Last Updated:2016-11-11

By Geoff Raby

The thing that most troubles the Chinese leadership is uncertainty. With Trump's election they have had their worst fears realised – not because of his policies, but because they, like the rest of us, don't know what they are.

With Hillary Clinton, the Chinese leadership knew that they would be in for a difficult time. During her time as Secretary of State she had become increasingly hawkish on using US military to achieve foreign policy objectives.

She made it known that she disagreed with President Obama when he made his single most important strategic blunder by not taking military action against the Syrian regime when it crossed the "red line" on using chemical weapons.

Had Clinton won, China would have had to deal with a tough leader who would have taken a much harder position with China over human rights, Tibet, Xinjiang, and possibly Taiwan and Hong Kong.

South China Sea tensions would no doubt have increased. Like the rest of us, China's leaders would have expected her to win, and would have been well prepared for managing the new stresses in the relationship.

To quote Shakespeare from the Merchant of Venice, Trump spoke "an infinite deal of nothing" during the primaries and campaign. But he seems to have said little about China other than accusing China of "having raped the US".

Consistent with someone who boasts that not paying taxes shows "how smart he is", he did not blame China but rather President Barack Obama for allowing it to happen.

He has said he will impose a 45 per cent tariff on China's goods coming to the US. This is a hollow threat.

The US would breach its WTO commitments and would not risk the embarrassment and economic loss of WTO-sanctioned Chinese retaliatory sanctions on US goods.

Obama's first Secretary of the Treasury, Timothy Geithner, caused a storm on the eve of Obama's inauguration in January 2009 when he accused China of being a currency manipulator.

It went nowhere, but did put the new administration on the defensive with China, which Beijing adroitly exploited to keep Obama wrong footed and defensive in its early days.

Nuclear capability

On strategic issues in the region, what Trump has said would trouble Beijing. Suggesting that Japan and South Korea should shoulder a greater burden for their defence raises the prospect that a US less committed to the defence of these allies, at any time since the Second World War, might lead them to adopt a nuclear deterrent of their own.

With North Korea, he has said that it is a problem of China's making and China should fix it. Putting the historical reductionism and simplification to one side, it is not an unreasonable position to adopt. Years of policy swings between engagement, including the Six-Party talks, to Obama's policy of "strategic patience" have not deflected Pyongyang's inexorable acquisition of greater nuclear capability.

While the DPRK's nuclear threat is often grossly exaggerated, it is nevertheless an additional element that could destabilise the region. Trump is correct to say that China could do much more to force Pyongyang to change its ways.

This is not, however, a policy. If serious, Trump will need to have a suite of measures to persuade China that it is in its interests to shut down the blatant border trade in coal, iron ore, food and cheap Chinese manufactured products.

It is not surprising that at this time there is nothing to indicate that Trump has any interest or inclination to push China on human rights, Tibet and Xinjiang. These are names that probably mean very little to him.

At best, he may be dimly aware that these have been difficult issues in the bilateral relationship. Similarly, he is unlikely to have had exposure to Taiwan and Hong Kong complexities.

A sustained trade war between China and the US would have disastrous consequences for the region, and particularly for Australia, if growth fell significantly as a result. It is most unlikely, however, that this will occur.

Deep relations

Contrary to a popular view that the China/US relationship is always teetering on the edge of implosion, the reality is very different.

At both the official, corporate and personal levels the relationship is deep with a great deal of ballast.

US and Chinese officials are forever meeting with each other in a myriad of bilateral forums; big US corporates get China better than most and have assiduously built deep relations with their Chinese counterparts and officials; and education institutions, philanthropic organisations and cultural institutions actively work together.

The first six to 12 months will nevertheless be challenging for both sides. As is usually the case with new leaders, Beijing will be wary and watchful. It will not reach out to the new leadership but rather wait for it to make the first move.

Trump will visit Beijing sometime in his first year. For the Chinese leaders this will be a critical meeting.

It will be their first opportunity to engage with him and to try to understand who he is and how he intends to manage the bilateral relationship.

China also has global interests from the state of the world economy and climate change to Middle East peace processes. They will listen closely to what he has to say also on these issues.

Beijing will also not show any flexibility or compromise on contentious issues and most likely in the South China Sea may seek to test Trump's resolve.

In the early months of Clinton's presidency, China fired missiles in the direction of Taiwan to which Clinton responded with maximum effect by sending two carrier fleets through the Taiwan Straits.

That moment in history has now passed and won't return. In the first few months of George W Bush's term, China forced down a US spy plane and held it on Hainan Island for several weeks.

A negotiated resolution was reached. We could expect some sort of incident in Trump's early months. It will test the judgment of Trump and his key advisers, but Beijing will not want this to escalate.

Most importantly, with Trump it is likely that the entire direction of US foreign policy will change. It is likely to mark a return to great power relations with much less emphasis on alliances.

This will be a big break with the approach of US foreign policy in the post-Cold War period.

Australia has benefited from this and been an active promoter and proponent of alliance-based foreign policy.

As China and the US engage more with each other as great powers, Australia will need to begin to re-work its foreign policy assumptions and settings of the past two decades.

Just being close to the US will not be sufficient for our foreign policy and relevance in the region and the world beyond.

Australia will need to return to the activist and creative foreign policy approaches that we pursued when the world was last centred on great power relations, during the Cold War.

Geoff Raby is Chairman and CEO of Geoff Raby & Associates and a former Australian Ambassador to China.

This article first appeared in the Australian Financial Review:
http://www.afr.com/opinion/columnists/how-beijing-will-manage-president-trump-20161110-gsmwum