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The Trump administration is committing a grave mistake by using Taiwan and the South China Sea as bargaining chips to secure China’s help with North Korea. Trump’s transactional approach to security policy risks damaging Sino-US relations at a time of high strategic uncertainty.

Building of the Bank of Dandong.

On the eve of Donald Trump and Xi Jinping's meeting at the G20 summit, not much appears to be left of the honeymoon atmosphere generated during the two leaders' summit at Trump's Mar-a-Lago resort in April. In the aftermath of the first US-China Diplomatic and Security Dialogue (DSD) in Washington, DC, on June 21, relations between the two countries seem to have entered a downward spiral.

The Trump administration is losing faith in Beijing’s willingness and ability to rein in Pyongyang’s provocative nuclear and missile tests. While both sides at the DSD maintained a semblance of consensus on the North Korean issue, high-ranking US officials after the meeting expressed their disappointment in China’s failure to generate concrete results.

Over the past week, the US imposed sanctions on China’s Bank of Dandong and two individuals implicated in assisting North Korean money laundering and a Chinese shipping company for helping smuggle banned luxury goods. The Trump administration further tested its relationship with China by proposing a new arms sale package for Taiwan.

North Korea should not be make-or-break issue

North Korea’s nuclear and missile challenges pose an enormous risk to security in Asia and beyond. But it should not become the make-or-break issue in the Sino-US relationship. The Trump administration commits a grave mistake by “punishing” China with sanctions for a perceived lack of cooperation or by suggesting that the decision on an arms sale to Taiwan could be traded against Chinese support on North Korea. This transactional approach does not do justice to the strategic issues both countries have to solve together.

The two sides should not get hung up on the stalemate over North Korea, which was partially caused by the Trump administration’s unrealistic expectations of what Beijing can and is willing to do. Beijing could and should have done more on implementing UN sanctions and plugging loopholes in enforcement. But Beijing also complains that its own actions against North Korea have not been appreciated, and that its own security interests are not taken into account. The Chinese proposal of a “dual freeze,” which connects a freeze of North Korean nuclear and missile tests to a cessation of US-South Korean military exercises and the deployment of the THAAD missile defense system, was dismissed by Washington.

Over the North Korea conundrum both sides should not lose sight of the two issues that currently pose the most serious challenges to Sino-US relations and regional peace and stability: Taiwan and the South China Sea.

Growing tensions over Taiwan and South China Sea

The Xi administration is anxious over US Taiwan policy. The Trump administration’s announcement of new arms sale package, together with a Congressional bill allowing US military ships to make port calls in Taiwan has triggered strong protests from Beijing. Ties between Beijing and Taipei have been strained since Tsai Ing-wen of the DPP won Taiwan’s presidential elections in 2016 and refused to endorse the 1992 Consensus that China views as the benchmark for cross-strait relations. China views the US support for the DPP government as a disregard of Chinese sovereignty and fears that it could embolden Taipei’s resistance to Chinese efforts towards re-unification.

The South China Sea poses another near-term challenge in Sino-US relations. Washington has long stayed neutral in the territorial disputes between China and the other five parties in the dispute. But in recent years, Washington has become more critical of Chinese policy and behavior, in particular of the latter’s massive land reclamation. Both the Obama and Trump administrations have authorized Freedom of Navigation Operation (FONOP) patrols either near or within the zone of 12 nautical miles around maritime features controlled by China. The growing frequency of US close-in intelligence gathering and reconnaissance activities on the one hand, and Chinese responses with maritime and aerial intercepts on the other, has led to a number of incidents, in some cases deadly. At the DSD, both sides agreed to abide by and strengthen incident avoidance protocols that had been adopted in 2014, but they remain divided on FONOP and continued US intelligence gathering activities.

The fact that Washington and Beijing recognize the need to engage in the Diplomatic and Security Dialogue, which replaced the Obama-era Strategic and Economic Dialogue, reflects the high level of maturity and institutionalization of their bilateral relationship. These meetings provide the opportunity for an exchange of views among high-ranking officials and for establishing procedures for communication and engagement.

What the dialogues should not be is a bazaar on which strategic priorities are being traded. If the Trump administration attempts to conflate North Korea, Taiwan and the South China Sea – three complex and volatile issues – it risks escalating all three of them at the same time.