There is growing frustration among other G20 members at both Beijing’s refusal to address the industrial policy issues at the heart of the dispute –
non-tariff barriers,
subsidies to state-owned enterprises and national champions, and
intellectual property theft – and the Trump administration’s unilateral approach, including the liberal use of
tariffs.
The gap between the US and China remains wide, and there are no indications China is prepared to compromise. In fact, after Trump’s patience
ran out in May because of what he felt was the Chinese side
backtracking on previously agreed-upon language in the joint
agreement,
Beijing ramped up its nationalistic rhetoric about the
Long March and China’s readiness to endure protracted hardship – it even dredged up
movies about China’s participation in the Korean war, which is known in China as the campaign to “resist America and aid Korea”.
Although both sides dug in, a ray of hope emerged with the advent of working-level talks prior to the summit, raising expectations that the Trump-Xi meeting will produce a breakthrough.
However, while working-level talks do increase the probability of a more productive meeting between heads of state, there is little chance of a breakthrough in Osaka.
Although some liberal Chinese economists are urging the government to enact market-based reforms to make the Chinese economy more productive, Xi has
no support among his own politburo for making the structural changes the American side is demanding in their quest for a level economic playing field.
While Xi is considered by many to be almighty in the maelstrom of Beijing power dynamics, he has every incentive at this point to share risk, as well as blame, for the breakdown of talks and the
slowdown of the Chinese economy.
He is therefore likely to seek a consensus with the rest of Beijing’s pantheon before making any critical decisions that affect the economy and US-China trade negotiations.
Likewise, the Trump administration is unified in its conviction that the only acceptable outcome is one where China agrees to meaningful, measurable economic reforms that they are held accountable for enacting.
It is also convinced that dialogue alone will not achieve that outcome, reinforcing Trump’s instinct for using tariffs as a coercive tool to achieve an
equitable bilateral trade relationship. Regardless of how prepared or friendly the meeting between Trump and Xi is, the likelihood of either side compromising is very slim.
In addition to trade, several security matters will undoubtedly be on the table when the two presidents meet.
Iran,
North Korea and
Taiwan are major areas of concern, but like the bilateral trade relationship, they are intractable issues that will not be resolved at the G20.
Xi’s
high-profile state visit to Pyongyang marked a return to normalcy in a relationship that had hit rock bottom following North Korea’s provocations and
nuclear tests, and China’s support for sanctions on Pyongyang during the Trump administration’s “maximum pressure” campaign.
Xi’s trip did nothing to address the nuclear issue, nor was there any indication that China would provide the sort of security guarantees Pyongyang seeks to create an opening for progress on
denuclearisation.
Despite the improvement of bilateral ties displayed by Xi’s trip, it is unlikely he will be able to use North Korea as leverage with Trump: North Korea is inclined to maintain its independent, self-reliant posture, and
Kim Jong-un is determined not to be a pawn in a political game between Beijing, Washington and Seoul.
Escalating tensions between the US and Iran are a major concern for Beijing. Xi is undoubtedly relieved Trump
called off retaliatory strikes against Iran following the downing of a US Global Hawk drone in the politically sensitive Strait of Hormuz. Xi could choose to commend Trump on his restraint and offer to increase cooperation.
Trump, for his part, should take advantage of the dynamics to propose that the US Department of Defence and the People’s Liberation Army expand a bilateral dialogue on crisis management, risk reduction, strategic nuclear competition and confidence-building measures to capture lessons learned and to ensure the two sides avoid misperception and miscalculation should future incidents involving unmanned systems occur in the future.
Xi is likely to voice his concerns about perceived shifts in US policy on Taiwan. The latest instance contributing to Beijing’s unease is the Indo-Pacific Strategy Report released by the Department of Defence this month that identifies Taiwan as a
country and a partner, without reaffirming that the US’ one-China policy remains based on the US’
three joint communiques with China, as well as the Taiwan Relations Act.
Reports that the Trump administration is considering sales of
new F-16 fighters and M1 Abrams tanks to Taiwan further heighten China’s apprehension that Washington is slowly and methodically upgrading its relationship with Taipei.
Should Xi state his concerns over Taiwan, Trump would have the opportunity to remind him that the US’ long-standing commitment to Taiwan’s security is intended to create space for the two sides to manage their differences and resolve them peacefully to the satisfaction of the people on both sides of the Taiwan Strait.
With the world watching and hoping for a positive outcome, the Trump-Xi meeting will undoubtedly be the highlight of the G20. However, in the face of difficult issues, they are unlikely to create a real breakthrough in Osaka.
Drew Thompson is a former US Defence Department official responsible for managing bilateral relations with China, Taiwan and Mongolia. He is currently a visiting senior research fellow at the Lee Kuan Yew School of Public Policy, National University of Singapore. He is on Twitter @TangAnZhu
