One Small Step For Trump And Kim — One Giant Leap For World Peace.” That’s how the Eurasia Group, a political risk consultancy with offices around the world, described it. Foreign Policy, an elite magazine that focuses on global opinion and global politics, saw it somewhat differently: “One Small Step for a President, One Giant Leap for Pyongyang” was its headline.
What they were reacting to was US president Donald Trump’s decision to meet the North Korean leader Kim Jong-un and then make history by walking across the border with Kim into North Korea on Sunday, 30 June. The two men posed for handshakes before talking for nearly an hour in the demilitarized zone that divides the two Koreas.
And where did those “one small step, one giant leap” comparisons come from? They were inspired by the astronaut Neil Armstrong, who was the commander of the Apollo 11 moon-landing mission in 1969. On 20 July that year, Armstrong became the first person to walk on the moon, and as he did so, he said: “That’s one small step for [a] man, one giant leap for mankind.”
As the world celebrates the 50th anniversary of that extraordinary American achievement, the symbolism and wordplay of Armstrong’s sentence were impossible for many commentators to resist.
But anything Donald Trump can do, Xi Jinping, China’s president, can do better or, at least, earlier. On 20 June, Xi travelled to North Korea, the first trip there by a Chinese president in 14 years. In a front-page editorial in North Korea’s Rodong Sinmun newspaper, Xi restated his support for nuclear talks, saying: “China supports North Korea for maintaining the right direction in resolving the issue of the Korean Peninsula politically.” And if he was worried about the trade war with the USA, Xi didn’t show it. As always, he smiled.
A new binary world
Donald Trump and Xi Jinping, two very different personalities, now dominate international affairs, as was made clear at the June G20 Summit in Japan. Together with other world leaders, Trump and Xi attended, but it was their “extended meeting” and positive remarks about an easing of trade war tensions that overshadowed all the other summit events.
The United States and China are creating a binary world, and this leaves Europe with a difficult choice: who should be its partner?
In his 2011 book On China, former US secretary of state Henry Kissinger writes: “Otto von Bismarck, probably the greatest diplomat of the second half of the nineteenth century, once said that in a world order of five states, it is always desirable to be part of a group of three. Applied to the interplay of three countries, one would therefore think that it is always advisable to be in a group of two.”
The interplay of three countries Kissinger was writing about was between China, the Soviet Union and the USA, and the world order he clearly would have preferred would have been a group of two, China and the USA, working together and against the USSR. Those were the days of the Cold War (1947–91), a period of geopolitical tension between the United States and its allies and the Soviet Union and its allies.
Applying Bismarck and Kissinger’s theory to the interplay of two countries today, three is a crowd, which is a headache for Europe. Trump and Xi represent something new for all those too young to remember the Cold War. Ours is a world that is now being divided into two economic and political blocs. The growing rivalry between the rising superpower and the recognized superpower will affect not just China and the USA but the countries that make up most of the global trade that provides jobs to billions of people.
A looming conflict
In a Financial Times article titled “The looming 100-year US–China conflict”, economic columnist Martin Wolf warned that the American–Chinese rivalry “is the most important geopolitical development of our era”. Wolf added: “Not least, it will increasingly force everybody else to take sides or fight hard for neutrality. But it is not only important. It is dangerous. It risks turning a manageable, albeit vexed, relationship into all-embracing conflict, for no good reason.”
The thing about Cold War II, unlike Cold War I, is that the conflict with China doesn’t have its origins in an ideological debate, but an economic one. Washington has long believed that it has been exploited by Beijing and points to several examples of alleged intellectual property theft. President Trump is pushing back, say his supporters, and this is affecting the supply chains on which almost all other countries depend for production.
So, how should Europe react?
If Hillary Clinton were president of the US, the question would be easy to answer, say those who dream of an America that’s “more like us”. Europe shares more values with the United States than with authoritarian China. But Donald Trump’s “America First” policies are asking big questions, not only of Europe, but also of Canada and Japan. All these countries, and especially trade-reliant Germany, are heavily invested in China, so the choice between Washington and Beijing isn’t really East/West or good/bad. Instead, it’s existential.
Europe divided
If we look north, we can see how disunited Europe is on this issue. The Swedish EU trade commissioner, Cecilia Malmström, is fully committed to multilateralism. She sees China as an economic rival, but not as a political enemy, and she completely rejects Donald Trump’s polices. “The EU is a community based on the rule of law and, as such, treaties and the international order are correspondingly important to us,” she told Der Spiegel. The Danish former NATO secretary general Anders Fogh Rasmussen, however, argues that the transatlantic alliance should work more closely together to challenge Beijing, which he sees as a political and military enemy.
In Brussels, the think tanks are busy rethinking the meaning of “economic sovereignty” in the face of the global realities of power politics. The EU lacks clear direction in this new world order and its founding principles leave it poorly positioned to deal with China and the United States as they try to gain geopolitical advantage by using their economic muscle.
That, by the way, is the view represented in a new joint paper written by the economic think tank Bruegel and the European Council on Foreign Relations. Prominent scholars, including Jean Pisani-Ferry, Jeremy Shapiro and Guntram Wolff, have put together a set of recommendations for the next European Commission, urging Brussels to redefine Europe’s “economic sovereignty” in a time of hard new global facts.
Quote from the paper: “There are many threats to European economic sovereignty, ranging from structural demographic and technological trends to lone-wolf hackers in their parents’ basement revealing state secrets. But two great powers — China and the United States — represent specific and particularly difficult problems for the European Union because of their unique capacities and approaches to the international economic order. The two countries present distinct challenges, but overlap in one important respect: both increasingly link their international economic policies to their geopolitical goals and seek to use economic tools to secure geopolitical advantage.”
Bonds and beans
Financial markets are worried that China might weaponize its holdings of more than $1.1 trillion worth of US treasuries in retaliation for the tariffs the Trump administration has imposed on Chinese imports. According to Reuters, China has the world’s largest stockpile of foreign-exchange reserves, at more than $3 trillion, and much of that is denominated in US dollars gathered through its ongoing trade surplus with the United States since the early 1990s.
Many analysts believe that China has not opted to sell its US bonds because a collapse in their prices would bring down the value of China’s remaining treasury debt, and any damage done to the US economy by such a move would also be felt in China, as America is where nearly one fifth of all Chinese exports go.
You cannot eat bonds, of course, but you can eat beans, soybeans. As part of the trade war, China’s purchases of soybeans from the US fell significantly, which is very bad news for US farmers. And this, in turn, is bad news for President Trump, who gets much of his support from rural voters. But, again, China is stuck between a rock and a hard place. With nearly 100 million metric tons of annual soybean imports on the table, Beijing’s soybean appetite reflects the worrying reality of the country’s food security dilemma.
Different ideologies
Trump’s trade war caught China by surprise because it remains dependent on the US for so many essential technologies, but China is moving from defence to attack and has its own trump card, it believes. At the end of May, Beijing presented its own list of “unreliable” foreign companies and threatened to stop exports of rare earth metals, which are essential for the high-tech industry. China accounts for over 95 per cent of the world’s production of such rare earths as cerium, praseodymium and yttrium.
Speaking at a security forum in Washington in April, Kiron Skinner, director of policy planning at the US Department of State, described the competition with China as “a fight with a really different civilization and a different ideology”. She also said that while the “Cold War constituted … a fight within the Western family”, the coming conflict with China is “the first time that we will have a great power competitor that is not Caucasian”.
Li Zheng, an assistant research fellow at the China Institutes of Contemporary International Relations, responded to Skinner in the China Daily, an English-language daily newspaper owned by the Publicity Department of the Communist Party of China, saying, “Racist remarks are not new in US political and social circles, but before the present administration took office, they did not come from the mouth of US officials.”
The words on both sides are reminiscent of language used during the darkest days of the Cold War.
Following the Trump–Xi agreement at the G20 Summit in Japan in June to restart trade talks, the world now hopes that a trade war truce will lead to peace. But most observers of US politics say that a lot will depend on President Trump’s campaign to be re-elected next year. An agreement with Xi Jinping, which he could sell to voters as the “greatest deal in history”, might be a winner. Or the threat of China as the West’s most dangerous enemy might help Trump even more.