China’s Vice-Premier Liu He and United States Treasury Secretary Steve Mnuchin were properly grim-faced when they were pictured on Wednesday sitting on opposite sides of a long negotiating table in Shanghai’s Xijiao Conference Center.

This, after all, was the first formal resumption of trade talks since negotiations collapsed nearly three months ago.

Both sides accused the other of a breach of faith, so the small but important objective of the Shanghai meeting was to see if Liu and Mnuchin could stay in the same room without coming to blows, and have a reasonably civilized conversation.

That seems to have been accomplished, and there is now the prospect of a new round of face-to-face talks starting in September aimed at producing a new framework for Sino-American trade.

Except, Donald Trump is clearly unhappy that Beijing has not yet started buying large amounts of agricultural products, as apparently promised, and which the American leader hopes will cut the trade imbalance.

In a Tweet on Thursday Trump said: “The U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25%.” 

Military friction

This move tends to clarify even further that both sides see the trade wrangle as only one theater in a titanic contest for supremacy between the world’s established superpower and its challenger.

What deserves more attention as this contest builds is the number of military friction points that are emerging. None is immediately dangerous at the moment, though some of the rhetoric is increasingly bloodcurdling, but as the number multiplies so do the prospects for misjudgment or confrontation building into conflict. 

Since he came to power at the beginning of 2017, Trump has held up the US relationship with China as the prime example of everything he says has gone wrong and been misplayed by America in the last few decades. He points to the flight of US manufacturing industries and jobs to China – all done by American industrialists, of course – and the resulting huge imbalance in bilateral trade.

There is evidence, though, that Trump and those around him have always seen the trade tussle as a proxy for the wider contest.

Early in June, Robert Spalding, a retired Air Force general who is now a senior fellow at the Hudson Institute, but who was a central figure in the development of Trump’s national security strategy, gave an illuminating newspaper interview.

Asked why the US is in a trade war with China, Spalding replied: “It’s really not about trade. It’s really about what kind of world we want to live in. When you look at everything, the full scope of everything that China does, it mixes its own brand of expansive influence into its economics. And so, it’s not only the goods that we receive here, it’s the principles too.” 

Spalding went on to say that what is at stake in the contest with China is American freedoms and the values on which the country was founded. More than that, the influence of the Chinese Communist Party (CCP) on global affairs undermines the values that have been built into international institutions under US leadership.

Political reform?

Spalding’s thoughts are echoed throughout the Trump administration and even more widely in the US. The dream that economic development in the People’s Republic of China would make Beijing into a reliable “stakeholder,” and foster political reform, achieved its zenith when, backed by former President Bill Clinton, China joined the World Trade Organization on December 11, 2001.

Since then the reality has slowly dawned that the CCP has no intention of pursuing political reform, nor of adopting western practices – such as full respect for intellectual property, or the rule of law – that might undermine the party’s supremacy.

Since the early 1990s, the CCP has been pursuing military, economic, political and diplomatic power and influence. For most of that time it has followed the 24-character dictum former paramount leader Deng Xiaoping issued in 1990 in the heat of international revulsion at the Tiananmen Square Massacre the year before.

“Observe calmly; secure our position; cope with affairs calmly; hide our capacities and bide our time; be good at maintaining a low profile; and never claim leadership,” Deng wrote.

For the most part, successor leaders until Xi Jinping came to power in 2012 have followed that “hide and bide” strategy.

But Xi decided it was time for the PRC to stop pretending it has no ambitions. His multi-trillion-dollar Belt and Road Initiative is an economic and political scheme of imperial proportions aimed at making the PRC the hub of an indispensable global network.

Similarly, Beijing’s massive investment in military development and reform since the early 1990s at first made little mark. Beijing’s claim to own the South China Sea right down to Indonesian waters, 1,500 kilometers from the China coast, was slightly amusing.

Maritime trade routes

Then dredgers appeared off seven shoals. Within months Beijing had seven fortified islands dotted across the South China Sea and had achieved military control over one of the world’s most important maritime trade routes without a shot being fired.

The US and allies, such as Canada, Britain and Japan, have sailed warships through the disputed waters on what are called “freedom of navigation operations.” Ironically, the only purpose these serve is to affirm the reality of Beijing’s occupation of the sea and may well be used in the future to affirm PRC sovereignty.

Meanwhile, in the East China Sea, various arms of Beijing’s forces continue almost daily incursions into the maritime and airspace around Japan’s Senkaku Islands, which the CCP claims are its territory.

Beijing knows that Japan is a much tougher nut than the littoral states of the South China Sea and their western allies. This confrontation is a long game.

But Beijing introduced a new element into the long game with Japan and South Korea in the middle of last month.

Chinese and Russian military aircraft carried out a joint patrol over the Sea of Japan through airspace over islands called the Liancourt Rocks that are claimed by both Japan and South Korea. Tokyo and Seoul both scrambled interceptors and South Korea says its fighters fired warning shots at the intruders.

This was the first known joint patrol by the Chinese and Russian airforces. It appeared to carry the message from both Beijing and Moscow that neither is politically friendless, but it also shows the ease with which mistakes might be made in the current climate.

The situation would be very different today if South Korea’s “warning shots” had gone astray and brought down a Chinese or Russian warplane.

For the most part, though, Beijing is adept at using non-military means to try to achieve its objectives.

Persistent threats

Beijing’s agents are engaged in furious operations to influence the outcome of January’s presidential and legislative elections in Taiwan, the independent island nation of 23 million people that the CCP claims to own.

At the beginning of this year, President Xi reiterated persistent threats to invade the island if it did not acknowledge Beijing’s sovereignty. That threat was underlined again last month in the context of the release by Beijing of a defense policy document.

But Beijing’s major efforts are going into trying to ensure the election of opposition Kuomintang party candidate Han Kuo-yu against incumbent President Tsai Ing-wen of the Democratic Progressive Party.

However, Han’s advocacy of closer economic and political ties with Beijing has suffered mightily because of events in Hong Kong. The suppression of dissent, crippling of current freedoms and throttling of hopes for reform have had a dramatic effect on Taiwanese voters, who cherish their democracy, rule of law and open civic values.

The message from Hong Kong is that CCP guarantees to protect democratic values cannot be trusted. 

Beijing is bending every effort to fix the outcome of the Taiwanese election by using its influence over the island’s media, fielding its agents of influence and imposing economic blackmail by cutting tourist visas.

But the indications so far are that the uproar in Hong Kong will ensure the re-election of Tsai and the DPP.

If Tsai does indeed win the election it is going to be an affront to the power and authority of President Xi in Beijing.

The question will then be how vigorously Xi feels he has to respond. And the next will be what lights go on in the eyes of Trump and his people, who see Taiwan as the frontline outpost of American values in the Far East.