Has Trump Re-set U.S.-China Relations?

Following his G-20 meeting with Xi Jinping, Donald Trump went well beyond the trade truce I had expected, as he downplayed the national security tensions between the U.S. and China while describing the bilateral relationship as one of “strategic partners.”

With that characterization of the relationship and his apparent decision to lift his administration's recent ban on the sale of American technology to Huawei, Trump threw his national security team under the bus.

Returning to his transactional roots, Trump favored selling more goods to China over his advisers' attempts to constrain the rise of that nation (and its leading telecom company). If the president sticks with this approach—which is not a sure thing—that would be positive for the future of the bilateral relationship and for the near-term health of Chinese consumer and corporate sentiment.

Partners rather than adversaries

In an article on our website last month, I wrote that “Far more than trade will be on the table when the two leaders next meet. . . In short, [Trump and Xi] will have to agree that rising competition between the two nations does not have to be a zero-sum game, and that it is cooperation and concessions, rather than confrontation, that will leave both sides better off.”

In his comments after meeting with Xi in Osaka, Trump seems to have opted for engagement over confrontation. When a reporter for Caixin, a Chinese financial magazine, asked if the two countries should view each other as strategic partners, competitors or enemies, Trump replied: “I think we're going to be strategic partners. I think we can help each other.”

That was, for the moment, at least, a stark rejection of the more adversarial, “strategic competitor” approach that the president's national security team has been advocating.

Trump's perspective was evident in his comments on two contentious issues: Huawei, a world leader in 5G technology and in mobile phone sales; and the status of Chinese students in the U.S.