Donald Trump’s unexpected victory in the 2016 U.S. presidential election has raised profound questions about how the United States and other members of the international community will approach global governance amid a host of transnational challenges. Trump’s populist “America First” rhetoric has sown doubts about U.S. resolve to remain internationally engaged, while Chinese leader Xi Jinping emerged on the international stage reaffirming globalization and international collaboration at Davos in January 2017. There is no doubt that Xi envisions China as a rising leader in a changing world order, and Trump’s positions on issues like climate change and trade may indeed create space for countries like China to assume more of a leading role. But paradoxically, the new U.S. administration’s stances may also foster an environment of uncertainty, or even insecurity, that could make it more difficult for China to exercise greater influence on global governance. A long list of important causes stand to lose from the electoral outcome, including climate change, free trade, and globalization.
The Fate of Climate Change and Energy Cooperation
One likely casualty is the fruitful climate and energy cooperation between the United States and China over the last few years, as well as China’s ambition to lead the way on the international response to climate change. Given President Trump’s climate change denials, ambitious joint commitments made by former U.S. president Barack Obama and Chinese President Xi Jinping, which had been leading global efforts to combat climate change, seem very unlikely to be fulfilled in the coming four years.
President Trump’s view that climate change is a Chinese hoax designed to destroy U.S. industry has struck a chord in China, where ironically many domestic climate skeptics have argued the same thing about the United States. As one of the few areas in which China and the United States have demonstrated real joint leadership in global governance, the climate- and energy-related exchanges and collaboration between the two countries has drawn worldwide applause. The series of joint climate-change announcements that Obama and Xi made was seen as a crucial foundation for the success of the Paris Agreement, which was finally reached in December 2015 after lengthy negotiations. In late March 2017, President Trump rolled back the Clean Power Plan, which aims to curb carbon emissions from the U.S. power sector and is one of the key U.S. commitments that China and the United States agreed to in their landmark climate announcements. In the wake of this, President Xi may have second thoughts about the huge amount of political capital he invested over the last few years in the Obama administration, and the Chinese leader will likely find himself in an uncomfortable position before his first meeting with Trump on April 6 and 7.
Certainly, China could still move forward with its commitments under the Paris Agreement, as these pledges have never been conditional on U.S. reciprocation. That is most likely what China will do, regardless of President Trump’s position on climate change. Doing so will require true leadership from China on climate change, which is also what many observers expected at the November 2016 UN Climate Change Conference in Marrakech immediately after witnessing the outcome of the U.S. presidential election.
But this would, at least to some extent, run counter to the very concept of “common but differentiated responsibility” that China has fought so hard for, under which industrialized countries are supposed to lead and shoulder more of the burden of curbing carbon emissions than developing countries. It would be uncomfortable for China as a developing country to lead on this issue, as climate change was initially largely caused by carbon emissions from industrialized countries, which remain major contributors to this day. This dilemma would be all the more salient if the United States, the world’s largest historic polluter, shirks its own responsibility. This also would provide further fuel for Chinese climate skeptics to argue against Beijing’s climate actions, which they still see as the result of a Western trick meant to constrain China’s development.
One should not forget that China, too, is in the middle of painful and risky economic and energy transitions, with effects that impinge on many vested interests. For example, China’s decline in coal consumption over the last two years, which is likely to continue this year, comes at a grave cost to a coal sector that employs millions—an industry that is more powerful and closer to the government than its U.S. counterpart. If China were to also bend to economic pressure and relent in its carbon mitigation efforts, President Xi would lose a valuable platform for demonstrating global leadership and damage his credibility with the international community.
The Outlook for Globalization, Trade, and Investment
The world has seen increasing populist backlash against globalization, with Trump’s election being only the most recent high-profile example. Even as this trend offers an opportunity to Beijing, it could also hamper other aspects of China’s global ambitions related to trade and investment.
There is no doubt that China has been the world’s largest beneficiary of the last two decades of globalization, particularly over the last fifteen years since it joined the WTO. Integration in global supply chains has brought China enormous wealth and transformed a generation of Chinese citizens by broadening their knowledge and facilitating continuous interactions with the rest of the world. Foreign investment and trade has enabled the Chinese government to build infrastructure, to improve the country’s education and healthcare systems, and to lay the foundation of China’s modernization. With all of the pushback against globalization in the EU, the United States, and elsewhere in the world, this liberal and international vision may be at risk for future generations.
Trade, which once was one of the three pillars that supported China’s economic miracle, has become a less important contributor to the country’s economic growth as China continues trying to transition toward a more inward-driven and consumption-based economy. But as the world’s top exporter, China still considers trade an important avenue for technology transfers into the country and for exchanges of knowledge, even more so as China tries to build its own international brands and export high-value-added products.
Moreover, for the first time in 2014, China became a net capital exporter, investing more in other countries than it received itself. It is against this backdrop of increasing confidence that President Xi put forward his grand strategy of the Belt and Road Initiative, a strategic venture to link and expand China’s trade, economic, and political connections with other countries along land and seaborne routes through Central and Southeast Asia, parts of Africa, and all the way to Europe. In doing so, Xi is ushering in a new era in which Chinese trade, investment, personnel, technology, and culture actively extend beyond China’s borders. This is taking place for the first time since the overseas voyages made by the Chinese admiral and explorer Zheng He about six hundred years ago, when he commanded voyages to explore and promote trade with Asia and Africa as an envoy of the Chinese emperor of the Ming dynasty.
But China may find a world with closed doors. Europe, as the ultimate destination of the Belt and Road Initiative’s connective routes and as China’s largest trade partner, will likely struggle to satisfy the protectionist demands of its resurgent right-wing movements. Chinese companies, especially state-owned enterprises with opaque government connections, may soon find themselves unwelcome in countries where they seek trade and investment deals. The United States, the top destination for China’s outbound investment in recent years, will make it much harder for Chinese and other foreign investors to enter markets if President Trump indeed implements his campaign rhetoric about moving the United States in a more isolationist direction.
This trend has a direct bearing on Chinese investment in Western energy firms. Since the 2010 shale boom, energy assets and technology in the United States have been hot spots for Chinese investment. As China prepares to reform and open its oil and gas sector, many private oil companies, as well as the country’s national oil companies, have invested significantly in U.S. shale gas and oil assets in the hopes that this would offer them technological advances and oil and gas resources once the Chinese energy market is liberalized.
President Trump’s outdated obsession with achieving energy independence may deter the industrial efforts of U.S. firms to export energy and related technologies to China and other international markets. Currying presidential favor with the U.S. coal industry is unlikely to save American coal from losing out to cheap and abundant natural gas from the shale boom. While both Asian and European countries expect to benefit from a more international and fluid natural gas market with the addition of U.S. liquid natural gas exports, President Trump’s embrace of coal and an “America First” energy plan could hurt these plans.
Beijing also worries that Trump’s stated goal of more constructive relations with Russia may have negative implications for China’s agenda, particularly in the energy sector. Russian President Vladimir Putin was one of the first leaders to congratulate President Trump on his electoral victory, and many expect the two leaders to try to broker a grand bargain. Russia may prefer to focus its attention on the West rather than its recent pivot to China. If his relations with the West improve, President Putin may no longer see his energy ties with China as critical, and instead he may resist China’s increasing energy and economic engagement with Central Asia and other post-Soviet states. Securing Central Asian energy has helped China lessen its dependence on coal, which in turn has helped China to make emission mitigation pledges to combat climate change. A reset between Washington and Moscow could potentially deescalate tensions on Russia’s borders with the West and could even lead Washington to accede to Central Asia being a Russian sphere of influence. That could easily undermine Beijing’s confidence in its energy linkages with Central Asian states and by extension Beijing’s sense of energy security.
Time for Chinese Leadership?
As a consequence of the U.S. election and Western populism more broadly, the United States and the West in general is likely to have limited bandwidth to engage on international affairs in the near future as their politicians are preoccupied with domestic policy issues and divisions. This would no doubt leave more space for China and President Xi, as many Chinese have hoped. But the space given to China after such a hasty retreat would not be the same as Beijing would have enjoyed after a more planned-out, well-orchestrated redistribution of power. China and President Xi may not be prepared enough to deal with this new world in which European and American power are weakening while the world’s problems are becoming more complex.
Amid a global order in flux, China is still inexperienced in dealing with some of the world’s most complicated conflicts involving various ethnic groups, civilizations, and religions. This has become abundantly clear at great cost in some of China’s most high-profile overseas projects in countries like Libya and Sudan. As the world sails into these uncharted waters, long-suppressed conflicts may very well surface again. Extremism of all sorts, especially xenophobia, would certainly have more space to grow in the wake of international power vacuums in places where China plans to invest and trade. This will force China to reconsider its security assumptions in these locales.
There are those who view China’s rise on the global stage as inevitable, and President Xi has demonstrated great vision in seeking to make China a crucial and constructive player in the evolving international order. But the world after Brexit and President Trump’s election is increasingly full of uncertainty, and with that comes insecurity. China’s path toward a greater global role is not as clear now as it was before 2016. Trump and Xi’s first meeting this week will offer China’s leader a close look at President Trump’s “America First” mentality and what might be in the way of his China Dream.
Wang Tao is a China strategist at ClimateWorks Foundation. This is the final article he wrote as a non-resident scholar at the Carnegie-Tsinghua Center.