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Trade & Travails

Sieren's China: Good counterattack

China's President Xi Jinping made a credible case for free trade at the World Economic Forum in Davos. Yet, there is nobody who protects his market more rigorously, says DW's Frank Sieren.

Chinese President Xi Jinping should actually thank US President-elect Donald Trump. With his piecemeal reflections about how he can protect the US from the disadvantages of free trade, Trump has let uncertainty loose in the world. Xi decided to use the occasion to position himself as a pioneer of globalization and thus spoke not only to the hearts of people in the West. The same president who just weeks ago had been accused of protectionism and of flooding the Western markets with state-subsidized steel. The same president whose country on whom the EU refuses to grant market economy status.

While Trump is regarded negatively as a champion of total protectionism, Xi is now being considered an advocate for fair globalization. But neither is Xi the Che Guevara of a free global economy, nor is Trump the avenger of those US citizens who have lost out with globalization. Put simply, the two have different interests. Trump will have to see how he can reduce an $800 billion trade deficit and create jobs at home. While Xi has to defend his trade surplus by selling as many goods as possible to the rest of the world. Xi's position is much more in tune with Germany's interests for instance.

China and the US: Differing interests

Frank Sieren Kolumnist Handelsblatt Bestseller Autor China (Frank Sieren)

DW columnist Frank Sieren

We like it when Xi insists that protectionism does not help anybody, that everyone is in the same boat, that nobody could win a trade war and that economic globalization is not responsible for all the refugees, terrorism and poverty in the world. We also like hearing him say that "in a philosophical sense, nothing is perfect in the world," not even free trade, and making calls for constant improvements, with rules that are adhered to. "One should not just retreat to the harbor when encountering a storm, for this will never get us to the other shore of the ocean," he said, speaking of Trump without mentioning his name.

Trump could retort that if a ship risks going under in the storm it makes sense to retreat to the harbor when he makes his first speech as US president on Friday. The world looks different from the perspective of a rising power like China than from that of a declining power such as the US. What links the two is that neither Beijing nor Washington will stop fighting for their countries' interests. They will only make compromises when this makes sense to them. This actually goes without saying and yet it can be forgotten in these crazy times. Many people are doing everything to consider Xi as their new hero and to criticize Trump.

Nobody benefits from a trade war

If it helps China, Xi will eventually position himself against those who are currently applauding him. And of course Trump will make compromises with those who are currently attacking him if this is best for the US. Neither of them are really free in their decision-making. They are caught in a dilemma: China has to connect to the world more if it wants to be successful but does not want to become too dependent on the volatile ups and downs of the world economy. The US has to produce more in its own country without goods becoming more expensive for Americans.

The two presidents have a hard task of finding a balance between these two poles. The second big question is what a compromise could look like. As both men know, a trade war is not a solution. If Trump has threatened to put everything in doubt, including the One-China policy, it's really because he is warming up for trade talks with China. Nothing more. And he has every right to ask to what extent Washington should listen to Beijing when it comes to US dealings with Taiwan. At the same time, it is not surprising that Beijing is threatening to "take off the gloves."

Difficult search for compromises

It is very unlikely that this could lead to a war. The political and economic costs would be too high for China. Donald Trump has also made it clear that he thinks that launching the Second Iraq War was one of the worst decisions in US history, "like throwing stones into a bees' nest." What he has not said, but knows, is that to get into a fight with China would be like provoking a herd of bulls with a red cloth. As of Monday, the new US president's first work day, the phase ought be over and done with, where the one side crows that it has stuck it to the other and insisting that it has the right worldview. The time of painstaking compromises in a multipolar world order will then begin. And neither Donald Trump, nor Xi Jinping, are to be envied for this task!

 

DW's Frank Sieren has lived in Beijing for over 20 years.

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