Both the US and China are showing signs of instability. Neither of their leaders can be believed. What global strategies are Donald Trump and Xi Jinping considering? What will be their next moves? The prospects for US-China relations—the most crucial diplomatic concern for Japan—continue to remain unclear.

　　　　　One obvious cause of the current apprehension is Trump’s continuing penchant for capricious remarks. After questioning why the US should be bound by Beijing’s ‘one China’ policy, Trump did a complete about-face two months later, abruptly pledging in a telephone conversation with his Chinese counterpart that the US would “respect” the policy. Declaring NATO to be obsolete during the presidential campaign, Trump later commended the organization as the “transatlantic bond” that helped the West defeat communism in the Cold War.

　　　　　When it comes to demonstrating inconsistency between words and actions on the part of a head of state, China is even more extreme. Xi’s preaching of the importance of free trade at last year’s World Economic Forum in Davos, Switzerland, was simply ridiculous.

　　　　　Virtually nobody would expect Xi to readily implement economic reform. In 2013, he had Premier Li Keqing propose a bold market-oriented economic reform, but in reality the Chinese economy has since been subject to increasing political intervention. In exchange for a reduction of state-owned corporations, intervention by the Communist Party has been intensified and concentration of businesses has increased as privatization has been discouraged.

　　　　　The proposed new economy, once called “Liconomics” after Li, has since been renamed “Xiconomics,” under which government control has been tightened.

　　　　　Xi initially managed to win popular support for waging an anti-corruption campaign, but virtually all of those purged—military men, bureaucrats, and politicians—have been the followers of former presidents Jiang Zemin and Hu Jintao. Xi’s campaign has turned into one aimed at stamping out his political rivals. His followers, as well as members of the so-called “Crown Prince Party”—the descendants of senior Communist officials in China—have remained unaffected.

China’s Defense Budget Exceeds One Trillion Yuan

　　　　　Beyond their lack of credibility, Trump and Xi have one other thing in common: their commitment to increasing defense spending. Trump has vowed to implement a 10% increase this year, declaring his intention to add two active duty carriers to the present 10-carrier fleet as a symbol of America’s renewed military buildup.

　　　　　With China’s adventurism in mind, Trump on February 18 deployed the Carrier Strike Group One and its flagship the USS Carl Vinson to the South China Sea.

　　　　　On March 5, meanwhile, Premier Li read a report on the work of the Chinese government to open the 12th National People’s Congress. In an apparent response to the US, Li declared China will go all out to protect its maritime interests, stating: “We will resolutely oppose and contain Taiwan’s independence.” Li’s message reflected a stronger resolution than last year regarding Taiwan in that he did not use “contain” in his last report.

　　　　　This time, Li referred to Xi as “the core” of China six times, praising him as an exceptional leader on a par with Mao Zedung—proof that Xi is on a straight path to establishing his own autocracy. Evidently, this in turn implies the failure of Li’s economic reform. In other words, China will not be able to avoid plunging further into an economic downturn, putting its future at risk.

　　　　　Perhaps reflecting its economic deceleration, China this time refrained from announcing its defense budget for 2017. But Chinese government sources have confirmed it will definitely exceed one trillion yuan (approximately US$145 billion) for the first time in Chinese history. The two big powers across the Pacific are conspicuously embarking on massive military buildups.

　　　　　Japan is sandwiched in the Pacific between the US on one side and China on the other. It goes without saying that Japan is extremely reassured by the military buildup of its ally. Enhancing the US-Japan alliance is the only means for Japan to cope with China’s exceptional military expansion, begun in 1989. Japan is delighted with America’s commitment to its security pledged by President Trump and Defense Secretary James Mattis. Mattis visited Japan February 3-5, while Trump received Prime Minister Shinzo Abe in Washington and Florida February 9-13. Mattis declared the US would stand “100 percent, shoulder to shoulder” with Japan on its claim to the Senkaku Islands in the East China Sea, while Trump vowed the US would defend Japan with both conventional and nuclear weapons.

　　　　　However, international relations can easily change in accordance with the balance of power between nations and prospects for gains and losses. In particular, one may well view as untrustworthy what the leaders of America and China have to say about their own bilateral relations. They could suddenly do an about-face at any time.

　　　　　That is why it is all the more important to pay close attention to what takes place between the US and China not only on the surface but behind the scenes—the moves made by American and Chinese bureaucrats and politicians, as well as overtures Trump’s family members make towards the Chinese.

　　　　　On February 1, Trump’s oldest daughter Ivanka, considered to be the person the president trusts most within his family, visited the Chinese embassy in Washington with her daughter Arabella to celebrate the Chinese New Year. Little Arabella, who has been studying Chinese, sang a song in Chinese to be applauded by all present, including the Chinese ambassador. Ivanka posted her daughter’s performance on her own Twitter account.

US-China Relations: No Preconceptions Allowed

　　　　　This may surely have simply been an occasion for private socialization for Ivanka and her daughter. On the other hand, it was unmistakably a formal act of diplomacy approved and supported by Trump himself. How was the US-China relationship generally regarded at the time? Trump was calling for a “review of the ‘one China’ policy” (January 13) and accusing China of being “grand champions of currency manipulation” (January 31). On the surface Trump appeared to be taking a tough policy towards China, but the exact opposite—an exhibition of American affection or China—was apparently taking place behind the scenes.

　　　　　The activities of Jared Kushner, Ivanka’s husband, must also be watched closely. Said to be the person Trump trusts most within the White House, Kushner is in a position to exercise enormous authority as senior advisor to the president.

　　　　　The New York Times ran a major feature on Kushner in its January 10 edition, although Kushner himself apparently refused to be interviewed. The daily detailed his meeting over lunch with Chinese multi-millionaire Wu Xiaohui about a week after his father-in-law won the presidential election.

　　　　　Kushner is closely connected with Chinese fund operators, including Wu, who is chairman of Anbang Insurance Group, one of China’s largest companies with assets estimated at US$285 billion. Wu is married to a granddaughter of Deng Xiaoping, but how he has managed to cultivate his power in such a short span of time remains unclear.

　　　　　Kushner, who turned 36 in January, graduated from Harvard University top of his class and joined the real estate business started out by his immigrant grandfather. Over the past decade, he has invested an estimated US$7 billion in his business, much of which has reportedly been provided by Chinese capitalists like Wu.

　　　　　One may well view the US-China relationship in two mirrors held against each other, as it were, to see the truth behind the façade. But the more one ponders the mixed presence in the White House of China hawks—such as Chief Strategist Steve Bannon, and Robert Lighthizer of the Office of US Trade Representative—alongside the pro-China members of the Trump family, such as Kushner, the less discernible the president’s policy toward China becomes. The important lesson here is to not entertain any preconceptions about the relationship between the two big powers across the Pacific.

(Translated from “Renaissance Japan” column no. 745 in the March 16, 2017 issue of The Weekly Shincho)