What the ‘one China’ policy Trump agreed to really means

TOPSHOT – A copy of the local Chinese magazine Global People with a cover story that translates to “Why did Trump win” is seen with a front cover portrait of US president-elect Donald Trump at a news stand in Shanghai (JOHANNES EISELE/AFP/Getty Images)

‘One China’ means no room for Taiwan

President Donald Trump has now agreed to honor the “one China” policy that insists Taiwan is a part of China, backing down from his post-election skepticism of the diplomatic protocol.   

In a Thursday phone call with Chinese leader Xi Jinping, Trump agreed to stick with “one China,” which formally acknowledges only the People’s Republic of China and says that the self-governing Taiwan is a part of it — and not a separate nation.

The policy began in 1979, when the United States under President Jimmy Carter first established a diplomatic relationship with China and severed its then-official relationship with Taiwan.

After the switch, the U.S. passed the Taiwan Relations Act, which pledges support, but not diplomatic ties, to the Taiwanese people. Every U.S. president since has upheld both practices.

Thursday’s call marked the first time that Trump and Xi had spoken. A day earlier, Trump sent Xi a letter wishing him a happy Chinese New Year — though the holiday was on Jan. 28 — after three months of tense relations following Trump’s December friendliness toward Taiwan.

Breaking a 38-year silence  

Trump’s promise to maintain the “one China” policy marks a sharp reversal of his previous statements on the issue. In December, he accepted a phone call from Taiwanese President Tsai Ing-wen, who he claimed called to congratulate him on winning the election. In doing so, he became the first sitting U.S. president-elect or president to open direct lines of communication with Taiwanese leaders since the 1979 change in diplomatic relations.

That 10-minute phone call enraged Beijing, which sees Taiwan as one of its provinces, even though the island has had its own, separate government since 1949 as a result of a civil war. China largely blamed Taiwan — not Trump — for the call.

China nonetheless filed a “diplomatic protest” against the U.S. over the communication, but never detailed to whom it was addressed or what repercussions it may carry. Meanwhile, several Chinese ministry heads publicly demanded that the Trump administration adhere to the “one China” policy.

Following the phone call with Taiwan, Trump repeatedly questioned “one China,” asking why the U.S. has “to be bound” by it. He suggested that the U.S. might back down from the nearly four-decade-old standard.

“Everything is under negotiation, including ‘one China,’” he told the Wall Street Journal.

Trump’s tone reversal is not unprecedented: several U.S. presidents have promised on the campaign trail to push back against Beijing and provide more official support to Taiwan, only to cede to the “one China” policy while in office.

In 1980, then presidential candidate Ronald Reagan vowed to support diplomatic ties to Taiwan, but “one China” continued under his presidency. Presidents Bill Clinton and George W. Bush criticized China’s government when they ran, but also followed the protocol in office.

Avoiding a possible trade war

Trump’s agreement to follow “one China” is a step toward a cordial relationship between his administration and the world power — one that could be crucial to the U.S.’s and the world’s economic health.

China and the U.S. have long been the world’s largest economies, but China is set to overtake the U.S. in gross domestic product by 2030.

Economic analysts have cautioned that a testy U.S.-China relationship could have massive economic implications. Trump previously threatened to impose hefty punitive tariffs on Chinese goods — possibly as high as 45 percent, and well above the current average tariff of just 3 percent.

That kind of move would likely infuriate Beijing, which could retaliate with similar fees on U.S.-made goods, igniting a trade war across the Pacific Ocean.

Goldman Sachs analysts warned that if that scenario plays out, China’s economy could decrease by a percentage point, while the U.S.’s could drop by one quarter of a point. Sustained economic shrinkage could mean recessions for both nations.

On Friday, when asked about China’s currency policies, about which he has often complained, Trump suggested that the Chinese would be amenable to making changes. “I believe we will all eventually, and probably very much sooner than a lot of people understand or think, we will be on a level playing field, because that’s the only way it’s fair,” he said.