U.S. President-elect Donald Trump faces a very tall task in Asia: balancing mercantilist campaign pledges with the need to tap the world’s fastest-growing economies.
With America’s “Asia pivot” more punch line than workable policy, Trump must shift from vitriol to seeking opportunities for growth, trade and partnership. President Barack Obama’s look-east gambit got bogged down in security squabbles, territorial spats and internecine Washington politics. Can Trump see it through?
If you’re thinking “fat chance, Trump will never do that,” you’re not alone. His varying pronunciations of “China,” apparent view that Asia is some homogeneous mass of sweatshops, sense that Japan is stealing U.S. jobs the way it did in the 1980s and penchant to trash-talking foreign leaders leave serious room for doubt. Wednesday’s 920-point plunge in the Nikkei said it all.
But let’s go high for the moment. As a businessman, Trump hopefully gets that he must solidify America’s place in the most vibrant region — and do damage control following verbal assaults on allies and foes alike during this election. Here are five Asia priorities for the Trump White House.
Hit China restart button. America can’t wage a trade war with an economy destined to become the biggest, no matter what Trump pledged in his fierce battle with Hillary Clinton. It would devastate growth and troll a government that holds grudges like few others. Beijing, remember, is Washington’s main financier, holding some $1.2 trillion of Treasuries. All big global decisions, after all, run through Beijing. “By far the key problem of U.S.-Asia policy is the poor state of relations with China,” says Temple University’s Jeff Kingston. The answer? “Revive dialogue based on mutual respect” and “across the board, put everything on table and initiate discussions on issues that divide” from trade to financial imbalances to security to human rights.
Rethink TPP framework. Obama’s much-maligned Trans-Pacific Partnership pact with 11 nations is a giant exclamation mark aimed at Chinese President Xi Jinping’s face. Trump promised to kill or renegotiate the TPP. Or he could go the other way and include China. Closer China ties are necessary to stop Xi from allying with Vladimir Putin’s Russia, a devastating prospect. They also could help head off China’s giant Regional Comprehensive Economic Partnership. Trump needs China’s help to rein in North Korea, address predatory trade practices and tame South China Sea tensions.
If Trump really wants to get audacious, be could pull India into the TPP, too. Hopefully, advisers will convince Trump he’ll get more mileage out of working with Beijing than against America’s banker. In that spirit, Trump should join Beijing’s Asian Infrastructure Investment Bank project. Highly unlikely, yes, but worth considering.
Tough love for Tokyo. While Prime Minister Shinzo Abe’s party prefers Republicans in the White House to Democrats, Trump is a very different specimen. Trump should reassure Tokyo that talk of shaking down the place for protection money was just that. He could throw Japan a bone by closing the U.S. Marine base in Futenma, which has turned Okinawans against Tokyo, and recalibrate plans to relocate troops to Henoko.
Washington should stop enabling Abe’s change-adverse government and prod him to implement the pro-growth reforms he promised four years ago. Instead of fresh dynamism, America’s top ally in Asia is exporting deflation and upping the odds of dangerous currency wars. Perhaps Trump can use his business acumen to prod Abe into action.
Engage Southeast Asia. 2016 has seen all too many of the region’s most promising economies unravel or display big cracks. Exhibit A: the Philippines, where in just 132 days President Rodrigo Duterte changed the narrative from economic revival to political chaos amid extrajudicial killings and erratic behavior. Malaysia descended deeper into kleptocracy-state territory amid Prime Minister Najib Razak’s scandals. The death of Thai King Bhumibol Adulyadej coincided with the demise of Bangkok’s democratic spirit. Investment darling Indonesia faces growing Islamization risks. Aung San Suu Kyi is proving to be no match for Myanmar’s military-industrial complex and social fissures. Southeast Asia also is on the front lines of Federal Reserve interest-rate hikes. It’s high time the U.S. paid more attention to the hopes, needs and challenges of a 600 million-plus person region that’s more of a powder keg than Washington realizes.
Hang open-for-business sign. The Asia scapegoating of the 2016 contest made banner headlines. Trump blamed China and Japan for every ill you could possibly name, threatened to leave South Korea to Pyongyang’s clutches, pulled Indonesia into bizarre Obama-isn’t-an-American theories, encouraged governments to develop nuclear weapons and called climate-change effects flooding cities from a Mumbai to Manila a hoax. He needs to hang out a giant open-for-business sign within the first 100 days of his tenure. The more the U.S. demonstrates it values Asia’s increasing economic heft and supports its aspirations, the more access corporate America will have to growing markets.
This column may indeed be an exercise in wishful thinking (some might say complete delusion). As Asia changes before the world’s eyes and booms more than its busts, though, the U.S. can’t afford to antagonize billions of people. Opportunity, as the old Chinese proverb said, knocks at the door only once. Let’s hope Trump seizes it.
Based in Tokyo, William Pesek is executive editor of Barron’s Asia and writes on Asian economics, markets and politics. www.barronsasia.com
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