Following United States President Donald Trump’s warning of another wave of potential trade tariffs against China, the US Dow Jones Industrial Average stock exchange fell sharply last Friday by 572 points. Trump’s threats of further action follow the initial $50 billion (Dh183.9 billion) of tariffs on Chinese goods announced last month and the reciprocal sanctions by Beijing on US goods in what could, yet, turn into a trade war.
Trump’s rationale for his move in imposing the initial tariffs, which is the first time that he has specifically targeted Beijing on the trade sanctions front, is his belief that Beijing is employing a range of unfair practices, including stealing US intellectual property. And he has repeatedly criticised China’s very large surplus in trade in goods with the US, which was around $375 billion last year.
The Trump team’s targeting of China in this specific way reflects not just the personal animus that some administration officials appear to have toward that country. It also reflects wider shifts in the global economic and political landscape over many years with China’s rise to greater prominence one of the defining features of this period.
On the financial front, for instance, International Monetary Fund data since 2014 has asserted that the Chinese economy is now larger than its US counterpart on a purchasing power parity basis which makes adjustments for the fact that goods are cheaper in China and other countries relative to the US. However, the consequences of the country’s generally strong growth since 2001 have been more than economic and financial.
In terms of perceptions, many internationally believe the global economic and political balance of power has swung very significantly. And this is having important, real-world implications, including feeding into political posturing of some US politicians on China such as Trump with his sometimes misguided, blunt rhetoric.
During the 2016 US presidential campaign, for instance, he promised “we’re going to turn it around. And we have the cards, don’t forget it. We’re like the piggy bank that being robbed. We have the cards. We have a lot of power over China”. One of his threats has long been to impose, potentially, punitive tariffs on goods made in China, a move that Beijing has always said it would oppose given that its WTO membership prohibits other members from unilaterally raising such tariffs above levels that they have committed to maintain.
The stark change in some international perceptions toward China is underlined by Pew Global Research. In 2017, the latest year for which research is available, domestic publics in seven of the ten European Union (EU) nations surveyed asserted that China is the world’s “leading economic power” (and in a further EU nation, Italy, China was tied with the United State for the top spot). Moreover, in long time US ally in Asia-Pacific, Australia, the population there puts China ahead on this question by a two-to-one margin.
Thus 58 per cent of Australians in 2017 believed Beijing is the “world’s leading economic power” which represents a rise of 18 percentage points (from 40 per cent) since 2008 alone. Comparable data for other countries includes the United Kingdom which has seen a rise from 29 per cent to 46 per cent over the same period.
Much of the reason for these changed perceptions of China’s strength stem from the aftermath of the 2008-2009 financial crisis. While much of the developed world subsequently recovered, at a sometimes slow pace, from the worst economic downturn for a generation, China enjoyed mostly strong growth.
While welcomed by many in China who understandably like recognition of the country’s growing might, this opinion shift is not without headaches for Beijing. For, as Trump’s sometimes misinformed rhetoric shows, it has exposed the country to greater foreign scrutiny and fed into perceptions, seized upon by politicians like the US president, tapping into angst about China’s rise.
What this underlines is that China’s growing prominence is not without challenges for Beijing. For the country’s grand strategy has long been premised on a gradual, peaceful transition to power during which it will grow stronger while keeping low profile.
The significantly brighter spotlight on the country, especially since 2008, has exposed a ‘soft power deficit’ which is complicating its rise to power. Soft power, which rests upon the international attractiveness of a country’s foreign policy, political values and culture, is recognised by Beijing as a key political commodity, but one it has had limited success in cultivating to date.
As international perceptions of the country’s power have changed, its global favourability has shown weakness in some key countries and continents, as underlined in Pew’s data in 2017. For instance, across the populaces surveyed in the EU (ten nations) and Asia-Pacific (seven countries), there was overall net negative opinions about China — 44 per cent unfavourable to 43 per cent favourable in the EU, versus 41 per cent unfavourable and 34 per cent favourable in Asia-Pacific.
Moreover, in the US, China also had a net unfavourability rating too in 2017, according to Pew. Trump is well aware of this sentiment, and also the fact that US Republican voters tend to have lower overall favourability than Democrat counterparts towards the country.
Especially if critical scrutiny intensifies, Beijing must find better ways to tackle this soft-power deficit, including enhanced international public diplomacy to win more foreign ‘hearts and minds’. At a symbolic level, example measures might include utilising the country’s growing capabilities in space travel for high-profile international cooperation projects. Surveys underline that many around the world admire China’s strength in science and technology.
Beijing should also restart a process of addressing foreign concern about its intentions as a rising power. Here, it could intensify efforts to be seen as a responsible, peaceful global stakeholder. And match this rhetoric with actions. This agenda may pose significant challenges for Beijing. However, unless it is tackled, China’s soft power deficit could only grow bigger in 2018 and beyond.
Andrew Hammond is an associate at LSE IDEAS at the London School of Economics.