Is Trump on a collision course with China?

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0:42BBC Sounds, music, radio, podcasts. What will it mean for the price of an iPhone or Nike trainers? Who should be allowed to control our blast furnaces and make the steel our economy so badly needs? Should we allow them to access our medical data? Every day there is a new argument about our relationship with China. But I wonder if this is one of those moments when we're failing to see the wood for the trees. I've been thinking this ever since I spoke on last week's episode of the Today podcast to Carla Sands, who was an economic advisor to Donald Trump. We were talking about the purpose of Trump's tariffs, but all she really wanted to talk about was, you guessed it, China.

1:36If you have an adversary that talks so belligerently and backs it up with actions, you have to pay attention and you have to prepare for war to avoid war. Not the shooting kind. Not now. Not yet, at least. But many of Trump's allies and cheerleaders are talking about a full-scale, no-holds-barred trade war between the world's biggest economies, in which they'll insist that their allies like us in the UK have to take sides, have to choose. And that war talk is being heard in Beijing. Just listen to Victor Gao, vice president of a think tank in the Chinese capital, the Centre for China and Globalisation, speaking on Wednesday's Today programme.

2:22The United States constantly threatens war against China. The tariff war, the trade war, and they are also talking about the Cold War, the proxy war and the hot war. So that is our question on this week's Today podcast. Is this the start of a new Cold War with China?

2:58Hello, it's Nick in the Today Podcast studio. Amol is away, enjoying some time with his four apprentice members of the pod squad. I am joined in his place on the sofa in the podcast studio by Nigel Inkster, who used to be deputy chief of MI6, the Secret Intelligence Service, having served in Beijing and in Hong Kong. He's now a senior advisor on China and cybersecurity at the International Institute for Strategic Studies. Nigel, hello and welcome to the Today podcast. I'm very glad to be here. Thank you for asking me. Does it feel this week if this issue that you've been wrestling with, writing about, advising on for a lot of your adult life suddenly is coming into the public sphere.

3:44Very much so, yes. In 2020, I published a book called The Great Decoupling, which looks at the kind of trajectory of US-China competition, particularly from, but not exclusively from a technology perspective. And yes, I mean, in a way, I guess my worst case expectations are being borne out by what we're seeing today. Worst case expectations being a Cold War? Being a global bifurcation. A great split. A great split, yes. A war? Maybe, maybe not. In that context, I think we have to bear in mind that there are two sides to this. Yes, the United States is talking in these terms, but it is not as if China never has.

4:28When looking at China, one has to consider two aspects. One is what they're telling the world, and one is what they're telling themselves. And what really matters, of course, is what they're telling themselves. And if you look, for example, at an essay published by Xi Jinping in the party's theoretical journal at the beginning of this year, a kind of reheating of a speech he gave a couple of years previously, that very much talks in terms of an antagonistic situation. China under threat, the need to struggle, but also the conviction that because China is following a scientific path, it will eventually prevail.

5:07So both sides are talking about this in terms of at least conflict, if not a hot conflict. Now, in one way, that is Xi Jinping anticipating what might happen if Trump got into power. In another, it's a reflection of his worldview, isn't it, that China should be the globe's top dog. That is what history states should happen. I mean, Xi Jinping is in no doubt, in his mind, that the Chinese system, as currently constituted, is superior to the West. We've heard a constant drumbeat of the East is rising, the West is in decline for quite a few years now, initially internally, but increasingly externally.

5:49and yes I think there is this conviction I think it's born partly of a Marxist sense of historical determinism but also an innate sense of Chinese cultural superiority. And for people who don't know China well as it happens my mother was born in China I learned a bit about it from her that is something that predates President Xi albeit that he is the big strongman of China. It predates Marxism, it predates the People's Republic, that sense of Chinese superiority. Yes, I mean China, you know, Zhongguo, the centre of, you know, the central state, there's always had this sense that to be civilised is to be Chinese.

6:35You know, dates back to when China was largely surrounded by nomadic states that did not have anything like as advanced the material civilization as China. And that sense of cultural superiority is kind of deeply baked in the collective psyche. Let's whiz forward a few centuries and just remind ourselves where we are now. The US and China are locked in a trade war. The numbers for the tariffs almost don't matter. Prices have effectively been doubled by both sides, which means trade is almost going to be eliminated unless it's strictly necessary. And in addition to those triple-digit tariffs, Remember that some goods, steel, aluminium vehicles, vehicle parts are subject to separate sector specific tariffs.

7:19And Trump says he's looking at pharmaceuticals and semiconductors, which were previously exempt. As this is happening, President Xi is on his charm offensive tour of Southeast Asia, talking alongside, for example, the leader of Vietnam about jointly opposing unilateral bullying with his foreign ministry spokesman saying, in the face of external uncertainties, China will insist on shaking hands rather than shaking fists, tearing down walls instead of building barriers, connecting instead of decoupling. Let's hear a little bit more now of what Victor Gao, not an official spokesman for the Chinese government, but he sure as hell knows what the Chinese powerful are thinking, said on Wednesday's Today programme about the suggestion that in this looming trade war, Britain would have to choose whose side it was on.

8:16China has never and China will never hold a gun at the British head. Please be assured, whether there are other countries who want to have the guts to hold a gun at your head, you know better than I do. Therefore, between China and Britain, we need to use all our brains, all our wisdom, or our far side to promote free trade. Free trade between China and Britain, free trade between both of us and the rest of the world. And I think this is the time really to do the right thing. As I emphasize, the choice is not between China versus the United States. The choice is between whoever will promote and protect free trade versus whichever country which is damaging and undermining and destroying free trade.

9:00Victor Gao there trying to reach through the airways of Radio 4, it seemed to me, to the decision makers in Parliament, in the government, saying if it's a choice about whose side you're on, why aren't you on our side? Be on China's side. Yeah, well, I think there is a fundamental disingenuousness about the Chinese position, because if we look at what's really happening in terms of China's grand strategy, essentially Xi Jinping has a vision of a China that has minimised its dependence upon the rest of the world whilst maximising the rest of the world's dependence upon China. You know, that is essentially what this is all about.

9:34So for China to stand up and present itself as a shining exemplar of unrestricted free trade perhaps stretches credulity a little bit. Spell that out a bit. When you say that China has minimised its dependence on the rest of the world, how? Well, it's seeking to minimise its dependence on the rest of the world. I mean, let's just remember that no other country on the planet has everything China does. The raw materials. Yeah, it's not just raw materials. This is all the capabilities of manufacturing. And we've seen China trying to corner market in critical raw materials around the world. It has a dominant position in critical areas like rare earths, Although in practice, you know, there are many other countries who could eventually match China in that regard.

10:26And just for those who hear that phrase, rare earths, bandied about and think, what is it again? I sort of know it's a component of my mobile phone. Why is this trade so important? Well, I mean, these components, you know, rare earth is a misnomer because they're actually rare, but they're found in very low concentrations. So actually, you know, sort of getting enough of them to matter involves crunching through large quantities of ore in processes that are very environmentally damaging. And China has to date been the only country that's been prepared to take that hit. And most of these rare earths in and of themselves don't do very much.

11:03But in combination with other materials, they have a very significant multiplier effect. So hardening steel, amplifying electroconductivity, this sort of thing. So if you've not got them crudely, pretty much everything else you do in your economy is in trouble. Exactly, indeed. Particularly if you're manufacturing things, then yes. But ultimately, these rare earths and other materials are to be found in pretty much everything we have come to rely on in modern life. While we're unpacking what China is doing to make itself less dependent on the world, do we have to use a word that we often use about the United States and Europe historically, but rarely use about China, which is colonialism, which is basically either occupying, bullying, forcing into debt, developing countries in order that you control their natural resources, you control their ports.

11:57And yes, you might even control their politics and their government too. Well, yes. I mean, of course, the UK did this very extensively in the 19th century. The United States has done it in the 20th century. Now we're seeing China doing it, albeit in a different way. I mean, China's looked at the UK and the US models, looked at the UK, lots of colonies, very expensive. You know, we give the natives, you know, tea and even cricket, for God's sake, and they're still not grateful. They want rid of us. The United States, 800 plus military bases around the world, enormous alliance obligations. China doesn't want to go down either of those routes.

12:37what they essentially want is to be in a position where they can be confident that no other state is likely to do anything that is significantly detrimental to China's interest. But I think it goes beyond that because I think Xi Jinping has a vision, not well articulated, but I think real nonetheless, of China becoming a civilizational state with such a strong pole of attraction that other states will naturally gravitate towards it. Now, we've done one half of the equation. What about the other half of the equation? You said that China wanted to make sure that the rest of the world were dependent on China, while they were dependent on us, as it were.

13:24By doing what? By dominating the technical standards of the next generations of advanced technologies. That is key to their endeavor. They want to be the global standard setter. They want to be the country whose products people more or less have to buy because otherwise they just won't work. If you look back to the emergence of mobile telephony in the 1980s and 1990s, if you travel to the United States or Japan from the United Kingdom, your phone wouldn't work because everyone was using different standards. Eventually, we agreed on GSM and all of a sudden we had global interconnectivity. China wants to be the kind of GSM provider for the next generation of advanced technologies, be it 6G mobile, artificial intelligence, you name it.

14:20They want to be the ones who set the standards and determine who can manufacture what. So is it the case that in a funny way, the debate that we've been having ever since this tariff war was announced is about the wrong things, that politicians, for understandable reasons, care about steel and jobs in traditional manufacturing. Consumers care about the price of an iPhone or the price of their traders. But these aren't the point at all, are they? It's the future economy that's at stake. Well, this is it. And for that reason, I worry that the United States risks fighting the last war rather than the next, because I don't see how, for example, it's going to be possible to regenerate mass scale manufacturing in the United States with millions of workers, you know, trooping in and out of factories.

15:12The factory of the future is going to be mainly automation with a very few highly skilled human beings there to fix things when they go wrong. Well, now you've raised that, let's listen to Stephen Moore, who was on Wednesday's Today program, a senior advisor to the Trump campaign in both his successful campaigns in 2016 and 2024. This is how he described the way in which the United States now sees China. The one issue that almost all Americans agree on is that China has an enemy of the United States that are an adversary and they're dangerous to our country, both in terms of their predatory economic practices and the building up of their military.

16:00We want to isolate China. We want to decouple the world economy from China because they are a real danger to economic prosperity and to freedom. From what you know, do you think he's right to say, he clearly a Trump cheerleader or Republican, that pretty much across American politics, that is now the view? I think there are more nuanced views, but this has certainly become the dominant view. I mean, I've always found up until now, two prevailing views about China within the United States. One is China, the sum of all fears, exactly what we've just heard. The other is China has peaked, they're in a downward cycle now, and we don't have to worry about them.

16:44I think both views, I think, are misconceived for various reasons. But the latter view is clearly not getting much attention at the moment. This very much is a dominant thing. Certainly, I think when it comes to the economy, China is obviously seeking to maximize the advantages that we know that it has in terms of market share, manufacturing, etc., etc. When it comes to the military, I think it's a bit different because I've had dealings off and on with the Chinese military for many years. And I remember during the third Taiwan Straits crisis when I was in Hong Kong, it became clear to me then that there were senior people in the Chinese armed forces who were never really going to feel whole men until they'd had a crack at America.

17:33But, you know, I think the Chinese party state as such is not in an adventurous expansionist mindset. It doesn't want to go to war with the United States. But there are some significant issues. I mean, I think Donald Trump is becoming fairly clear now that the Trump vision of the future is the United States establishing an uncontested sphere of influence in the Western Hemisphere. The problem for China is that Western Hemisphere expands to the Western Pacific, which China kind of thinks ought to be their sphere of influence. And that's where the potential clash is. And then you've got these two potential rubbing points, the South China Sea, one, and the Taiwan Strait, the other.

18:21And so, I mean, another organization I work for in order to economics, we've developed what we call the three T's to characterize the US-China relationship. It's trade, technology, and Taiwan, Taiwan being obviously the point at which all these things intersect. Do you think that President Xi will not die happy, will not leave office happy until Taiwan, that island that became separate from the Communist People's Republic of China in 1949, when the nationalist forces retreated to it, that he will not feel complete until that is a full part of the People's Republic? He certainly won't. And he has said on many occasions that his signature vision of China's future, the great rejuvenation of the Chinese nation, is dependent upon national reunification.

19:20So in other words, he can't achieve his signature vision without recovering Taiwan. That much has been clear. The question is how he goes about it. Yes, he doesn't necessarily have to invade in inverted commas, does he? He can blockade by just surrounding the island with Chinese ships. Well, there are many things he can do. And at the moment, I think it remains the case that he believes Taiwan can be peacefully reunified. We're seeing a combination of carrot and stick, a much more emphasis on stick at the moment with all these military exercises in and around, in the Taiwan Strait and around Taiwan, all sorts of pressure, sabotage, espionage, cognitive operations, propaganda, etc., etc.

20:08And they're just going to keep piling on the pressure here. At the same time, since the mid-1990s, since the third Taiwan Straits crisis, China has been laser-focused on developing the military capabilities it would need to retake Taiwan, whilst keeping the United States and allies out of theatre long enough to enable this to happen. Now, that said, of course, a full military invasion of Taiwan is not, at any means, straightforward. In the 1940s, the Americans looked at doing it and decided actually it would be orders of magnitude worse than the Normandy landing, so they went another route. But you mentioned blockade, yes.

20:52I mean, a blockade is an act of war. But let's say China did blockade Taiwan, what would the United States do? If they sought to break the blockade, that would be them eventually escalating the conflict to a kinetic level. Would they want to do that? Would they impose a counter-blockade on the Malacca Straits, let us say, through which much of China's imported energy transits? All of these variants are possible. And open to huge miscalculation by one leader or another. Indeed, a huge miscalculation and the potential for unintentional escalation. And this is happening at a time when connectivity between the United States and China is pretty much as low as it's ever been.

21:44You mean a political diplomatic engagement? Yeah. And in a world that's already drowning in noise, actually discerning signals becomes all the more difficult. That's very interesting. You mean that in this world in which we could talk so easily and at such speed and in such quality, oddly the thing that really matters, which is human-to-human connection, not necessarily face-to-face, but, you know, Nigel, Nick, we know each other. We can have a... That is poor, is it? I think it is very poor. I mean, I think, you know, if you look across, you know, China's elite, they collectively are far more familiar with the West than is true the other way around.

22:27You know, there are very few Western politicians or members of the elite who are familiar with China, speak the language, you know, understand the culture. The converse is true in China at the moment. But at the same time, one finds with a lot of very well-educated and very well-informed Chinese people, they've kind of got the sum of the parts, but they don't always necessarily get the whole. And should we, when we listen to someone like Victor Gao, because, of course, there aren't that many fluent English speakers who can claim to speak for the government and who are willing to do it. Should we, when we're listening at home, think, no, no, that pretty much is the view of, and I don't mean to single out him, there are other people that we have on, but it's quite a small group of people we have on.

23:13Should we listen to them and think, yes, no, no, that really is the view from Beijing? People like Victor Gao only talk because the party state is prepared to let them. If he was saying something they didn't like, they would shut him down very fast indeed. So you have to assume that whatever he and others like him might say meets with the approval of the party state. And to be fair, you know, the Chinese Communist Party has always been explicit and open about its intentions. It's just that we collectively in the West have not been particularly good at listening or have always sought reasons to discount what they're telling us because it's not what we would do.

23:54Yeah, and also because we want their money. Let's turn back then to money, because as you say, that Taiwan does give us a link because, of course, those semiconductors the world are so dependent on are manufactured almost uniquely in Taiwan. We need them until and unless Donald Trump can persuade someone to build a better factory in the United States to do it. I want to ask you about two theories about this trade war. One theory, which Trump clearly articulates himself, is it's China that's got the problem. They need to talk to us. We're bound to win. Why? Why? Because he points again and again to the fact that China had a trade surplus of almost 300 billion with the US last year.

24:35In other words, it sells a lot more than it buys. And therefore, they will be desperate to secure that trade. Now, another view that I was reading in the Financial Times this week, I thought was interesting, from a professor of international economics at the City University in New York, a woman called Marta Bengoa, is, well, hold on, look at what it is that constitutes that trade. China can get the agricultural products it buys from America, she argues, much more easily than the Americans can replace the electronics, the machinery it buys. What's your view? I think that view is absolutely correct.

25:12I mean, Scott Besant was saying recently that China's playing with a pair of twos. Well, I don't know what China he's talking about, but it doesn't feel like the one whose fortunes I've been following for the last 50 plus years. I mean, the fact is, you know, there is an asymmetry here. Much of what the United States imports from China is things like consumer goods, consumer electronics. And either the absence of these or their importation with tariffs is going to hit American consumers very hard indeed, and have all sorts of second order effects. So if the US Treasury Secretary Scott Besant is claiming that China only has a pair of twos in a game of poker, what do you think the correct description of their hand is?

26:00Well, I'm not an expert on poker, actually, but I would say they've got a fairly strong hand for a variety of reasons. One is, of course, the fact that the Chinese leadership controls all the domestic variables, doesn't have to worry about any other constituency. It can impose its will. It also has a much greater coordination over the different aspects of the economy and industrial policy than is possible in a liberal democracy. I think also you know that what China imports from the United States to a significant degree is advanced machinery but they're working hell for leather to indigenize production of these capabilities with mixed success but you know they're getting there and at the end of the day I think that China is able to absorb pain more than the United States.

27:01Xi Jinping is able to enjoin a spirit of sacrifice on the Chinese people and kind of expect that they'll get with the program. I'm not sure that any US president will so easily be able to enjoin a similar spirit on a US population that has become so dependent upon very rich consumer environment. What would you say to a Trump ally who I can imagine saying, look, this is defeatism. This is what we heard in the Cold War between the West and Russia. Look at Russia. They said all powerful. It's got to the moon. It's got this very successful five-year plan. We're weakened by democracy. And they would argue, look, freedom always wins.

27:48It is the free market always wins. Planned economies are always poorer than ones that aren't. Firstly, China's is not a planned economy. It is a very hybrid structure in which a lot of leeway is given to the private sector. I mean, if you look at how China got where it did over the past 30 years, that was in large measure a product of capitalist competition read in tooth and claw. I mean, no holds barred. But at the end of the day, the party always was ready to intervene to control the environment and ensure things didn't get too far out of hand. The other thing is that whereas a lot of what was happening in the Soviet Union was not immediately visible, when it did become visible, we discovered, and we used to be saying this amongst ourselves in the 1980s, well, you know, the Soviet Union is basically Upper Volta with a bomb.

28:47You know, no disrespect to Upper Volta, but what we're talking about is a very economically and technically underdeveloped country that just happened to have nuclear weapons. China is in a very different situation. China is an advanced industrial economy with a growing consumer society. and one of the consequences of the Trump tariffs is that a Chinese Communist Party that was always somewhat ambivalent about promoting internal consumption has now had to recognise the need to go full steam ahead to do this. That brings us to the choice. If it is a choice that we face here in this country. Now, Keir Starmer used to say, I'm never going to choose between Europe and the United States.

29:40He still says it these days. He'll be more tempted, I think, to say he doesn't also need to choose between the United States and China. And I was very struck by ministers choosing their words very carefully in this row about steel and Scunthorpe, just as they didn't want to offend Donald Trump. I interviewed a trade minister who described what was clearly an intention to sabotage the steelworks in Scunthorpe. The word sabotage appeared in every newspaper report. Anonymous briefings produced it, but he wouldn't use the words despite saying, look, they did not just fail to provide the raw materials for the furnaces.

30:18They actually were flogging them off in the hope that the steel would be bought from China rather than produced in the UK. Can we get away with choosing our words carefully or will we have to choose? I mean, I think I note that Vice President J.D. Vance talked about the prospects of a U.S.-UK trade deal looking very good. Now, I'm not sure how much weight to place upon that, but I think if it were the case that we had such a deal, I think it would come with strings. And one of those strings would be an expectation that the U.K. would get with the program when it came to China. And we've seen a precursor of this with the Huawei 5G saga.