Trump lands in China with focus on trade

US President Donald Trump toured parts of Beijing on Wednesday after arriving for a high-stakes state visit where he’ll look for wins from Xi Jinping on everything from the US’s massive trade deficit to reining in North Korea.

The third leg of Trump’s five-nation Asia tour comes after stops in Tokyo and Seoul. Addressing South Korea’s parliament earlier Wednesday he had strong words for Kim Jong Un — even as he remained open to a potential deal on North Korea’s nuclear weapons. And he called on China, Kim’s main ally and biggest trading partner, to cut him off.

The state visit, which will meld intimate sit-downs with Xi alongside state dinners and gala events joined by dozens of business leaders, is China’s answer to his hosting Xi at his Florida estate, Mar a Lago, earlier this year. The main event is on Thursday, when Trump and Xi are scheduled to hold a bilateral meeting and make joint statements to reporters.

On Wednesday afternoon, Trump and First Lady Melania Trump joined Xi and his wife, Peng Liyuan, for an opera performance and a tour of the Forbidden City — the imperial palace that served as the political center of China’s government for almost 500 years. China’s state-run media said Trump showed Xi video clips of his granddaughter singing in Chinese.

The stop is by far the most important part of Trump’s trip, given that he believes China is central to reining in North Korea. And Trump’s personal brand of diplomacy — based in professions of deep friendship to get what he wants — will be tested by his ability to come away with Chinese promises to halt what he sees as predatory trade practices.

While Trump repeatedly bashed China on the campaign trail for its trade and currency policies, on this trip he has an incentive to cut deals. His approval rating has plunged to an all-time low, while Xi has tightened his grip on power to become China’s strongest leader in decades.

The White House expects to announce upwards of $250 billion in business deals in China this week, an administration official said — exactly the sort of US jobs-based diplomacy that President Donald Trump likes to deliver when traveling abroad.

On Wednesday, Commerce Secretary Wilbur Ross announced deals worth about $9 billion that involving companies like General Electric, Caterpillar and Honeywell International. Few details were released, and Ross said more deals would be unveiled on Thursday.

The deals are expected to focus heavily on the energy sector. One of the biggest deals the Trump administration is currently negotiating is a multibillion-dollar energy investment from Chinese oil and gas giant China Petroleum & Chemical Corp., known as Sinopec, that would bring thousands of new jobs to hurricane-ravaged areas in Texas and the US Virgin Islands. This deal, too, would be a memorandum of understanding.

During a briefing in Japan alongside Prime Minister Shinzo Abe, Trump cited his friendship with Xi, an awkward moment given the rivalry — which sometimes boils over into enmity — between Japan and China.

“I very much look forward to meeting with President Xi who is just off his great political victory,” Trump said in a tweet on Wednesday. “We are coming off some of the strongest numbers we’ve ever had, and he knows that and he respects that,” Trump said. “He’s a friend of mine. We’re friends.”

Keeping that friendship may require tempering some of his previous criticisms of China over North Korea. While Trump left the door open in Seoul to meeting Kim or doing a deal to defuse the nuclear tensions, he also lashed out at the regime in extremely personal terms, especially over its treatment of its citizens. He accused Kim of turning North Korea into “a hell that no person deserves.”

Sarah Huckabee Sanders, the president’s spokeswoman, said Trump intends to make a final determination on whether North Korea is a state sponsor of terrorism at the end of his five-nation Asia tour next week. A US administration official, briefing reporters aboard Air Force One, said Trump is genuinely open to talks with Kim, but sees no evidence of that he would be willing to meet the first condition for talks: putting his nuclear weapons programme on the table, with a strict protocol for verification. 

This official called that position a non-starter for the United States. As for China, a senior State Department official who asked not to be identified discussing the administration’s strategy, said the goal was to persuade leaders to enforce United Nations Security Council resolutions against Pyongyang on a granular level, out in the provinces, where small companies do business with North Korea.

The US has long argued that China holds the key to choking off the regime’s economy. This time the US will ask that China take more concrete steps — such as strict customs enforcement — to ensure curbs on trade are properly enforced, the official said. Without China doing more, the official added, “we’re not going to get to a peaceful solution to this problem.” 

China’s view is it has already done a lot to put the economic screws on Kim, and it is reluctant to push to the point it risks a messy regime collapse on its border -- with the prospect that could bring U.S. troops even closer to its soil.

Business Deals

Trump will arrive with executives from some 40 companies seeking deals in sectors ranging from energy to aviation to financial services. One of the biggest under negotiation would see China Petroleum & Chemical Corp. invest billions of dollars to create thousands of jobs in hurricane-hit areas of Texas and the U.S. Virgin Islands.

The president will be joined by Stephen Miller, a senior policy adviser and Stephen Bannon loyalist who has pushed a far sharper and tougher line on China, and frames the future of geopolitics as a war between the countries. Notably, however, Trump left economic adviser Peter Navarro, another strong China critic, at home.

Last week, Xi told a group of U.S. executives in Beijing -- including Apple Inc. Chief Executive Officer Tim Cook and Facebook Inc. founder Mark Zuckerberg-- that he would “continue issuing a series of measures to further open up.”

Still, Trump walked away from Japan and South Korea with little progress on fixing trade deficits even though he brought up the topic repeatedly. And China will be seeking some quid pro quos, particularly for the U.S. to ease restrictions on selling high-tech goods to the country, and to drop an investigation into intellectual property practices.

The Dealmakers Behind US & CHINA

One president pledging to “make America great again.” Another pushing his “Chinese dream.” Together, Presidents Donald Trump and Xi Jinping oversee about one-third of the world’s economy, a quarter of its trade and two of its most powerful militaries. So whether their negotiating teams move toward cooperation or confrontation has huge consequences.

While it’s impossible to precisely pair up the key players in these vastly different political systems, here’s a look at some of the men shaping decisions:

Economics

American shoppers snap up cheap, Chinese-made widgets while the massive trade surpluses that result are funnelled back into Treasuries. That keeps the yuan weak, US borrowing costs low and ensures that cash registers keep ringing on both sides of the Pacific. Trump wants to reshape the US-Chinese economic relationship.

 

Security

 

Even before Trump’s win, experts have been predicting more confrontation over security in the Asia-Pacific region, where China’s military build-up is challenging US dominance. While disputes over China’s expansive claims in the South China Sea continue to simmer, Trump’s early tenure has been preoccupied with North Korea.