A Complex Mismatch in Non-Transactional Negotiating Skills: Trump vs Xi

 

A Complex Mismatch in Non-Transactional Negotiating Skills: Trump vs Xi

It’s no secret that China’s President, Xi Jinping, views Donald Trump as an egotistical, weak and bumbling leader, unable to deal with reality, principally responsible for terrible decisions (e.g., the Iran War or treating climate change as a “hoax”), surrounded by unskilled sycophants, and helming the unraveling of America as a great power. Yet Xi has presided over a massive devaluation of real estate values, unemployment of many educated young trying to enter a difficult job market, a loss of faith in his corrupt military leadership leading to a firing of virtually his entire top brass, and uneven growth that has not fared well under US tariffs and sanctions. Climate change, Iran, Taiwan and artificial intelligence (access and development) still top the list of global issues, although “the climate change hoax” is unlikely to be the hot topic of discussion.

Right now, it’s a battle between the only two remaining superpowers; Russia is devolving as the Ukraine War shifts toward Kiev, even as the increase in oil prices boosted Moscow’s gross revenues. But just as Xi is beyond certain that the United States is slip-sliding away, a reality which has been supercharged by Donald Trump in their eye, he is aware that Vladimir Putin is both subservient to Beijing and seems to have shoved his country into the ground, running out of both soldiers and arms at irreplaceable levels. Xi may have his own set of challenges, but he is smiling as Putin and Trump sweat profusely. Trump is en route to Beijing to confront a master negotiator.

Trump’s advisors, who are all acutely aware that Trump plunging polls and inability to solve the nation’s most basic problems, just might make him vulnerable to Xi’s obviously superior power. They fear Trump’s shoot-from-the-hip style, coupled with his desperate desire to find a decent way out of his failed war in Iran, just might have him slip and suggest Taiwan’s future is no longer his concern, as a trade-off for China’s stepping in, offering just enough to Iran to end the conflict and reopen the Strait of Hormuz. But Xi has long time been planning for a trade confrontation with Trump over tariffs, sanctions and technology restrictions. Writing for the May 11th New York Times, Alexandra Stevenson and Murphy Zhao, explain the evolution of revenge:

“It is a high-stakes moment a decade in the making. In his first term, Mr. Trump warned that confrontation with China over technology and trade was unavoidable. He placed tariffs on certain Chinese sectors and singled out companies for sanctions. China responded with restrained, largely symbolic countermeasures, as regulators drafted laws mirroring U.S. actions, creating blacklists and export control lists.

“But what started as a game of tit-for-tat has escalated, reaching across global supply chains and leaving countries and companies scrambling to manage the fallout. After years of mostly reacting, China is going after entities that comply with Washington’s sanctions… The growing concern is that both countries will wield their expanding regulatory regimes as economic cudgels, dragging other nations and businesses into the fight. Business leaders and experts warn that the two superpowers are increasingly forcing the world to choose a side: China or the United States.

“In April, Beijing announced sweeping rules giving regulators the power to investigate corporate records, interrogate employees and bar companies or executives from leaving China if they are found to be helping shift supply chains out of the country… The rules also open a new corporate battlefront that Beijing previewed in 2024 after PVH, the owner of Calvin Klein and Tommy Hilfiger, stopped sourcing cotton from Xinjiang, the western Chinese region. The United States has imposed an import ban on cotton from Xinjiang because of its association with forced labor… China accused PVH of discrimination, initiated an investigation and eventually placed the company on its ‘unreliable entity list,’ a designation that can carry legal consequences, including restrictions on executives from leaving the country.

“It no longer appears to be an isolated case of retaliation. ‘It is posing both a risk and a dilemma: ‘Will you break our law or American law?’’ said Sean Stein, president of the U.S.-China Business Council… The shift in China’s regulatory posture accelerated last year after a series of aggressive actions from Washington, including raising tariffs to 145 percent, imposing fees on Chinese ships at U.S. ports and restricting critical technologies such as semiconductors, chemicals and machinery… Now it has become a hot stove approach: ‘We need to show that when the U.S. takes an action, they will touch a hot stove and get burned,’ Mr. Stein said, summarizing the Chinese perspective.

“This approach means putting new regulatory weapons into action, as Beijing did this month after Washington placed sanctions on five Chinese refineries over their ties to Iran. China ordered the companies to defy the sanctions, invoking a blocking measure it enacted in 2021 to shield companies from foreign laws it opposes… China’s state-controlled media trumpeted the move as ‘a pivotal step in China’s transition from building a legal reserve to the practical application of its foreign-related legal weapon,’ casting it as a stand against American hegemony on behalf of the world.’” The other area of sensitivity is the battle over artificial intelligence.

The United States seems to have a clear lead over the macro picture, the goal of a completely self-generative AI that flies so fast, without human inefficiencies, that it just might be unstoppable. This just may have been the ah-ha moment where even Donald Trump might realize the need for mutually approve guardrails, before AI finally does the damage we all fear. As Jake Sullivan, U.S. national security advisor under President Biden, noted (as reported in the Los Angeles Times, May 11th): “[The Chinese] naturally view any American diplomatic initiative involving limitations or restrictions of one flavor or another on a capability as being a trap… It was a breaking of the seal that we could actually do something on AI,’ Sullivan said. ‘In the transition, I told the incoming Trump team that they should really pick up that dialogue. But the Trump administration’s view was just far more laissez-faire, and they didn’t seem particularly interested in it… ‘That’s all changed in the past few weeks,’ he added.

“A Trump administration once eager to gun for technological supremacy is now, for the first time, reckoning with the power AI could unleash if left unchecked. In a surprise reversal, quiet discussions have taken place ahead of President Trump’s state visit to China this week to explore reviving talks on an emergency channel, officials told The Times, prompted by shared alarm in Beijing and Washington over the debut of Mythos, Anthropic’s powerful new model.

“Mythos’ capabilities are seen across the industry and government as those of an unprecedented cyberweapon , able to infiltrate and exploit digital communication systems — including government databases, financial institutions and healthcare programs — with untold consequences… Whether an announcement will come to fruition this week is not yet clear. Any talks between the United States and China over AI regulations — designing some kind of arms control agreement governing the use of a technology that neither side fully understands or controls — will be fraught with suspicion, misunderstandings and risk, experts say.”

Meanwhile, China’s focus on practical integration of AI with most consumer goods, an area where Trump’s absurd opposition to alternative energy has accelerated China’s setting global consumer AI standards. But AI is a limited area where, if Trump’s ego doesn’t get in the way, there is potential for genuine progress. Can Trump avoid his usual attraction to his transactional mentality, which has not served him well, and focus on the bigger picture of what values are essential for America? Time will tell. But right now, I’d say “advantage” Xi.

I’m Peter Dekom, and unless Trump begins to appreciate the stakes at issue, relinquishing his failed “the art of the deal” transactional negotiation strategy in a diplomatic setting with an equally powerful foe, he will only reinforce Xi Jinping’s premonition of Trump’s leading the United States in a downward path from which it would hard to recover.