities, states, universities and businesses would inform the U.N. that they aimed to honor the U.S. commitment. Jerry Brown, the governor of California, has been in China to talk to political and business leaders about coordinating new green technologies being produced by Chinese manufacturers.
China Investment Corp.,the Chinese sovereign fund, which has been eyeing the vaunted $1 trillion Trump infrastructure program as a possibility for enhanced American engagement, is exploring whether Trump’s disavowal of the Paris agreement is a possible opportunity for building cooperation in the U.S. at a state and municipal level.
What is clear is that China now has a series of valuable channels for enhanced international cooperation bypassing Trump’s Washington. Over time, President Xi may be very grateful to his opposite number in Washington. “America first” may turn into “China first.”