By William Jones
The meeting between U.S. President Donald Trump and Chinese President Xi Jinping will be a watershed moment for the US-China relationship and a critical event that can determine the direction of world history. While ANY meeting between the heads of these two indispensable nations would have global implications, this particular meeting is especially crucial. The newly elected U.S. President has charted a new course for the U.S. economy, rejecting many of the shibboleths of the traditional “free market” ideology, which have proven disastrous over the decades for many countries, including the United States, and is moving toward returning to the “American System” economics of Hamilton and Henry Clay, which would involve protection for many U.S. industries which have disappeared thanks to the avarice of our U.S. industrial and financial layers.
China, which has successfully utilized the “dictates’’ of the free market system by entering that system as a low-wage producer has, through a conscientious government policy of systematically investing in science and technology moved from its original status of low-wage manufacturing center to a higher niche of productive capability and skill level in the world economy. Through that policy, China has succeeded in developing its economy, becoming the veritable engine of world economic growth, and has raised over 700 million Chinese out of poverty. China’s development of the Belt and Road Initiative in 2013 now promises to lift hundreds of millions of people in other Third World countries out of poverty through a policy of infrastructure investment. China has also taken the initiative for the creation of new international banking institutions, like the Asian Infrastructure Investment Bank and the BRIC’s countries’ New Development Bank, which are solely geared to realizing that investment.
The question facing the two leaders is how do these two policies fit together. China was concerned about some of the statements made by presidential candidate Trump during the presidential campaign, in which he seemed to blame China for the U.S. economic predicament and later accepted a call from the leader of Taiwan, putting into question his commitment to the “one-China’’ policy. China was also concerned about the appointment of a couple of outright “China-bashers’’ like Peter Navarro and Robert Lighthizer to the Trump cabinet, in positions affecting international trade. This created a great deal of trepidation among Chinese leaders with regard to the upcoming policies of the new President. Much of this trepidation has since been alleviated by the phone call between President Trump and President Xi in February, where President Trump reiterated his support for the One China policy, that is, recognizing the People’s Republic of China as the sole representative of the Chinese people, and expressed a willingness to establish a good working relationship with China on all levels.
More recently, President Trump sent his Secretary of State, Rex Tillerson, to China to meet with his counterparts. There Tillerson surprised his Chinese hosts by using the exact terms that China has insisted must characterize the US-China relationship, namely that it be a relationship characterized by “no conflict, no confrontation, mutual respect and win-win cooperation.’’ Until Tillerson’s statement, no U.S. official has ever uttered these words to Chinese leaders.
The fact that the two leaders mutually decided to hold such a summit at a very early stage in the new administration’s term indicates that they both realized that having a good mutual understanding of each other’s goals and intentions was absolutely crucial, and both were confident that such a meeting would be successful.
It is perhaps too soon to expect any resolution of the key issues on which the two sides have differing views, whether it be on trade policy, or the North Korea nuclear program, which has become the pretext for the U.S. to place THAAD missiles in South Korea, and which China views as a threat to them as well; or the South China Sea, where Chinese territorial claims have received push-back from the U.S.
Given the fact that the new Administration does not even have all of its people in place in order to review or come up with policy recommendations in these matters, there will probably be no definitive resolution on them just now. These will, of course, be on the agenda of discussion, discussions which President Trump has characterized as difficult.
But what can be accomplished in the meeting, which is so crucial to the resolution of any of these issues, is a greater understanding of each other’s positions and outlooks. President Trump has often shown himself to be a gracious host in these circumstances, and holding the meeting at one of his homes in Mar-a-Lago, Florida, away from the craziness of the nation’s capital, will also be conducive to a more personal and intimate discussion. And, when met with the appropriate respect which is due to a Chinese leader, President Xi often shows a great deal of magnanimity and deft in dealing with foreign leaders, even with those with which he is not totally in agreement. It is not entirely out of the question that the two leaders, even with such very different personalities, might even develop a warm relationship.
One can also not exclude the possibility of some surprises coming out of the encounter which may point the way out for some of the problem areas. While President Trump, who has made it one of the hallmarks of his Administration to make changes in trade policy which would benefit U.S. industry, may make greater use of tariffs and taxes in order to keep some production in the U.S., and to attract new production, this could possible have a negative effect on some Chinese export products to the U.S.
But if such a policy were not solely directed toward Chinese products alone, and were not of such a draconian nature as some of the Chinese “hawks’’ in the Administration may want to impose, this could be acceptable to China if they received something in return. If some restrictions were lifted, China would be happy to buy more American products. China also invests heavily in the United States and President Trump has called for a one trillion dollar investment in the failing U.S. infrastructure. China is presently the greatest producer of infrastructure in the world. And they have expressed, in official statements and in numerous articles, their interest in investing in U.S. infrastructure. While direct Chinese ownership of strategic infrastructure like railroads or telecommunications might be frowned upon, less strategic areas might be opened for Chinese investment. Creating a Hamiltonian national infrastructure fund or bank in which China could invest at an equal or higher rate of return than they are getting from their extensive holdings of Treasury bills, might also be a means of helping President Trump in realizing his infrastructure promise. If this were combined with the implementation of Glass-Steagall legislation, another Trump promise, this would also provide the basis for stabilizing the U.S. banking system, where it also could reorient to the more long-term investment of the infrastructure program.
A closer relationship between the U.S. and China, particularly on these economic issues, would go a long way in helping them deal with the other issues that are on the table. US-China cooperation would also help solidify the gains made by China’s Belt and Road Initiative. A U.S. development program, especially in the realm of high-speed rail, could turn the New Silk Road project of China into a veritable World Landbridge, as has been proposed by Lyndon and Helga LaRouche. Both President Trump and President Xi are leaders who are clearly focused on the need for increased economic development based on the expansion of infrastructure, and this could be what unites them policy-wise. If they can find the wisdom to work together on this issue, then the “American Dream’’ will converge with the “Chinese Dream’’ and will create a new paradigm of global development for the entire world.