China Warns Trump Against Using Taiwan for Leverage on Trade

EghtesadOnline: China warned Donald Trump against using the One-China policy regarding Taiwan as a bargaining chip in trade talks, a swift response that indicates Beijing is losing patience with the U.S. president-elect as he breaks with decades of diplomatic protocol.

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12 December 2016

“Adherence to the One-China policy is the political bedrock for the development of the China-U.S. relationship,” Foreign Ministry spokesman Geng Shuang told reporters in Beijing at a regular briefing on Monday. “If it is compromised or disrupted, the sound and steady growth of the China-U.S. relationship as well as bilateral cooperation in major fields would be out of the question.”

According to Bloomberg, Trump said in an interview broadcast on Sunday that his support for the policy --- which has underpinned U.S. behavior toward Taiwan since the 1970s -- will hinge on cutting a better deal on trade. He has repeated his accusations against China since election day, telling a crowd in Iowa last week that China would soon have to “play by the rules.”

Policy makers in Beijing initially had a more subdued response after Trump departed from diplomatic convention earlier this month and spoke by phone with Taiwan’s president. Now things are getting more serious: the official Xinhua News Agency warned that world peace hinges on close and friendly ties between the U.S. and China.

“For China, there is no balancing of trade and Taiwan,” said Wang Tao, head of China economic research at UBS AG in Hong Kong. “Taiwan is considered the utmost core interest of China, not for bargaining.”

The Shanghai Composite Index sank 2.5 percent on Monday, the yuan fell toward an eight-year low and Chinese government bonds tumbled. Analysts cited Trump’s comments on the One-China policy amonga long list of reasons for the selloff. Taiwan’s benchmark Taiex index slipped 0.5 percent on Monday.

‘Make a Deal’

“I fully understand the One-China policy, but I don’t know why we have to be bound by a One-China policy unless we make a deal with China having to do with other things, including trade,” Trump said in interview with “Fox News Sunday” that was taped on Saturday. “I don’t want China dictating to me,” he added, echoing his comment a week ago on Twitter.

Trump’s 10-minute phone call with President Tsai Ing-wen in early December was the closest a Taiwanese leader has come to getting formal recognition from Washington since the U.S. established ties with the Communist government in Beijing almost four decades ago. Trump threatened during his campaign to brand China a currency manipulator immediately upon taking office, and to slap 45 percent tariffs on its exports to the U.S.

Taiwan’s government must prepare for the future given uncertainty surrounding the 12-nation Trans-Pacific Partnership trade pact, which Trump has pledged to abandon, Taipei-based cable television TVBS cited Tsai as saying on Monday. Eric Huang, director of the International Affairs Department of the island’s opposition party Kuomintang, said that peace in the Taiwan Strait shouldn’t be sacrificed under any circumstance.

The One-China policy is an acknowledgment that Taiwan and China are part of the same China, even if they disagree on what that means. Chinese leaders define Taiwan as a so-called core interest, with the view the island belongs to China and will never be independent.

“We urge the new U.S. Administration and its leadership to fully recognize the sensitivity of the Taiwan question and stick to the One-China policy,” Geng said.

The policy was worked out in the 1970s as President Richard Nixon switched formal diplomatic recognition to Beijing from Taiwan’s Kuomintang government, which fled to the island during a civil war three decades earlier.

At the same time, China has been willing to allow Taiwan almost complete unofficial sovereignty. The U.S. has sold billions of dollars in weapons to the Taiwan government over the years, while China’s own trade with the island has risen steadily.

The Global Times, a party-run newspaper, said in an editorial on Monday the One-China policy “cannot be bought or sold” and indicated that China should consider arming American adversaries if the U.S. supported Taiwanese independence.

“It looks like Trump only knows about business and thinks everything can be assessed with a price tag, and as long as he’s powerful enough, he could use force to buy or sell,” the Global Times said. China should make Trump “hit some snags” to show him it’s not “easy to bully,” it said.

While it emerged that former U.S. Senator Bob Dole, acting as a paid lobbyist for Taiwan’s government, connected Trump’s staff with Taiwanese officials in advance of the call, Trump defended his decision to speak with Tsai. He said he accepted the call, which was made by Tsai. Claims from his own advisers that he was considering the move for weeks were “all wrong,” he said.

“Why should some other nation be able to say I can’t take a call?” Trump said. “It actually would’ve been very disrespectful, to be honest with you, not taking it.”