Trump’s US investment ban aims to cement tough-on-China legacy

The Guardian

Move is latest chapter in deteriorating relationship with Beijing and improvement under Joe Biden is unlikely

Donald Trump

Foreign policy analysts believe Trump wants to leave a tough-on-China legacy while simultaneously conducting a ‘scorched earth’ policy on his way out of the White House. Photograph: Saul Loeb/AFP/Getty Images

Helen Davidson in Taipei @heldavidson Mon 23 Nov 2020 10.52 GMT

Donald Trump has banned US investment in a further 89 Chinese companies, and reportedly sent a navy admiral to Taiwan, as he seeks to secure a tough-on-China foreign policy legacy.

Multiple media outlets have reported plans by the Trump administration for a series of confrontations with China before Biden’s inauguration on 20 January, and the moves were largely expected. Foreign policy and political analysts believe Trump wants to leave a legacy of being tough on China, while simultaneously conducting a “scorched earth” policy on his way out of the White House.

The arrival of the two-star admiral, whom Reuters described as overseeing US military intelligence in the Asia-Pacific region, has not been formally confirmed by either government. But it drew immediate (albeit undefined) threats of retaliation from Beijing, which considers Taiwan to be the most sensitive issue in China-US relations.

The US building ties with Taiwan was one factor in the historic deterioration of the US-China relationship during Trump’s term. It has left any return to a policy of engagement unlikely. Joe Biden is not expected to drastically change the course of Washington’s policy on Beijing, but he will have to deal with the final diplomatic landmines left by Trump.

Until Biden is inaugurated, Trump retains the full powers of the presidency, even if his influence in domestic and international politics has diminished.

Other predicted actions from Trump include anti-exploitation protections for US technology, expanding sanctions on Chinese entities and individuals linked to crackdowns and human rights abuses in Hong Kong and Xinjiang, and further crackdowns on illegal fishing.

The US government said last month the US Coast Guard would deploy fast-response vessels to the Indo-Pacific region and seek to expand bilateral enforcement agreements to counter China’s $23bn illegal fishing industry.

He has already issued one executive order banning US investment in companies owned or controlled by the Chinese military. On Monday, 89 companies were added to the list. David Dollar, senior fellow at the Brookings Institution, said the order was largely symbolic, but Trump could take other “highly risky” measures that “a responsible policy-maker would not even consider”, such as cutting off big Chinese banks from the US dollar system.

“I think Trump is [now] shoring up a legacy of having decisively shifted Washington’s policy towards China,” said Natasha Kassam, a research fellow at the Lowy Institute. “Trump likely also sees it in his interest to not allow an incoming democratic administration to soften those positions. I’m not sure if he’s leaving diplomatic landmines or tying [Biden’s] hands.”

Relations deteriorated sharply under Trump’s hardline megaphone diplomacy and China’s regional belligerence and aggression, with spats over trade, visas for journalists and diplomats, the coronavirus, Xinjiang, and Hong Kong. After initially praising Xi and his Uighur detention camps, Trump quickly pivoted to a narrative of anti-China rhetoric, including labelling Covid-19 the “China virus” when the US lost control of its epidemic. His administration has imposed sanctions on Beijing and Hong Kong authorities.

Donald Trump shakes hands with China’s President Xi Jinping during the G20 leaders’ summit in Osaka, Japan, in June 2019

Donald Trump shakes hands with China’s President Xi Jinping during the G20 leaders’ summit in Osaka, Japan, in June 2019. Photograph: Kevin Lamarque/Reuters

Last month, the secretary of state, Mike Pompeo, declared China’s claims in the disputed South China Sea “illegal”, and the US military has increased activity in the region, fuelling tensions with China over the area and relations with Taiwan. The US has sold billions of dollars in arms to Taiwan while strengthening ties with its government, which remains under threat of invasion. Beijing considers Taiwan to be a part of China it will retake by force if necessary.

A US state department policy document last week said the Trump administration had made “a fundamental break with the conventional wisdom” in approaching Beijing.

Kassam said much of the US’s China policy in the past four years had been “scattergun”, and this had benefited places such as Taiwan, but at no point had there been “a coherent vision for what role the US sees Taiwan having in the region”.

Nevertheless, it has bolstered regional support for Trump as an ally against Beijing aggression, and fed fears that Biden will return to Obama-era engagement – a prospect many analysts say is remote.

John Ullyot, the National Security Council spokesman, told media last week it would be “political suicide” for future US presidents to overturn Trump’s actions unless Beijing reversed its current trajectory “and becomes a responsible player on the global stage”.

Biden is highly experienced in foreign policy, working for decades under US policies of engagement and cooperation with China. But his position has significantly shifted as the US and its allies have come up against Xi’s increasing belligerence. He has pledged to take a tough stand on human rights and military aggression, and publicly criticised Xi during the campaign. The 2020 Democratic party platform pledged pushback on China “where we have profound economic, security, and human rights concerns”.

Biden is historically in favour of multilateral solutions and is considered far more capable than Trump of building global alliances to address the China issue. Joseph Nye, political scientist and former dean of Harvard University’s Kennedy School of Government, said Biden would also be tough, “but with a different tone and more predictable” than Trump.

But undoing any of what Chinese state media termed Trump’s “final madness”, by overriding his executive orders, could come at a domestic political cost.

“Reversing a China-related executive order could be framed (however disingenuously) as helping US companies build up China’s military,” said Dr Frances Brown, a senior fellow at Carnegie Endowment for International Peace, characterising the executive orders as part of a “scorched earth” strategy by the Trump team.

“They want to make it as hard as possible for the Biden administration to pursue their own policy agenda and to undo Trump-era initiatives,” she said.

Cheng Dawei, a professor at Renmin University’s school of economics in Beijing, said any further sanctions from Trump would be perceived in China as of a “personal purpose” that could be reversed by Biden.

Cheng said tensions would remain high, but “the way cards are played will change”.

Additional reporting by Lillian Yang

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