As global markets count down to the Trump presidency, the trillion-dollar question seems to be how the flamboyant realtor and reality TV personality plans to "get tough" with China, as he has so emphatically promised to do so ever since his improbable bid for the presidency began nearly nineteen months ago.
Trump's appointment of anti-China stalwarts Peter Navarro and Robert Lighthizer to key trade posts in his administration signals a break from the past, when such offices were as good as a China lobby on Beijing's behalf in the US - without China having to spend a dime buying influence itself. State media in the communist superpower has predictably responded nastily: China isn't afraid of a trade war, it pouts, because such a conflict will be anything but one-sided and will leave America bruised and battered, too. That begs the question: Is Trump really preparing to exchange salvos with the world's second-biggest economy in such a way that global markets and supply chains are jolted into painful adjustments?
On closer examination, highly improbable. Trump knows that his mandate to govern will be judged by practical positive results. And he also knows that such results could be hard to come by in a scenario of tit-for-tat hostile escalation with the middle kingdom - especially in light of how much more achievable they'll be with Beijing's cooperation.
For starters, China is already such a major market for American companies - with such potential for further growth - that even Trump can't purport to start from scratch in kickstarting US exports to what promises to be the largest single foreign market in the not-so-distant future. As the Asian powerhouse grows wealthier, with an ever expanding middle class, its appetite for US agricultural produce and high-end manufactured products, as well as premium services such as those in finance and law, is primed to explode. Mind-boggling sums of money over many years into the 2030s and beyond are now at play. To take just one example, Boeing expects China to account for nearly a third of global jetliner demand in the coming decade and purchase a whopping nearly 7,000 planes over two, which would make it the first trillion-dollar aviation market. While this smacks of the time-honored Western China lust whose fabled lineage can be traced all the way back to Marco Polo, it gives a sense of the sheer magnitude of the perceived opportunity for US capitalists and investors - and by extension, workers.
To "win" the trade war with China, in other words, doesn't mean making China - no more than America - worse off: quite the contrary. "Victory" will mean the rising Chinese upper and middle classes purchasing massive volumes of American goods and services even as Chinese firms continue to sell prodigious quantities the other way. Both sides stand to become better-off - possibly much better-off.
On this flip side, Trump's biggest wish - that America attracts more productive plant investment from international companies - also happens to correspond with what a growing number of Chinese companies are already pursuing. The combination of rising labor costs at home and cheap energy supplies on the other side of the Pacific is slowly but steadily becoming a structural vacuum sucking Chinese manufacturers onto Yankee shores to be closer to their most lucrative foreign market. Massive retailers like Walmart and Amazon, whose branded and generic products alike are heavily sourced from Chinese-owned factories on the mainland, could in time find themselves purchasing inventories instead from new Chinese assembly lines employing American workers and robots domestically in the US.
Chinese investment in America will get an even bigger boost if the pragmatic Trump administration, eager to capitalize on excess Chinese capacity in real estate, construction and infrastructure-related industries like steel, cement, and glass, reduces the political barriers hindering investment from majority state-owned Chinese players in these sectors. Such a drastic move may be wishful thinking for the foreseeable future, but if anyone would even consider it for the medium to longer term, Trump would be the one. While China trade hawks like Navarro decry Beijing's seemingly untouchable lifeline of subsidies to its favored industrial firms, one wonders what attitude a mercantilist Washington will adopt if this largess is turned to support American reindustrialization and American jobs instead. Having never been a slavish ideologue when it comes to "free markets" and strictly "private" investment, Trump of all American leaders would likely welcome a helping hand from the Chinese state: it's not like subsidies are anything new to strategic sectors of the US economy, to begin with; if introducing Chinese cash into the mix stirs competition in these spaces which otherwise tend to be pockets of inefficiency and waste (as tends to be the case where free public money is doled out), all the better.
The psychological aversion of Americans, especially conservative Americans, to communist Chinese investment is a barrier of the kind that only a character as unconventional and maverick as Trump can overcome: he likes to see the big picture, and as a consequence isn't apt to dwell on details which in and of themselves could feel awkward. What better way to contain China, he'd broach, than to sucker Beijing into pouring so much of its prime industrial capacity into America that America effectively gains a veto over Chinese behavior around the world?
For China's part, far from lamenting the loss of factory installations and jobs that this strategic economic shift comes with, both the communist government and general population would welcome their own arrival as major investors and owners of productive assets in the heart of the developed world.
The "win-win" aspect of US-China relations has in recent years become so cliché as to become a fitting euphemism for everything that America feels has gone off the rails with the globalization project. But even now, a good two weeks before he even takes office, one can see the outlines of how a reinvigorated America under Donald Trump could score so big and so spectacularly - eventually, at least - in reframing the world's central commercial relationship that before we know it, we'll actually get tired of winning.
It's a crazy world when the Apocalypse becomes the Salvation, but that's what 2017 seems to be heralding barely a week in.
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