Welcome to Foreign Policy’s China Brief.
The highlights this week: The United States puts pressure on Taiwan, the Chinese Communist Party announces dates for its Fourth Plenum, and China alters its World Trade Organization status.
Taipei Faces Trump Pressure
Months into U.S. President Donald Trump’s second term, Taiwan faces double pressure. As Chinese President Xi Jinping reportedly lobbies Trump to formally oppose Taiwanese independence, the White House is pushing Taiwan to move a significant portion of its semiconductor industry to the United States in return for protection against China.
Previously, there had been speculation among observers about so-called grand bargains that could be struck between Trump and Xi, but none has ever materialized. Trump’s record of keeping up his end of deals is bad, and it would take surprising naivete for China to make concessions in return for his promises—or to expect a future U.S. administration to stick to this position.
Xi has had some diplomatic success with Trump of late, but getting the United States to actively oppose Taiwanese independence is unlikely. Though Trump doesn’t seem to give a damn about Taiwan, many Republicans do, and the move would be seen unequivocally as a capitulation to China.
However, Taiwan now lacks allies in the White House. Ardent China hawks of Trump’s first term—Mike Pompeo, Mike Gallagher, and Matt Pottinger among them—have largely been replaced with younger isolationists. U.S. Secretary of State Marco Rubio, once considered a stalwart ally to Taiwan, seems mostly interested in chasing the approval of the president.
So where does this leave Taiwan? One option it has is to try to curry favor with Trump, possibly by going along with his plans for the moment even if they make no long-term sense.
To be clear, moving Taiwan’s semiconductor industry to the United States is a practical impossibility because it depends so heavily on local material technology, supply chains, and expertise. Taiwanese staff won’t move to the United States en masse, especially after seeing what happened to South Koreans working for Hyundai in Georgia.
But the inanity of Trump’s plan could stretch out talks long enough to make it moot. Taiwan could pretend to show interest in a plan, make some token investments in the United States, and wait until Trump gets distracted and moves on to something else.
Another approach would be for Taiwan to pay Trump off another way, either directly or with political favors. Taiwan just inked a significant soybean deal with the United States, for instance, which will offer some help to struggling U.S. farmers (although hardly enough to compensate for the loss of tens of billions of dollars in Chinese soybean sales).
The most practical approach might be for Taiwan to leverage existing relationships on Capitol Hill to put pressure on the White House to continue arming Taipei and at least implicitly guaranteeing its defense. Taiwan still has many friends on both sides of the aisle, such as Republican Sen. Roger Wicker, who recently visited and described it as a “free country.”
Moreover, if Taiwan can find a way to get President Lai Ching-te—a Harvard University graduate and fluent English speaker—face time with Trump, then it has a good shot of repairing relations.
In the long term, though, if Taiwan can’t trust the United States as a security partner, then it might begin real discussions about restarting its own nuclear weapons program—abandoned in the 1980s under U.S. pressure.
What We’re Following
Fourth Plenum dates announced. The Chinese Communist Party (CCP) will hold the Fourth Plenum of its 20th Central Committee from Oct. 20 to 23. Plenums are regular high-level party meetings that cover a wide range of topics. They are sometimes used for major personnel changes, but there are no announcements or clear signs of big shifts this time around.
Dates of big political meetings are never confirmed until close to the event, mostly out of ingrained habits of secrecy but also because they can require delicate negotiations among leaders with busy calendars.
It’s most likely that the plenum will focus on China’s attempt to rebalance its economy away from “involution” and toward new models of growth. I think that the CCP is looking to shed some of the priorities of the first decades of Xi’s rule, such as the emphasis on economic self-reliance and the destruction of local political innovation, without the leadership having to accept any blame.
China alters trade status. In a step long asked for by the United States, China is voluntarily altering its World Trade Organization (WTO) status as a “developing” country to a “developed” one.
Developing countries enjoy special privileges at the WTO, but the label has been an uneasy fit for China and many other states for some time. Countries choose how to describe themselves, which has always produced some odd results: South Korea, for instance, is still officially a developing country but stopped using the status in negotiations in 2019.
China was reluctant to give up the leverage of its developing-country status, but the move both helps Beijing’s relationship with Washington and reflects Xi’s domestic priorities of being a middle-income country. Though China’s economy is the second-largest in the world, in terms of per capita income it is roughly 75th—near the top of the middle third of all countries.
FP’s Most Read This Week
- Trump to U.N.: ‘Your Countries Are Going to Hell’ by Christina Lu
- Trump Is Learning Geopolitics 101 in Real Time by Suzanne Nossel
- ‘Super-Sparta’ Is Bad History and Bad Strategy by Irad Malkin
Tech and Business
Record trade surplus. Since the onset of Trump’s trade war, China’s exports to the rest of the world have noticeably risen, creating a likely record trade surplus of $1.2 trillion this year. But that’s not as good for China as it sounds.
Even though other countries have been reluctant to protect their domestic markets, fearing blowback from Beijing, the surplus is exacerbating overproduction in China. This has caused serious factory-gate deflation—in other words, manufacturers are being forced to sell at lower prices because of intense competition.
But trying to cut back on industrial overcapacity is difficult for CCP leadership, even when it’s official policy. Balancing wider economic priorities with immediate employment risks is a sensitive issue in China, given its rather weak welfare state. When widespread factory layoffs rocked the northeastern rust belt in the 1990s, it caused protests and prolonged economic weakness.
U.S. tech policy whiplash. Even as the United States and China come closer to reaching a high-level agreement on TikTok, the countries’ struggle over controlled technology continues elsewhere. On Monday, the U.S. Commerce Department expanded its trade blacklist of Chinese firms, hoping to chip away at China’s increasingly sophisticated tech ecosystem.
The reason for Washington’s seemingly divergent policies is simple: Though Trump and his closest companions shape big events such as the Nvidia payoff or a potential TikTok handover, blacklists and other sanctions tools are usually formulated by mid-level officials with domain expertise and then approved by the White House.
The latest news thus follows the relatively normal pattern of U.S.-China tech rivalry that has played out over the last decade.