POV counts. Chinese have opinions too.
Some westerners are pushing back against the idea that we are facing the risk of rising trade barriers or a breakdown in orderly trade regimes. Their logic is that, “The US has a lot of levers, and we can assert our rights without necessarily sparking a trade war that the Trump Administration doesn’t want.” Not wrong, but it makes the dangerous assumption that trade relations are going to be something Washington stays in control of.
Trade frictions almost always take on a life of their own due to a single inconvenient point: Both sides in a dispute get an opinion. If you don’t know the other guy’s point of view (POV) then you have absolutely no control over the final result.
Chinese negotiating POVs
Chinese negotiators tend to look at a few factors when assessing counter-party.
• Strong vs. Weak
• Stability vs. Immaturity
• Collaborative vs. Selfish
• Integrity vs. Unpredictability
• History vs. Rules
• Alignment of goals
Strong vs. Weak.
Chinese decision-makers don’t draw that much of a distinction between strength and intelligence/experience. They wrote the book on asymmetrical tactics, and don’t feel that short-term imbalances of material or technology are deal-breakers. The new US admin is getting points for certain types of strength – at least online. Trump looks decisive, effective, and rich. The question in China (and elsewhere) is if there is a method or strategy behind the posture.
Verdict: This category is Trump’s to win or lose.
Stability vs. Immaturity
China fears chaos the way Kansas fears tornedos. Disorder is the Chinese code word for destruction, famine, and invasion. Inability to maintain order is politely labeled “immaturity” – but it is viewed as a threat. Chinese bosses like quiet informal deals, little if any publicity, and no surprises.
Verdict: This hasn’t been great for the new administration.
Collaborative vs. Selfish
The real meaning of being cooperative and a “team player” is accepting the Chinese agenda and making sure you are only talking about the things they want to talk about. This is as much process as practice. When President Trump shocks the world with tweets about Taiwan, the Chinese are reading it two ways. First – the message is difficult. Second – the way the message was broadcast put our people in an embarrassing situation. The substance of a disagreement is always manageable; the process is not quite as flexible.
Verdict: Not good. The Trump administration will find that Twitter is even more unpredictable and high-impact in China than in other places.
Integrity vs. Unpredictability
Trust has two meanings –
1) You can have faith in the ethical & moral code of another person – or
2) You can trust that you know the other person and can predict how they’ll behave under a certain set of circumstances.
Chinese negotiators care about #2, and this could actually work in Trump’s favor. Beijing never trusted the “human rights” agenda that US trade missions used to build into their proposals. Chinese entities are more comfortable talking output quotas than working conditions or sourcing policies.
Verdict: This is Trump’s category to win or lose.
Rules vs. History
In 2016, a World Court tribunal at The Hague ruled that China was violating Philippine sovereignty by annexing parts of Scarborough Shoal. China responded by dismissing the ruling as though it never happened, and declaring that Chinese history takes precedence over the laws of men. Though the PRC does love its own bureaucracy, it doesn’t have much patience with other people – and that includes multi-lateral NGOs, like the WTO or World Bank.
Verdict: If Washington really does have a secret master plan, then this could be where the chess-masters in the Trump Administration play out their deepest stratagems.
Or it could be where the trade train really goes off the rails. If the new administration in Washington systematically undermines existing trade & regulatory measures already in place, then China is not going to feel bound by the rules it has signed onto. (Many will say that China doesn’t feel particularly constrained by rules now. You might be right, but it could get worse.)
If Washington starts ridiculing Beijing by holding up broken treaties (or the twitter equivalent), then this will have an outsized impact that may spin out of control.
Alignment of Goals
The Chinese side of the table has always been clear on its goals – in many cases, far more so than the western side. This has also been a strong point for the new Negotiator in Chief. It seems unlikely that the US and China will develop a common set of high level goals, but it’s not impossible. (What that might mean for other stakeholders is an entirely different question.)
So far, however, this is a problem area. China gets extremely unfriendly when the topics involve sovereignty, territorial integrity, and status. The US media may have moved on to covering other things, but in China the Taiwan tweets and SE China Sea war leaks have already formed strong impressions.
Verdict: Still room for opportunity, but the outlook isn’t good.
Whatever the new administration’s strategic goals
for China and Asia, the twitter feed will have the final word.
Written by an American for Westerners negotiating in China, “The Fragile Bridge” dispenses with politically correct euphemisms and ivory tower pseudo-psychology. Knowing which 1,500 year-old philosopher uttered what esoteric phrase won’t help you safeguard your assets or keep your JV operating, but learning from the lessons of dozens of successful Westerners who have survived the China challenge just might.