From US-China trade to the Korean peninsula, 2017 could still get messy in Northeast Asia

Although certainly turbulent at home, President Donald Trump’s first 100 days in office were less disruptive with regard to Asia than expected. A summit with Chinese President Xi Jinping in April proceeded relatively smoothly, and threats to designate China a currency manipulator or impose blanket tariffs on its imports were not carried out.

This month, the United States and China announced a trade deal that the White House heralded as ”gigantic” – the first fruits of the 100-day period designated at the summit to work on trade disputes. Talk of reduced US military commitment to Asia gave way to reassurances for allies and, despite a spike in speculation, US pre-emptive strikes on North Korea remain highly unlikely. Some in Beijing even joke that Trump may have the makings of a “responsible stakeholder” — a role the United States urged China to play.

These developments point to the emergence of a relatively undramatic narrative: Trump is fighting other, more-immediate battles, and his campaign threats were just rhetoric, or he has run into the same realities that constrained his predecessors’ options in Asia. Leadership flux and troubling fundamentals still portend regional friction, despite the election of South Korean President Moon Jae-in – a man with a peace vision for the Koreas.

Korean forecast

Trump’s focus on North Korea has been remarkable. Prioritization of this problem is long overdue, but he could hardly have picked a tougher one to tackle, or on which to cooperate with China. Over the past 25 years, every attempt to incentivise a deal with Pyongyang has failed., Proponents of diplomacy have been accused of naivety, yet emphasising sanctions to force abandonment of weapons programs has shown no sign of success. Pyongyang tends to accelerate those programs when diplomacy breaks  down, including  frequent nuclear and missile tests during the past two years.

China may be ready to place unprecedented economic pressure on Pyongyang if it conducts another nuclear test —  a major foreign policy dilemma for Xi. But the chances of North Korean leader Kim Jong-un giving up his weapons program seem close to zero without a deal and process to addresses its security dilemma.

With the North Korean threat more credible every year, Trump’s apparent consideration of direct diplomacy with Kim is sensible despite criticism and being at odds with his more hawkish signals. It coincides with a return to a pro-engagement “sunshine policy” toward the North from South Korea.

Conventional wisdom says hawkish Trump will clash with dovish Moon. However, this is likely to in regard to trade — Trump is unhappy with a US-Korea free trade deal. For the first time in many years both Washington and Seoul are considering  talks with Pyongyang. Trump and Moon have very different instincts and ideas about the balance of pressure and diplomacy.

Greater urgency and leadership in Washington, Beijing, and Seoul offer some hope of an exit – even temporary – from the trajectory of recent years, which was inevitable North Korean progress toward a fully credible nuclear threat, with no serious efforts at diplomacy. Unfortunately, the odds seem stacked heavily against Trump and Kim pulling off a historic peace deal that survives years of tortuous, precarious implementation.

Another 100 days

At their bilateral summit, Trump and Xi agreed a 100-day period ending in July to explore measures to address trade tensions. The deal announced in May will remove a ban on US beef imports, give full market access to electronic payments providers, speed up decisions on several US biotech firms’ product approvals, and allow US credit ratings agencies to provide services in China without joint ventures. The United States also agreed to allow cooked Chinese poultry exports to the United States.

The concessions are significant, and there may be more to follow – the 100-day period runs into July. However, we will certainly not see the kind of fundamental shift in China’s economic and trade model that some in Trump’s team – and at times the president himself – have demanded.
About the author: Control Risks is an independent, global risk consultancy specializing in political, integrity, and security risk. They help some of the most influential organizations in the world to understand and manage the risks and opportunities of operating in complex or hostile environments.