Art of the Asian Deal

Asians are optimistic that Donald Trump is more interested in cutting a deal with China than in risking a global trade war. Wishful thinking?

SINGAPORE — There is a strong conviction in Asia that the American dealmaker is back.  In an eleven-day post-election tour through Hong Kong, Shenzhen, Beijing, and Singapore I found an almost smug optimism that Donald Trump’s campaign threats on tariffs are nothing more than the opening gambit of a predictable bargaining strategy.

For Asians, this hope is a silver lining in what they admit is a very dark cloud. Trump’s strident anti-China stance is widely seen as an intolerable outcome.  The thought of 20% tariffs on all US imports, together with a special 60% incremental levy aimed at China, is viewed as nothing short of draconian.  There is little doubt in Asia that such actions, together with likely tit-for-tat retaliation, would inflict enormous pain on the world economy. Notwithstanding Trump’s triumphant November 6 pledge to keep his key campaign promises, the thinking in Asia is that this is a foil, that he is on the prowl for an early deal. After all, that is what he tried to do with his first tariff war with China in 2018-19, culminating with the ill-fated Phase I trade deal of 2020.  China, especially in its current weakened economic state, is widely believed to be even more compliant to such a possibility today than it was back then. 

In one key sense, this deal-focused script that is now on the whisper circuit in Asia is strikingly reminiscent of what played out in 2017, the first year of Trump 1.0. The opening act featured two glitzy summits between Donald Trump and Xi Jinping, highlighted by lavish dinners they threw for each other, first in Mar-a-Lago and then in the Beijing.   Trump, especially enraptured with the historic surroundings of the Forbidden City and gushing over the possibilities of his budding bromance with XI, turned toward his counterpart and raised his glass with the memorable line, “My feeling toward you is a tremendously warm one.”  Fast forward eight years and who better than the same two powerful leaders to seize another high-profile moment and cut a quick deal — or at least begin the process that might lead to such an outcome.

I fear this is wishful thinking.  For starters, despite the well-staged handshake photos that flash instantly across media platforms all over the world, leader-to-leader summits are often disappointing.  That was the case during the US-Soviet summitry during the first Cold War and has been especially evident in the majority of summits that have occurred between the heads of state of the United States and China.

The table below, an update of a taxonomy originally developed by China scholar David Shambaugh in 2011, ranks  the success of some 22 Sino-American leader-to-leader summits since 1972. Only seven such summits achieved major strategic breakthroughs in the US-China relationship, especially two of them in the 1970s — the historic meetings of Nixon-Mao (1972) and Carter-Deng (1979). There were three celebratory summits that occurred when there was smooth sailing in US-China relationship, gatherings filled with good feelings and long toasts — especially the 1998 Clinton-Jiang  summit as a stage-setter for China’s WTO accession; and there two summits that deepened the institutional commitment with wide ranging agreements between the two nations.  But that leaves fully 15 US-China leader-to-leader summits that accomplished very little  — either going through the motions as placeholders, dealing with bilateral crisis events, or those summits that fell well short of expectations.

Looking back at the glitz and warm words between Donald Trump and XI Jinping at their two meetings in 2017, I am being generous in dubbing them “place holders.” Behind the scenes in late 2017, when the glasses were being raised by the two leaders in Beijing, the Trump Administration’s Trade Representative, Robert Lighthizer, was hard at work in the preparation of a detailed Section 301 report on unfair Chinese trading practices that would become the template for Trump’s tariff actions in 2018-19.  Despite all the fanfare, the two summits of 2017 were head fakes, quickly followed by a trade war — not exactly the precedent that today’s deal-focused optimists in Asia smugly seem to be counting on.

The setbacks following the two leader-to-leader summits of 2017 resonate with my own long-standing concerns about the pitfalls of over-reliance on diplomacy in managing great power rivalries.  Leader-driven diplomacy is an inherently personal effort.  Apart from the Nixon-Mao meetings of 1972, well supported by the hard work of Henry Kissinger and Zhou Enlai, US-China summits have been less about the brilliance of strategic breakthroughs at the leader level and more about the very human characteristics of leaders’ reactive egos and sensitivities to domestic political pressures.  High-level diplomatic summits also suffer from the “event-planning syndrome” — they tend to occur at irregular intervals and when they do happen, they suck much of the oxygen out of the supporting efforts on both sides. That latter point was especially evident during the high-profile  Strategic and Economic Dialogues  (S&ED) — biannual during the Bush II Administration and then annual under Obama — that were held between the US and China starting in 2006.

That’s not to take away from very positive diplomatic accomplishments that have often occurred at the working group level between the US and China.  The US-China Joint Commission on Commerce and Trade (JCCT) was a great example of the successes of working-group diplomacy over the 1983 to 2017 period.  Significantly, both of these institutionalized efforts at diplomacy — the JCCT and the S&ED — were terminated in by the first Trump Administration in 2017, the same year of leader-to-leader summit glitz noted above that Asians seem to be banking on again.

I am not anti-diplomacy. However, I believe that the mixed record of sporadic diplomatic breakthroughs suggests that US-China leader-to-leader summits should be considered as necessary, but not sufficient, for successful relationship management. Largely for that reason, I have made the case for a US-China secretariat as a permanent mechanism of engagement between the two countries.  Operating on a 24x7 basis, located in a neutral jurisdiction, staffed by equal complements of professionals and technocrats from both nations, and with a broad remit to cover a wide range of mutual issues — from bilateral concerns over trade and economics, technology and innovation, and state subsidies of industrial activities, to global issues such as climate change, health, artificial intelligence and cyber hacking — the secretariat would foster a collaborative approach to US-China conflict resolution. In my opinion, it will take the combination of diplomacy and an institutionalized mechanism such as a secretariat to alter the now dangerous course of US-China conflict escalation.

I pound the table again on the secretariat not to sell any more books but to inject some realism into the post-election complacency, bordering on euphoria, that now appears to be sweeping across Asia.  Nor is it just the Asians, themselves, that seem to be taken with the deal-making opportunities that seemingly await Trump 2.0.  During this four-city swing, I participated in a number of joint dialogues between seasoned US experts and Asian counterparts, in which many American representatives (sorry, no names, here) urged Asians in general, and the Chinese, in particular, to seize the moment as quickly as possible in efforts to broker the commitment to a US-China leaders’ summit early in 2025. 

How Donald Trump ultimately plays this is anyone’s guess — probably including his own.  Unfortunately, the case for further escalation of the US-China conflict during Trump 2.0 remains compelling: Trump remains enamored of tariffs as the most “beautiful word” in the dictionary; he has assembled a team of China hawks that would be delighted to orchestrate such an effort; he campaigned on the promise to do what he did before in raising tariffs sharply on China; and he declared categorically in his post-election victory statement that he will govern on the basic premise of “promises made, promise kept.”  Still, there is growing speculation — both out here in Asia as well as at home — that he might simply change his mind and cut a deal. Stranger things have happened, but I wouldn't count on it for the foreseeable future.