Trump team struggles for cohesion on tougher China policy

[January 14, 2017]  By David Brunnstrom and Matt Spetalnick

WASHINGTON (Reuters) - The incoming U.S. administration’s tough talk against China has set the stage for showdowns on everything from security to trade and cyberspace, but contradictory signals are sowing uncertainty over how far President-elect Donald Trump is prepared to go in confronting Beijing.

Highlighting the contested South China Sea as a potential flashpoint, Trump’s Secretary of State nominee Rex Tillerson threw out an explosive challenge to Beijing on Wednesday by calling for it be denied access to artificial islands it is building in the strategic waterway.

A Trump transition adviser told Reuters that Tillerson, Trump’s pick to be America's top diplomat, did not mean to suggest the new administration would impose a naval blockade, which would risk armed confrontation with China, something the new administration was not seeking.

But another official authorized to speak on behalf of the transition team pushed back on that view, saying Tillerson “did not misspeak" when he said China should be barred from its man-made islands.

Amid the conflicting signals on policy, the team appears to be making progress on plans for a major naval build-up in East Asia to counter China's rise.

The transition adviser told Reuters about specifics under consideration, such as basing a second aircraft carrier in the region, deploying more destroyers, attack submarines and missile defense batteries and expanding or adding new bases in Japan and Australia.

They are also looking at installing “air force long-range strike assets” in South Korea, bordering China's nuclear-armed neighbor North Korea, said the adviser who spoke on the condition of anonymity.

Trump, who succeeds President Barack Obama on Jan. 20, has vowed to greatly expand the U.S. Navy to 350 ships, but his transition team has not made clear how he will fund this, amid other massive spending plans.

China's Foreign Ministry said it could not guess what Tillerson meant by his remarks, which came after Trump questioned Washington's longstanding and highly sensitive "one-China" policy over Taiwan. But an influential Chinese state-run tabloid warned on Friday that blocking Chinese access to South China Sea islands would require the United States to "wage war."

Trump's pick for defense secretary, retired Marine General James Mattis, did not endorse Tillerson's message on the South China Sea, which would seem at odds with Washington's own longstanding commitment to freedom of navigation for all.

Asked about the remarks at his confirmation hearing on Thursday, Mattis said China's actions in the South China Sea were part of a broader attack on the world order, but said the State, Defense and Treasury Departments needed to put together an integrated policy "so we are not dealing with an incomplete or an incoherent strategy."

The conflicting messages underscore the incoming administration's struggle in crafting an approach to one of the biggest foreign policy challenges facing Trump, who during his election campaign repeatedly bashed China, saying it was "killing" and "raping" America on trade.

RISKS OF RETALIATION

A former U.S. official who has informally advised Trump's transition team said it may not have fully thought through the risks of any new U.S. military or trade pressure on China.

"We should not underestimate China's willingness to retaliate in kind," the former official, who spoke on condition of anonymity, told Reuters.

As part of a drive to protect American jobs, Trump has threatened to declare China a currency manipulator - even though economists say Beijing has been seeking to prop up, not weaken, its currency. He has also threatened to slap punitive tariffs on Chinese goods, risking a trade war that could hurt both countries and the global economy.

President-elect Donald Trump gestures to people in the lobby after speaking to the news media with television personality Steve Harvey and businessman Greg Calhoun after their meeting at Trump Tower in New York, U.S., January 13, 2017. REUTERS/Shannon Stapleton

Trump has yet to name to his national security team high-level members with deep experience of the region, leading some analysts to question whether the new administration will have enough expertise to translate rhetoric on a more robust Asia policy into action.

But Trump has appointed two harsh China critics to his trade team - Peter Navarro, an academic who authored a book entitled "Death by China," and Robert Lighthizer, a former Reagan administration official.

Trump advisers dismiss concerns their approach could prove risky or counterproductive, arguing that a "peace through strength" stance will put real muscle behind U.S. policy in the region after decades of under-resourcing due to U.S. distractions elsewhere in the world.

"Once we start correcting the military imbalance, I actually think you will get more cooperation rather than less," the Trump adviser said.

Trump and his cabinet nominees have also vowed to step up pressure on China to rein in North Korea's nuclear and missile programs, including by holding out the possibility of "secondary sanctions" on Chinese entities found to be violating sanctions on Pyongyang.

But analysts say China may be in no mood to cooperate if Washington is leaning on it on other issues. Those include U.S. pressure on Beijing to curb cyber hacking of U.S. entities.

China's official responses to recent broadsides have been measured so far as they wait to see how Trump will act once he takes office.

"We have seen many conflicting messages from people within his prospective administration,” said Tu Xinquan, a trade expert at Beijing's University of International Business and Economics.

But analysts say confronting Beijing over hot-button nationalist issues like Taiwan and the South China Sea could trigger strong reactions, especially in a year when President Xi Jinping is seeking to further consolidate power at a congress of the ruling Communist Party held every five years.

Zha Daojiong, a professor at Peking University, said the theme of clash of civilizations was becoming increasingly popular in Chinese circles and this was ominous.

"This does not bode well at all ... And it means that the continued war drums from America on the South China Sea would not help matters at all."

(Reporting by Matt Spetalnick and David Brunnstrom; additional reporting by Michael Martina and Christian Shepherd in Beijing; Editing by Yara Bayoumy and Mary Milliken)

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