Daily Times

The rise of populist nationalism, of which Trump’s election as the US President is the most vivid example, is changing the contours of global politics. Trump proudly calls himself as a “nationalist” out to make the US great again. Which, not so subtly says, that the US has been short changed both by its leaders at home (before Trump appeared on the scene) and its friends/allies and others abroad. So, there is need to reset its affairs and institutions to weigh the gains and losses of its international dealings — be it trade, security relationships, foreign policy and whatever. In other words, international relations have to be transactional in nature to maximize US gains.

Take the case of China, for instance. The Trump version will go like this: China has dealt underhandedly in trade relations to amass vast US asset reserves through currency manipulation — though this is no longer said loudly now compared to during the presidential campaign — by low manufacturing costs through depressed wages, by keeping Chinese markets restricted/closed through high tariffs, theft of US intellectual property and so on.

In other words, China hasn’t been playing fair and hence the raising of tariffs on Chinese exports to force it into buying more US goods to create a level playing field.

China, of course, doesn’t buy the US narrative and has responded by raising its own tariffs on US exports, determined to engage in a tit-for-tat retaliatory action. However, following a bilateral meeting between Trump and the Chinese President Xi Jinping on the sidelines of the recent G20 summit in Argentina, it looked like that the dreaded escalation of the tariff war between the US and China might be averted, when Trump announced a temporary moratorium on further US tariff rises that were due from the beginning of 2019.

During this period, the two countries might work out their differences, allowing Trump to claim a victory, with China undertaking to buy more US goods and open its markets. China has been undertaking to do this even before the meeting in Argentina but nothing concrete and spectacular has happened for Trump to claim a victory in US-China tariff war. And unless Beijing does that, it would look like that their trade war might not de-escalate any time soon.

Indeed, if anything, the arrest in Canada of Meng Wanzhou, the daughter of Ren Zhengfei, the founder of China’s giant technology company, Huawei, is likely to further complicate US-China relations. Meng is a senior executive of the company. She was arrested in transit at Vancouver airport at US request, allegedly because the company had violated US sanctions against Iran. On her extradition to the US, Meng will face criminal charges.

China has reacted strongly, threatening Canada with “grave consequences”, if it didn’t immediately release Meng. As for the US, where Meng will face criminal charges when extradited, a Chinese foreign ministry statement said, “The actions of the US seriously violated the lawful and legitimate rights of the Chinese citizen, and by their nature were extremely nasty.”

Whether coincidentally or not, Meng was arrested on the same day as the meeting in Argentina between Xi and Trump. It is reported that even though Trump might not have known about Meng’s arrest, his national security advisor, John Bolton, was certainly aware of it.

Indeed, at one time, it seemed like that Huawei might succeed with one or more of the “Five Eyes” countries (so called because they share their intelligence) but now all five have decided against Huawei’s 5G network despite its price competitiveness. They fear that China’s technological penetration into their mobile and internet systems might make their essential utilities as well as security systems vulnerable to Beijing

The question then is: is the US confident that the 90-day truce between Trump and Xi would hold and lead to some sort of breakthrough to avert the trade war between the two countries or is Meng’s arrest part of the larger strategic conflict between them?

From the US perspective, China is a strategic rival seeking to establish its supremacy across the board, whether it is trade, its global Belt and Road Infrastructure project and its leap to technology preeminence in which Huawei is the “point man”, as part of Xi’s China Dream to be a global brand.

Whether or not the arrest of Meng is an isolated event is hard to say. But in the US-China competition, everything is related. And considering China’s sharp reaction to this development, it would seem that Beijing might not regard it as an isolated development. China’s Global Times called it an act of “despicable hooliganism”. It said “having failed to contain Huawei’s outstanding competitiveness in the 5G field [fifth generation mobile technology] through market means; the US took to arresting its very senior executive.”

According to the Beijing News, the “Five Eyes” security alliance of the US, Canada, Australia, New Zealand and Britain were behind the arrest, which was the latest step in a plan to contain Huawei, China’s technology giant.

Indeed, at one time, it seemed like that Huawei might succeed with one or more of the “Five Eyes” countries (so called because they share their intelligence) but now all five have decided against Huawei’s 5G network despite its price competitiveness. They fear that China’s technological penetration into their mobile and internet systems might make their essential utilities as well as security systems vulnerable to Beijing.

Indeed, whether or not Meng’s arrest has such wide-ranging implications, it would, however, seem that it is part of the wider push by the US to contain China’s ambitions, whether it is the South China Sea, trade dispute and to expand its horizon from simply being the factory of the world for cheap consumer goods to technology leader. Where will this confrontation take the world would remain to be seen, but it portends trouble.

The writer is a senior journalist and academic based in Sydney, Australia

Published in Daily Times, December 14^th 2018.