The U.S. - China relations and their impacts on Vietnam

Keywords: U.S. - China relations.

1. Current U.S. - China Relations

After being sworn into office, U.S. President Trump has shown that he has a world view different to those of his predecessors. He pursues a “transactional” approach in diplomacy to realize his “America First” and to make “the best deals possible”. In particular, Trump makes the whole world “feel” that the U.S. is pursuing an “uncertain” policy and even “in total contrast” to his pledges during his 2016 running for the office and sometimes his yesterday’s announcements. His policy towards China is not an exception.

Economic and trade relations

Economic and trade relations are seen as a “corner stone” in the relations between the two afore-said countries. In spite of differences in currency exchange, intellectual property and market access, the “interdependent” nature of economic relations between the two sides have not changed.

In recent years, U.S. - China trade relations have been so intertwined that all other ties in other areas are put in a lower status. The benefits of the U.S. in China are also the economic profits enjoyed by U.S. enterprises, which is rapid production at a low cost for the U.S. and world’s consumer market. Bilateral trade turnover has grown more than 200 times from under 2.5 billion USD in 1979 to nearly 600 billion USD in 2017; the investment accumulation between the two sides has reached more than 276 billion USD. China is the largest trading partner to the U.S. and vice versa, the U.S. is the second largest trading partner to China. Cooperation between China and the U.S. in military, Internet, law enforcement, humanitarian, etc. has also seen continuing progress(1).

During his race for the U.S. presidency, Trump threatened to initiate a trade war with China, as he considered China to be a currency manipulator and proposed a high tariff on Chinese products. Then Secretary of State, Tillerson, also threatened to blockade China’s territory in the Pacific, a potential hotspot of war. However, after Trump’s meeting with Chinese President Xi Jinping in Mar-a-Lago Resort in Florida, the relations between the two countries saw important changes. Trump surprisingly changed his attitude, praising Xi Jinping as a “wonderful man”, while the Chinese President reaffirmed the “friendly relations” between the two countries. For Xi Jinping’s pledge to help the U.S. control North Korea, Trump accepted his explanations for why it was harder to act than he had thought. Trump stopped mentioning trade retaliation or considering the Remnibi as one of the international currencies and the “difficulties” in territorial disputes in the “South China Sea” (the East Sea).

After a series of announcements which upsets China, the Trump administration is worsening the bilateral relations rapidly after a short period of warming up. In late June 2017, the U.S. finalized the 1.4 billion USD arms export contract to Taiwan and imposed sanctions on China’s Dandong Bank for its illicit supporting North Korea’s suspicious financial activities(2). That the U.S. punished a small Chinese bank, although being viewed as an action for “intimidation”, is considered as an indicator for the change in the U.S.’s approach to North Korea and China – US relations in the coming time. In June 2018, the US imposed a 25% tariff on about 1,300 Chinese products, including industrial, medical, educational, and traffic goods. The value of these products amounted to 50 billion USD worth of imports from China. The U.S. even threatened to impose a further tariff on 200 billion USD worth of imports from China if China did not make any move to lower the trade deficit. On its side, China imposed a 25% tariff on 106 products imported from the U.S., including soybean, cars, corn, and chemical products. These actions from both China and the U.S. have caused widespread concerns of a trade war between the two largest economies. After a short “honeymoon”, the relations between the two great powers have now returned to the mainstream. However, a big crisis is unlikely to take place as long as U.S. - China economic interdependence continues.

Political and security relations

In political areas, despite differences or even conflicts of interests on several issues, the U.S. and China have multiple intertwined interests. Their cooperation is a good thing for both countries and for the world. Vice versa, their conflict will be a disaster.

After the U.S. elections, China and the U.S. have witnessed an unfavorable political cycle. Both countries’ leadership has to face the issue of how to reduce suspicion towards each other. China stated that the U.S. was interfering into its internal affairs with the issues of Taiwan, Hong Kong, and Tibet. Meanwhile, during the race, candidate Trump criticized Chinese actions in bilateral trade and militarization in the  East Sea. He announced his intention to pursue a more aggressive policy towards China. Therefore, the first U.S. - China summit (April 7, 2017) after Trump assumed presidency, and the meeting in China (November 9, 2017) between the two leaders are considered important diplomatic events as they were going to shape the bilateral relations. The most important result of these meetings is that both sides agreed to “expand their cooperation, and address differences on the basis of mutual respect”. This is a good starting point for both countries to increase their understanding, and for mutual trust for a “warmer” relationship. However, there are still many “thorny” issues in their relations which cannot be solved “overnight”.

Taiwan issue

In reality, Trump’s intention in his policy towards Taiwan is to maintain the status quo, guaranteeing U.S.’s interests in the region, as well as maintaining the existence of Taiwan as a “strategic chess piece” to constrain China. On January 20, 2017, in his first telephone call with Chinese President Xi Jinping, Trump affirmed U.S. support for the “One China” policy to reduce tension between the two countries, and to seek Chinese cooperation in North Korea’s nuclear issue. When his expectations were not met, Trump started taking a more aggressive stance in his policy towards China. This move immediately causes tension in the bilateral relations. In his telephone call with US President D. Trump on July 3, 2017, Chinese President Xi Jinping stated that the bilateral relations were being affected by “negative factors” after they had held the first meeting in Mar-a-Lago in Florida (U.S.). He said: “We appreciate the U.S. administration’s reaffirmation of the One China policy and hope that the U.S. will address Taiwan issues correctly by respecting this principle”(3). 

North Korea’s nuclear issue

After taking office, Trump urged China to restrain North Korea. He stated that if China could not address North Korea’s nuclear program, the U.S. would do so on its own. In early March 2017, Chinese Foreign Minister Wang Yi urged both North Korea and the U.S. to make concessions to lower the tension. China proposed an end to annual U.S.-South Korea military exercise for North Korea’s halt to their nuclear programs. However, this proposal was refused by the U.S. and South Korea.

After the meeting in March 2017 and phone calls with President Xi Jinping, the U.S. President Trump hoped to receive better cooperation from China to increase their influence on North Korea. On their side, the Chinese Ministry of Foreign Affairs affirmed that China would incessantly strive to address the tension in the Korean peninsula.

For China, an unstable North Korea is a bigger concern than a nuclear-armed North Korea. Although China has significant economic leverage over North Korea, there are limits for their sanctions on North Korea. China does not want to face a humanitarian crisis along their borders with North Korea, and does not want Kim Jong-un’s regime to collapse, precisely because it would mean China has to accept a unified Korea under U.S.’s “security umbrella”. Military planners in the region and in the U.S. understand that there are no military options to control North Korea’s actions while South Korea is in the range of North Korea’s thousands of artillery guns, as well as Japan and China in the range of North Korea’s missile. Meanwhile, North Korean regime has done an extraordinary task, which is to cause China (and the rest of the world) a headache reviewing their intelligence service’s reports during military planning to avoid the worst possible scenario of a regional war.

The meeting between the U.S. President Trump and North Korean leader Kim Jong-un took place in Singapore on June 12, 2018 and the two sides agreed to sign a historic joint statement. On June 19, 2018, North Korean leader Kim Jong-un paid the third visit to China and was greeted with praises from Chinese President Xi Jinping, which sent a message for the U.S. against the background of questions regarding North Korea’s commitment to denuclearization and escalating trade war between China and the U.S. Kim’s visit strengthened the assumption that China is still the key actor – a variable which Trump needs but unable to control. The U.S. officials stated that they continued to maintain sanctions against North Korea even when dialogue continues and determined to increase economic pressure if Kim Jong-un’s regime does not cooperate. However, China - North Korea’s biggest economic partner, plays a key role in determining the effectiveness of such sanctions. While trade tensions between China and the U.S. are escalating, the warm welcome Kim Jong-un received during his visit to China serves as a warning from Xi Jinping to say that Trump’s trade moves can potentially harm the U.S.’s most ambitious goal - peace with North Korea - in the U.S. diplomatic agenda.

Maritime disputes

The East Sea issue has been one of the most frequently mentioned issues in U.S. -China relations in recent years, and also one of the most “heated” issues in the bilateral relations. The U.S. has publicly criticized several times China’s illegal artificial island building as infringing maritime freedom and safety in the South China Sea, as well as “to cause insecurity and instability” in the Asia - Pacific.

Trump’s “transactional” approach to the “South China Sea” issue is similar to other issues. The new U.S. administration began with an assertive attitude towards China in general and Chinese actions in the East Sea in particular. After that, Trump stopped mentioning the trade retaliation and “difficulties” in territorial disputes over the East Sea to gain China’s cooperation in stopping North Korea’s nuclear and ballistic missile programs. However, after a year in office, Trump has changed his approach and his new policy towards China and the East Sea has also begun to take shape.

In his speech at the Shangri-La dialogue in early June 2017, the U.S. Secretary of Defense James Mattis tried to find a balance between praising China for its support in addressing North Korea’s nuclear issue, and criticizing Chinese “undeniable militarization of artificial features”, as well as “ambitious maritime claims inconsistent with international laws”. The U.S. “cannot and will not accept unilateral coercive actions to change the status quo” and “the U.S. will remain committed to the region for peace and prosperity in Asia with respect for countries respecting international law. No country can be an island or be isolated from the world, together we will push back security challenges”(4). He also emphasized that “the U.S. needs China in North Korea issue, but that does not mean the U.S. will accept China’s militarization of artificial islands”(5).

Thus, Trump’s South China Sea policy is the continuation of Obama’s policy, but it further emphasizes the military aspect. If China is not ready to or does not cooperate fully in North Korea’s nuclear issue or other “transactional” issues proposed by Trump, the military aspect of the U.S. diplomatic policy can be the key approach or even the only approach.

In the near future, although there may be changes and issues for negotiation, China - U.S. relations have become closely interdependent. Although the framework of the relations will remain to be both cooperation and competition, the competitive side will become more prominent in specific periods. Some possible scenarios can be envisaged as follows:

Firstly, the U.S. will increase its pressure over China to address “flashpoints” in the region. This will lead to more uncertainty and put countries in the region in a more “delicate” position in the relations with the two countries.

Secondly, after the 19th National Congress of the Communist Party of China, China is predicted to continue its pursuit of “Chinese dream”. China’s policy towards the U.S. will remain to be finding ways to control bilateral relations, avoid confrontation, make use of cooperation with the U.S. to strengthen its position as a regional power and become an international power, but also to be more assertive and not afraid to conflict with the U.S. to protect its “core interests” to gradually affirm China’s leadership in the regional order. This may lead to new complexities and tensions in U.S. – China relations.

Thirdly, Japan, South Korea, India, and Australia should also be taken into account while evaluating U.S. – China relations as these countries are important allies and partners related to both sides.

2. Impacts of U.S. – China Relations on Vietnam

The U.S. – China relations have comprehensive impacts on Vietnam, especially in political and economic areas, and in Vietnam’s defense of territorial integrity. The priority in Vietnam’s diplomacy is to maintain a peaceful and stable regional and international environment. Therefore, the ups and downs in U.S. – China relations greatly influence regional security. Meanwhile, both China and the U.S. have very special historic relations with Vietnam and now are most important partners to Vietnam.

On the economic aspect, regarding the developments in the first six months of 2018, many international experts have asserted that U.S. – China relations under Trump’s administration will be more strained and a trade war between the two leading economies can occur on an unexpected scale.

After the U.S. slapped a special tariff on Chinese products in June 2018 and China retaliated, Trump announced a 20% tariff on all U.S. imports. If this turns into reality, it will greatly affect our exports to the U.S. market, which currently accounts for 20% of our total export, and generates a trade surplus enough to compensate for the trade deficit with China. According to the General Department of Vietnam Customs, Vietnam’s exports to the U.S. in 2017 reached 41.6 billion USD.

On the political aspect, U.S. - China relations remain within the framework of both competition and cooperation, but the competitive side is increasing and it is difficult to predict. The geopolitical conflict between the U.S. and China may result in great risks for Vietnam, the most serious of which is Vietnam’s involvement in a new political game, making Vietnam difficult to maintain its balance in relations with great powers if it is unable to find suitable measures. Vietnam is facing a dilemma: maintaining good relations with China while strengthening relations with the U.S. As a small neighboring country to China, Vietnam does not want to choose between the U.S. and China, but rather to cooperate with both. Therefore, in their engagement to the region, Vietnam hopes that both the U.S. and China will be positive, clear, and proactive, as well as transparent and open to avoid forcing countries in the region to choose either side.

On protecting maritime sovereignty, in recent years China - U.S. relations in the East Sea have seen many changes directly related to Vietnam’s maritime sovereignty. In particular, it is possible that the U.S., to address the nuclear crisis in the Korean peninsula, will ignore China’s expansion in the East Sea to gain its cooperation in North Korea issue. If it really happens, Vietnam’s maritime sovereignty will be seriously affected(6). However, until June 2018, as North Korea’s nuclear program strained China – U.S. relations again, this scenario was unlikely.

On the other hand, although the U.S. is not a party to the dispute, China’s unacceptable ambition and increasing aggressiveness in the East Sea help the U.S. find a reason for intervention. What the U.S. wants to guarantee through participation in the dispute is neither peace nor maritime freedom in the Est Sea, but rather to use the dispute as a tool to restrain China’s rise in the region and in the world. The U.S. engagement can indirectly cause China to be more cautious and less likely to resort to the use of force. In addition, U.S.’s strategic calculation against China will also decrease the pressure on Vietnam’s human rights and become an opportunity for the two sides to promote bilateral relations to a new height.

In summary, cooperation and competition will always be two sides concurrently existing in the relations between countries, especially between the two leading great powers like the U.S. and China. It can be seen that with “America First”, U.S. President Trump certainly will use “national security” as “a weapon” to be more assertive against China. However, as the economization of politics has been considered as a cornerstone in U.S. – China relations, security and national defense can be put on the table for negotiation for “America First”. All conflicts between China and the U.S. can be solved on this basis. This is the key difference in U.S. – China relations under Trump compared to his predecessors. What Trump will do to make China become “a partner and a competitor”, or in other words, to make U.S. – China relations under U.S. leading, is much more difficult to predict(7).

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l Endnotes:

(1) http://vnexpress.net

(2) Yang Jiechi: “Maintaining “Shanghai Declaration” principle, promoting healthy and stable development in China - U.S. relations”, People’s Daily, February 28, 2017.

(3) “Honeymoon between Trump and Xi has ended” http://www.24h.com.vn

(4) “Bad omens in U.S. - China relations”, https://www.tienphong.vn.

(5) Duy Linh: “U.S. Secretary of Defense: No exchange South China Sea for North Korea”, tuoitre.vn.

(6) “Vietnam’s efforts to balance relations with the U.S. and China”, http://www.bbc.com

(7) Nguyen Nham: “Policy beginning to take shape in U.S. - China relations?”, http://dangcongsan.vn

BUI DUC KHANH

Permanent Office in Ho Chi Minh City,

Ho Chi Minh National Academy of Politics