President Trump’s much-heralded visit to Beijing appears to have gone less than swimmingly. One reason seems to be that China believes the United States is in decline. It shows no hurry to strike deals with a country whose power it perceives to be diminishing even as its own is increasing. According to news reports, Chinese president Xi Jinping cautioned Trump that the two countries should avoid the “Thucydides trap,” a reference to conflict between an established power struggling to maintain its influence and a rising power seeking to displace it. The United States, Xi asserts, should accommodate China’s role as an emerging power with global interests rather than attempting to hold China back.
Xi’s depiction of U.S.-China relations, however, is not the only narrative of decline. Hawks in the Trump Administration are convinced that China, not the United States, is the declining power. They insist that China’s diminishing labor force, its highly leveraged financial system, its rapidly aging population, and its slowing economic growth are depressing living standards and threatening the stability of a country whose leaders value stability above all else. The United States, they contend, has a unique ability to rejuvenate itself while China does not.
These clashing perceptions do not bode well for international commerce. Beijing may grudgingly buy some American soybeans and airplanes, but it sees no urgency to moderate the vast goods trade surplus that continues to foul its relations with the United States. While Beijing appears to believe that the United States is too weak to do much about China’s control over much of the world’s manufacturing, Washington is largely convinced China is firing up nationalist sentiment to distract its citizens from a tenuous economic situation. It finds little reason to grant concessions that might strengthen the Chinese economy.
The conflicting narratives of decline have led to an impasse that was not resolved by the face-to-face meetings in Beijing. This suggests we will continue to see erratic shifts in trade and investment restrictions on both sides. Whether Trump and Xi discussed U.S. threats to sanction Chinese-owned and Chinese-built ships and to exclude Chinese-made equipment from U.S. ports remains a mystery.
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