1 big thing: The U.S. confronts China
For decades, the U.S. and China have circled uneasily as current and future global superpowers. Now, President Trump's continued escalation of actions against Beijing threatens to push the two powers close to direct conflict.
Driving the news: This week, the U.S. took perhaps its most provocative action yet, springing a trap in Belgium that captured Yanjun Xu, a senior Chinese intelligence operative, and arraigning him in Cincinnati for economic espionage. This afternoon, Xu pleaded not guilty.
- The Xu arrest was the first such U.S. action against Beijing.
- Were the situation reversed — and a U.S. spy be on trial in China — it would create a major political crisis in the U.S., and possibly put the countries on a war footing.
- Thought bubble from Axios China author Bill Bishop: Expect a reaction soon from Beijing, quite possibly including the arrest of an American in China as a spy.
The big picture: This was only one of three substantial U.S. escalations against China this week. The Trump administration also tightened scrutiny of Chinese investment in U.S. technology, and issued new restrictions on the sale of civilian nuclear technology to Beijing.
- Trump and Chinese leader Xi Jinping may meet next month at the G20 meeting in Buenos Aires, the WSJ reports.
But the trio of actions — coming after last month's enactment of tariffs on half of Chinese exports to the U.S., amounting to $250 billion — amounts to a significant intensification of the U.S. offensive against Beijing.
- The White House asserts that it is only seeking redress after a wholesale Chinese assault on the U.S. and Western economies through the theft and extortion of intellectual property.
- And some dangle hope that the relationship can return to what it was once trade and IP issues are resolved.
- But many experts say relations are forever changed — and that the risk of an outbreak of war is growing. "As confrontation increases, the path to conflict is very short because the space to talk has been reduced or even eliminated," Gen. John Allen, president of the Brookings Institution, tells Axios.
"As it turns out trade wars are not easy, as some have proclaimed. And when you have the two most consequential nations on the planet trading increasingly damaging blows, accompanied with increasingly inflammatory rhetoric, the race to the bottom will be harmful to Americans and Chinese alike."— Gen. John Allen
The bottom line: One worrying thing is that, while Trump has sought to force U.S. allies to join the offensive, it has failed to do the diplomacy to create that kind of united front.
- If Trump's team is seeking "to out-compete China for global influence, it needs to reengage our allies and friends and gain their support for a common strategy. None of that is happening," says Ivo Daalder, president of the Chicago Council on Global Affairs and co-author of the forthcoming “The Empty Throne: America’s Abdication of Global Leadership.”
- "This is all doomed to failure, not because China is strong, but because this weakens the U.S. and shifts the world economy away from us," Adam Posen, president of the Peterson Institute for International Economics, tells Axios.
- "Those who will suffer will be emerging markets and U.S. consumers, with no military advantage gained."