Issue Brief

Assets and Aid: Leveraging Warming U.S.-China Economic Relations to Strengthen Investment Guidelines, Development Standards, & Corporate Social Responsibility Practices

in Program

As the Trump administration continues to formulate its foreign policies, one clear policy focal point has emerged within the new administration’s priorities – economic and business affairs. Following on Trump’s campaign rhetoric fixated on trade practices and U.S. manufacturing jobs, economics has unsurprisingly been at the top of Trump’s agenda as he establishes relations with world leaders. Trump’s vow to label China a ‘currency manipulator’ during the campaign created an uneasy buildup to the first meeting between the leaders of the two countries in April this year.

However, the Trump-Xi summit at Mar-a-Lago produced relatively positive outcomes despite the lack of any immediately tangible announcements. The two parties did, however, agree to a “100-day-plan” and a restructuring of the Security and Economic Dialogue, which was divided into four separate dialogues (Diplomatic and Security Dialogue, Comprehensive Economic Dialogue, Cyber and Law Enforcement Dialogue, and Social and People-to-people Exchange Dialogue).2 A noticeable warming in relations followed the summit evidenced by the U.S.
administration’s acknowledgement that it would not pursue labeling China as a currency manipulator, a purported increase in coordination around matters related to North Korea’s nuclear program, Trump’s accolades of President Xi Jingping – repeatedly stating that he is ‘a very good man,’ and an overall softening in the tone and treatment of China in official statements.

Initially, few details were given regarding the “100-day-plan” agreed to during the Mar-a-Lago summit, leaving room for skepticism and optimism alike among pundits.

Recently, the State Department issued a progress report on the initial actions in the “100-day-plan.” These included measures to increase access for U.S. beef producers, biotechnology firms, electronic-payments providers, natural-gas suppliers and other U.S. commercial interests to Chinese markets.3 While some remain cautiously optimistic that the actions included in the “100-day-plan” are effective and will be carried forward faithfully, the administration is touting the initial actions as proof of warming ties. Commerce Secretary Wilbur Ross stated during the unveiling of the initial actions that “U.S.-China relationships are now hitting a new high especially in trade.”

Included among the initial actions was a commitment on the part of U.S. officials to attend China’s Belt and Road Forum in May 2017.5 The Forum served as one of China’s biggest and most important diplomatic events of the year. Featuring 30 world leaders, the event ended with the signing of a joint communique which stated, “[w]e reaffirm our shared commitment to build open economy, ensure free and inclusive trade, oppose all forms of protectionism including in the framework of the Belt and Road initiative.”6 While the U.S. was not a signatory to the communique, senior director for Asia at the National Security Council, Matthew Pottinger, was present at the Forum indicating a formal acknowledgement and, perhaps, even support of China’s One Belt, One Road (OBOR) initiative by the U.S.

The Belt Road Forum struck an inclusive tone throughout the ceremonies. President Xi Jingping stating during his remarks, “[i]t is our hope through the Belt and Road development, we will unleash new economic forces for global growth, build new platforms for global development, and rebalance economic globalization so mankind will move closer to a community of common destiny.”8 The global and ambitious nature of Xi’s comments are in direct contrast to Trump’s ‘America first’ rhetoric and domestic-focused policy agenda. However, despite the
differences in agendas, U.S.-China relations are warming and economic affairs are the primary channel though which relations are improving.

The significance of economics and trade in Trump’s foreign policy bears serious consideration for policymakers who will be required to translate general frameworks such as the “100-day-plan” between Xi and Trump into actionable policy. The economic framing of relations will likely present ample opportunities for cooperation as Chinese investments in global development projects rise and U.S. interests become increasingly focused on trade. A ‘trade boom’ could generate an enthusiasm among the U.S. business community to quickly forge ahead with negotiations to gain market access and more favorable trade terms. At the same time, the inward U.S. focus and an uncertain financial future of the U.S. State Department may mean that diplomatic resources will become increasingly concentrated on economic and business affairs. It, therefore, becomes imperative that economic dialogues seek to uphold and strengthen existing investment standards and development practices to avoid shortsighted investment frameworks or trade deals that come at the expense of local peace and security, international labor standards, environmental safeguards or other matters of human security.

In December of 2016, the U.S. State Department released the Responsible Business Conduct: First National Action Plan for the United States of America. The action plan is intended to promote responsible business practices (RBC) by U.S. companies investing overseas. The plan states, “The U.S. government remains committed to playing a leadership role on RBC by working with the business community, civil society, labor and other stakeholders, through a whole-of-government approach to advance RBC principles, and to highlight U.S. companies that stand out as RBC leaders.” The plan goes onto to assert that the U.S. is committed to promoting the highest standards of business practices around the world and at the most senior levels at government-to-government platforms such as the G-7 Summit. This new action plan presents a ready-made guide for the U.S. agencies to advance standards around the world, and warming relations between the U.S. and China present an opportunity to utilize the action plan’s data and guidance.

Click here for the full series “Changing Landscape of Assistance to Conflict-Affected States: Emerging and Traditional Donors and Opportunities for Collaboration.

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