New US-China-Taiwan Relations: A Rebalance or a Reshuffle?

Mike Pence: China has an honored place in our vision of a free and open Indo-Pacific if it chooses to respect its neighbors’ sovereignty; embrace free, fair, and reciprocal trade; uphold human rights and freedom. The American people want nothing more; the Chinese people and the entire Indo-Pacific deserve nothing less.

Narration: Pence lashed out on China again at APEC. What will the Trump-Xi meeting at the G-20 summit look like?

Stephen Yates: The simplest prediction is that there will be very little outcome.

Narration: Forty-six years ago, the United States severed diplomatic ties with Taiwan for China. In hindsight, was that a good policy?

Stephen Yates: There’s no question that we ignored and devalued the political progress and political rights of the people of Taiwan in pursuit of a hopeful or optimistic approach towards dealing with China.

Simone Gao: So do you think the U.S.-Taiwan relationship will undergo fundamental changes under President Trump?

Stephen Yates: I do.

Title: New U.S.-China-Taiwan Relations: A Rebalance or a Reshuffle?

Simone Gao: Welcome to Zooming In, this is Simone Gao. Every new administration does balancing of foreign relations of some sort. The U.S.-China relations have been fine-tuned for decades from the Nixon era to the Obama era. Now that fine-tuning is disrupted by the Trump administration. President Trump calls for Americans to wake up from decades-long wishful thinking about China. Will there be a reshuffle of the most important bilateral relationship in the world under Trump? How will that affect Taiwan, communist China’s rival, and an extremely important ally of America and a friend, who felt betrayed but never left? I discussed these questions with Mr. Stephen Yates, who served as Deputy National Security Adviser to Vice President Dick Cheney and Idaho Republican Party Chair. Mr. Yates is the CEO of consulting firm DC International Advisory, and he spent years of his life in Taiwan.

Part One: G-20 Summit Not Promising

Narration: The Asia-Pacific Economic Cooperation, or APEC, was held in Papua New Guinea over the weekend. This year, they didn’t reach an agreement because China and the U.S. disagreed with each other. It is reported that four Chinese officials barged into the office of the host country’s foreign minister uninvited. They demanded changes in the official communiqué. The demand was rejected and Chinese officials voluntarily left after security officers were summoned. China dismissed the account as “rumors.”

Narration: Prior to the supposed conflict, Vice President Mike Pence openly criticized China once again. It comes after he declared an official China policy overhaul last month.

Mike Pence: And let me be clear again: China has an honored place in our vision of a free and open Indo-Pacific if it chooses to respect its neighbors’ sovereignty; embrace free, fair, and reciprocal trade; uphold human rights and freedom.  The American people want nothing more; the Chinese people and the entire Indo-Pacific deserve nothing less.

Narration: Chinese President Xi Jinping rebutted Mr. Pence’s account by pointing at the U.S. as the one installing isolationist and protectionist trade policies.

Xi Jinping: Resorting to old practices such as protectionism and unilateralism will not resolve problems. On the contrary, they can only add uncertainties to the global economy. Only openness and cooperation can bring more opportunities and create more space for development. This is a well proven historical fact. One who chooses to close his door will only cut himself off from the rest of the world and lose his direction.

Narration: China is the third-largest donor to countries in this region. The U.S. comes fourth but is catching up. Mr. Pence announced the United States’s pledge to join Australia and Japan in helping to bring electricity to 70 percent of Papua New Guinea by 2030. The United States will also partner with Papua New Guinea and Australia on their joint initiative at Lombrum Naval Base on Manus Island. This move has strategic importance since the base is big enough to hold large naval vessels and task groups, according to the New York Times.

Simone Gao: So America and China were not on good terms at the APEC meeting. It was almost like Mike Pence went there and disrupted a good show Xi Jinping was trying to put on, considering Beijing financed roads and a $50 million renovation of a convention center in the host city. This APEC summit probably would have served as a PR instrument to Beijing more than anything else. The real show is G-20 in December, where Xi Jinping and Trump will meet. How will that meeting be like? Here is my earlier discussion with Mr. Stephen Yates.

Simone Gao: U.S.-China relations. The G-20 is coming up. So what do you think will be the outcome of the Trump-Xi summit?

Stephen Yates: Well, my experience tells me that expectations should be very low. Usually when leaders get together they exchange talking points, they have some sense of what each is seeking, and the simplest prediction is that there will be very little outcome. And most of our leadership meetings are like that. Occasionally it’s different. You end up with something like Nixon going to China or having a big fundamental change in American policy. I don’t think this kind of meeting is a big fundamental change. President Trump has just gone through a midterm election; President Xi is under what we perceive to be strong economic and political pressure inside China. I don’t think either leader is looking to make big concessions in this meeting. That’s an important time to have a conversation between the two leaders. I don’t believe that President Trump feels the need or the desire to fundamentally change his trade policy. I think he intends to keep very strong pressure on China economically, at least through his reelection campaign, and maybe even beyond. These are beliefs about economic policy and the impact that U.S. trade policy has had on American workers that he has articulated for several decades. This is part of his political theology almost. And so I don’t expect him to make a significant change and concede. What I’m hearing from the Chinese side, they send envoys to the United States almost sounding boastful that they’re actually in a strong position, from their point of view. And so, so far, on the U.S. side, what I understand, and actually agree with, on the Trump administration approach on economic policy towards China, I don’t see that changing. And then what I see from China is more of the same theater of saying we’re strong, we are displacing the United States as the economic leader of the world, you are becoming isolationist because of your protectionist policies. And we have two leaders talking past each other. That’s what I think the G20 meeting is likely to be like. That President Trump will restate his priorities. He will speak in terms that say he’s open to a deal, but it’s a deal that President Xi is not prepared to accept in my estimation right now. And so the back-and-forth, the tensions, the on-again, off-again negotiations are likely to go on for at least the next two years.

Simone Gao: Then what’s the purpose of this meeting after all. I mean it’s speculated that Xi Jinping initiated the request to meet, right?

Stephen Yates: Yeah. Well, it is part of a pattern that, when major leaders go to these multilateral gatherings, and we know President Trump doesn’t like multilateral gatherings, that they’ll have bilateral meetings with key counterparts. Even to American stakeholders, say, like investors in Wall Street and farmers and manufacturers around the United States, they’re feeling some of the effects of the trade tension. And so it’s reassuring to them to see our leader engage the Chinese leader even if they’re not making concessions or accommodations or reaching a new deal. If there was no conversation going on, that could create a degree of uncertainty among some of these economic and political actors that would be a problem for U.S. politics and U.S. policy. And so even though this is somewhat theater, I think that that theater has an important impact on some key American stakeholders. I expect that President Xi Jinping has similar needs inside China to be seen engaging the U.S. president even if there isn’t a clear, definable outcome to come home and say this is what I got from the meeting. So that’s what I assume the purpose of this meeting is. But I would put it at extremely low chances of a significant policy development coming out of the meeting, even if something is announced, it’s probably a symbolic announcement more than a major breakthrough or measurable change in the economic relationship.

Simone Gao: But the difference between the U.S. and China is, China cannot afford a prolonged trade war, the U.S. can.

Stephen Yates: I believe that to be true. But as unimportant as I am, I believe that President Trump believes that to be true. And, while there are many analytical fights among China experts and economic experts about who’s winning, who’s losing, who’s facing what kinds of risks and pressures in this, the dominant analysis that the President of the United States accepts is that there’s more pressure on China, it’s having a more negative effect on China’s economy than on the American economy, and there are large numbers of American voters and workers who feel like decades of U.S. policy towards China has unfairly disadvantaged them. So even if they’re paying a price in the short term, a lot of them say that they’re willing to accept that price if it results in a rebalancing of the U.S.-China economic relationship towards something more normal, more fair, more reciprocal. And those are the words that the Trump administration has been using. And those are ideals that a large number of Americans would agree with. The key test is: do we go through this period of risk and tension and get better results. And so far, it’s too soon to say. But I support the direction the policy is going. I don’t think the president is going to change it. And when the president looks at his 2020 reelection campaign, those states that are very key for him to keep in his coalition to get reelected are the states where labor movements and other activist groups were very critical of NAFTA and of U.S.-China trade. And so what he’s done on trade negotiations so far is very much aimed at those geographies, and I think he has to keep consistent with his policies.

Simone Gao: So that makes me wonder what Xi Jinping’s thinking is even more. If President Trump won’t make concessions and China can’t afford a prolonged trade war. What is Xi Jinping gonna do?

Stephen Yates: Well, I would say, somewhat candidly, I don’t care what he does because it’s his job to figure that out. The biggest obstacle, though, for American policy, and I think for the benefit of the Chinese people, is how effective are we in helping the Chinese people know the truth about the economic impact this has? Because the Communist party still has near total control on information. They can make up their own statistics; they can make up their own leadership statements; and they can say that they are doing better off than they are. And there could be a large number of Chinese people that think, well, maybe I’m the only one feeling this pain. Or my village is the only one feeling this pain, but the rest of China is doing okay. And out of a sense of patriotism, they’re willing to sacrifice in their own small universe if bigger China is doing better. And that kind of propaganda has protected Communist Party leaders for a very, very long time.

Narration: Coming up: Has the U.S. started a new cold war with China?

Part Two: A New Cold War?

Mike Pence: I come before you today because the American people deserve to know that, as we speak, Beijing is employing a whole-of-government approach, using political, economic, and military tools, as well as propaganda, to advance its influence and benefit its interests in the United States. China is also applying this power in more proactive ways than ever before, to exert influence and interfere in the domestic policy and politics of this country. Under President Trump’s leadership, the United States has taken decisive action to respond to China with American action, applying the principles and the policies long advocated in these halls….

Simone Gao: That was a scorching speech made by Vice President Pence on China about a month ago. Is it a declaration of a new cold war? This is what Stephen Yates has to say.

Simone Gao: Talking about Vice President Pence’s speech, people say that it seems like a declaration of a new cold war with China. What do you think?

Stephen Yates: Well, I served in the White House when 9/11 happened and the so-called “war on terror” began. And one way that was talked about that resonated with me was that we didn’t declare war on the terrorists, the terrorists had declared war on us. And it took until 9/11 for us to decide that we were going to systematically respond. And that’s how I think about the China challenge. We are not declaring a cold war on China; China has engaged in a cold war against us for a very long time.

Simone Gao: Since when?

Stephen Yates: Well, maybe since the founding of the Communist Party. And maybe that never stopped. And at the very least, going through even the reform and opening period of Deng Xiaoping, there were many things that are, to put it in President Trump parlance, China-first policies that were nationalist, aggressively seeking advantage, and there isn’t necessarily something inherently wrong with that. There’s something inherently wrong with failing to recognize that that’s what they’re doing and meeting the challenge. And so when you look from the 1990s, especially forward, when we started to have campaign finance scandals of Chinese business people and others trying to buy influence in our political system, all the way through recent decades, where you have Chinese business people going into companies and conspicuously being able to walk away with financial or technological intellectual property to the point where there’s competition or crippling of those companies, we’re just at a fundamentally different place now than we were. And it’s my estimation that it’s been a part of a very systematic and cognizant policy of the Communist Party to engage America in this way and basically benefit from our strengths with the hope of bringing some of those strengths to China, which seems fair enough, but at the same time to find ways to cripple us from within. And that’s the part which I think people are just beginning to talk about and have more of an awareness of. In my experience, there have been many Democrats who have had these kind of concerns. I remember in the 1990s engaging in China policy debates with committees in Congress and members of Congress, and there were Democrats that were very vocal about their concerns on these ideas. And so we’re at the beginning of a conversation of—not just what an American response would be—in the Trump administration, in the new Congress, but also in Europe and in broader parts of Asia about how do we organize and strengthen relatively free societies against this kind of aggression. And it’s not an easy question to answer. So I think that cold war was declared by China in engaging in these policies, and we’re just now beginning to talk about how to respond, which is not the same thing as actually responding.

Simone Gao: So you are essentially saying the United States did not start a new cold war with China. The Chinese communist regime has been in a cold war with the U.S. ever since they took power. And only now the U.S. starts to realize it and respond to it.

Stephen Yates: Right. The fundamental assumption of the Nixon-Kissinger compromise with the People’s Republic of China was that the United States could look past the absolute brutality of the Great Proletarian Cultural Revolution and look past the very obvious self-inflicted poverty that the Great Leap Forward and other terrible policies of the Communist Party had imposed upon China. We could ignore these weaknesses and flaws because the value of having China balance against the Soviet Union in some fashion in the Cold War competition exceeded what benefit we thought we could get by confronting these truths about where China was. So we allowed ourselves to suspend disbelief about the nature and health of the Chinese system in order to have geopolitical advantage in the world against the Soviet Union. By the time the competition with the Soviet Union fundamentally changed, we were so accustomed to this suspension of disbelief that we just continue with these assumptions. And then the assumption becomes, well, if we just allow China to become more well off and more integrated with the world, that that improvement in standards of living, in integration into the international system, will change the nature of the policy of the Communist Party of China. And it will be communist only in name only, and the nature of the government and the party will be one where our differences will become fewer, and areas of cooperation will expand. And we can normalize what China is like and what the relationship between the U.S. and China is. That’s been the theory. And it’s been the dominant theory in our universities and in our government and in Republican and Democrat administrations. We’re just at the first time that someone’s been willing, in a leadership level, to say I don’t believe that anymore and to start taking a different approach to how to negotiate with a country that doesn’t resemble this image that has been accepted for far too long. So I think it’s actually a very historic and important moment for us. It’s unclear whether we will stick to this different approach or whether we have pressures in Congress and in the reelection campaign and, if some other leader is elected, will they continue some elements of the Trump approach towards China? Or they go back to the mainstream, more accommodating view. And that is something that only two or three more election cycles can answer.

Narration: Coming up: Will there be a fundamental change in the U.S.-Taiwan relationship under President Trump?

Part Three: New U.S.-Taiwan Relations Under Trump?

Narration: At the APEC meeting, U.S. Vice President Mike Pence met with Morris Chang, who is leading Taiwan’s delegation at the summit. APEC is the only major regional forum that includes Taiwan as a member. However, Taiwan has never been able to be represented by its president at the annual gathering due to opposition by China.

Narration: According to Taiwanese media, the Pence-Chang meeting is the highest level interaction between the United States and Taiwan at the APEC summit.

Narration: Meanwhile, Pence did not have a sit-down meeting with Chinese President Xi Jinping.

Simone Gao: This is probably another blow to Xi Jinping at the APEC meeting since Beijing is super sensitive as to who is meeting the Taiwanese at an international stage. The Pence-Chang meeting is everywhere in Taiwanese media. But does Taiwan feel truly secure with this administration?

Simone Gao: Forty-six years ago, the U.S. severed diplomatic ties with Taiwan for China. That left the Taiwanese people feeling that Taiwan is just a piece of commodity to the U.S. It can be sold for a higher profit at any time. Do you think that could be the case again with this administration?

Stephen Yates: Well, I get this question all the time in Taiwan. There’s a massive anxiety about being treated like a bargaining chip. And no one wants to feel like they’re just that simple chip. They are a nation, a proud people, a democracy, a significant economy, very well educated, integrated with the world in many, many ways, and they want to be treated with respect, dignity, and all those other things that people naturally want. So they’re doing everything that is—that they’re supposed to, and yet still feel at risk of being sold out. And so that anxiety is very, very real and pronounced in Taiwan. And, unfortunately, Taiwan has, in fact, been used as a bargaining chip. The people of Taiwan had no vote over whether they should stay in the U.N. or, as Chiang Kai-shek’s government decided out of protest, to withdraw from the U.N. when the PRC finally won the general assembly votes to enter in. They didn’t have a say in whether to advocate a one China, one Taiwan policy, which the United States was probably prepared to accept in the early 1970s. They instead were governed by a dictator that said no, there is a “one China” policy, and the Republic of China is that one China, and we will not concede, and we will retake the motherland. That was, of course, crazy talk. But the people of Taiwan have been sold out in a number of different ways. More establishment or traditional foreign policy experts have come up with nice phrases to try to make this sound okay, but there’s no question that we ignored and devalued the political progress and political rights of the people of Taiwan in pursuit of a hopeful or optimistic approach towards dealing with China. And so I am much more critical of the approach that has been taken, much more critical of what I see as establishment foreign policy thinking on this, and the people of Taiwan are not wrong to have that anxiety. It is clearly possible that this administration or any administration could reach yet another deal with China that would be to Taiwan’s disadvantage. That’s possible. I don’t think it’s as likely just because President Trump thinks differently than most American presidents ever do. And he—there’s some debate about what it means to be a nationalist, but one thing for sure is, if he’s making unnecessary accommodations on Taiwan to try to get a deal with China, that’s weakness. And President Trump hates to appear weak. And so there are some elements of his natural approach to policy that should be reassuring, that he’s not someone that is going to be happy with or rush into making unnecessary concessions. And I think a lot of the concessions that American policymakers have given on cross-strait issues or dealing with Taiwan generally, have been out of unnecessary weakness on the American side. So this whole idea that we can’t allow leaders of Taiwan to freely visit the United States, it’s a profoundly un-American policy. It’s also one that we have not followed consistently with other countries with whom we don’t have diplomatic relations. And Taiwan now is the only democratic society on the planet that we don’t allow leaders to come freely to our country and engage our people. So I don’t think that President Trump is as likely to be susceptible to that temptation to make those concessions as other leaders have. He’s not interested in new world wars, major power conflicts. One of the reasons he built a coalition to get elected president was to pull back somewhat from a perceived overextension of American engagement in conflicts. He was a critic of the war in Iraq and somewhat a critic of the war in Afghanistan, which still goes on. And so he would be susceptible to the notion that, well, if you engage in these policies, it increases the risk of conflict, but I think that to his core he believes in peace through strength and that the best deterrence against some kind of a conflict with China is the reality, but at the very least, a perception that he’s just crazy enough to fight and that America is stronger than it’s ever been. And that, I think, is the narrative that he would like to go into negotiations with. And until that changes, Taiwan is relatively in a safe space in terms of being a victim or a bargaining chip in that kind of back and forth. But the great game for President Trump very much focuses on rebalancing, recalibrating the U.S.-China relationship on security, economic, and other areas. And if that rebalancing occurs, I think he genuinely is open to a businesslike, friendly relationship with China, not necessarily the Communist Party, but with China and the Chinese people. So it’s not an anti-China policy. And I think he believes that. So whether I’m wrong in my faith and the Taiwan people are right about their anxiety, we’ll have to see. But for now, I think it’s very low risk of the American position towards Taiwan getting weaker. I think there’s a very high likelihood of it getting stronger.

Simone Gao: And you think this is an opportunity for Taiwan.

Stephen Yates: It is. You know, I have some sympathy for the people of Taiwan. I spent a lot—a part of my life coming and going to Taiwan. These are people who endured many decades of colonization and a dictatorship, martial law, and then through all of that, even with diplomatic isolation, still emerged with a very competitive vibrant democracy, successful economy, a good, well-meaning people who seem to have world-class food that is there to welcome any guest at any time. Clear, positive value to add to the world and its neighbors. And so I think that it’s incredibly important to not just do them a favor, but honor our own values by making sure that we’re not imposing pain and restrictions on people who have chosen this good path in so many other ways. I also think it’s a very important example to all Chinese people that they at some point, in their own way, if the people in Taiwan can outlive a Leninist dictatorship and martial law and organize themselves to make their national leaders have to submit to their will, well then the people in Jiangsu province can too. Guangdong province can too. And other areas of China can too, and should. And so to me that’s the other reason to make sure that the U.S. leadership and our policy reflects the value of what has happened in Taiwan.

Simone Gao: Have they? I was gonna ask you this. Has the U.S. leadership reevaluated their Taiwan policies, especially the one from 46 years ago and see if that was a good decision after all?

Stephen Yates: There has not been a systemic questioning or review of that, at least to my satisfaction. And there are a handful or more other experts on China that are around Washington and around the United States that have been in and out of government the way I have. And we all basically see a significant weakness in the concessions made from the Nixon-Kissinger consensus to the present. And we have felt the power of the criticisms of the Communist Party against what we do in our careers, against our ability to travel freely, and from the business community in the United States feeling as though it has to accommodate the Communist Party’s point of view if they want their businesses to be able to enjoy the benefits of this rapidly growing economy over the last several decades. And so we are a minority view. But I think that President Trump is the first opportunity to have a president that is open to practicing true realism. And true realism means seeing power and weakness for what it is. And if you truly believe in advancing your national interests and are engaged in a global competition to try to create as much advantage for your own people as you can—and I think that’s what President Trump’s policy is fundamentally—then we have an opportunity to break away from some elements of that. But you will know that that policy has finally been subjected to review when we stop using the words “one China.” Because the words “one China” is a form of communist manipulation and control. If they’re able to control the words that we use for our own policy, a policy that makes no sense in the English language, then they’re able to control our thoughts and our options and our actions. And for 50 years the Communist Party of China has been able to control American leaders’ thoughts, options, and actions with regard to dealing with China. And President Trump has not escaped that entirely, but he’s the first American leader in a generation plus to show some signs of looking in that direction and trying. And so whether it was President Trump or any other elected leader of the United States that proves an openness and a willingness to do that, I want to support that.

Simone Gao: So do you think the U.S.-Taiwan relationship will undergo fundamental changes under President Trump?

Stephen Yates: I do. I think there’s elements of that relationship that will become more normalized, whether there is a formal diplomatic recognition is an interesting question. I think that is possible, but perhaps unlikely. But much more normalization of the defense relationship with Taiwan. Fundamentally, the Trump administration seems to believe that allies and security partners that have more independent deterrent capability of their own is a greater and more effective challenge to Chinese aggression. And so whether it’s Japan, Taiwan, other partners having greater independent deterrent capability is seen as positive. And that will feed into more of a normalized defense or security relationship with Taiwan, I believe. And you hear words along these lines coming from the current defense department. It could, and it should, lead to more normalized trade and investment relations. For far too long we’ve sort of said, well, we can’t have a bilateral investment treaty with Taiwan because the word “treaty” implies statehood, and these are the verbal games that the “one China” policy has been able to control the thoughts, minds, and options of American decision-makers. When they sort of sober up and wake up and they realize, oh, we can engage in a legal agreement with whatever entity we want to, and China has no control over that, then we can say, you know what, there’s opportunity for America and opportunity for Taiwan to engage in a new trade and investment relationship. And if we set high standards in that, it will help America’s negotiations with other partners in Asia and elsewhere. And so there’s an opportunity there. But it will take two to tango, as they say. It’ll take some innovation and boldness on the Taiwan leadership’s part, and it will take a willingness and an openness from the U.S. government. I think that the most important parts of the U.S. government are open to this now. So really it’s—the opportunity is there, and when Taiwan emerges from its political competition at home, maybe there will be some proposals that will be evidence of this trend being manifest.

Simone Gao: Nov. 24, is a big election day in Taiwan. The Taiwanese people will elect almost every level of their local government. It will be a democratic display for the world as well. Just as Mr. Yates puts it, decades of colonization, dictatorship, martial law, with diplomatic isolation up until now, have not deterred the pursuit of democracy in Taiwan. Taiwan is a touchstone for whether the Chinese people are capable of democracy after all. And that judgment is as essential to the Mainland Chinese people as it is to the rest of the world. Thanks for watching Zooming In, I’m Simone Gao. See you next week.