(File pix) A trade skirmish, even a limited one between the world’s two biggest economies, China and the United States will naturally be bad news for the rest of us and will have relatively larger impacts for trade-dependent nations such as ours. EPA-EFE Photo

2018 seems to be off to a good start, with the global economy generally coasting along as placidly as can be expected and, with it, Malaysia reaping benefits by charting another bumper year of better-than-expected growth.

But, are there black swans lurking on the horizon?

The largest imponderable, I submit, will be over what United States President Donald Trump will do on a host of hot-button issues, most with particular bearing for the East Asian region.

After a year of what, on hindsight, might have been one of unaccustomed introspection, accommodation and giving face, Trump appears all but certain, to take measures to make good on his oft-repeated threats to be tough on China’s trade practices. Exactly what those steps will be and are they sufficiently provocative to compel China to hit back and thus trigger a limited or even full-scale trade war is anyone’s guess at this stage.

A trade skirmish, even a limited one between the world’s two biggest economies, will naturally be bad news for the rest of us and will have relatively larger impacts for trade-dependent nations such as ours.

The government, thus, needs to be prepared and have contingencies in place to cushion our economy should worse comes to worst in a choppy global trading environment.

What if a trade war spills over into other spheres? Trump’s “America First” slogan looks like it can only succeed in a very narrow, transactional, short-term zero-sum scenario focused rather strictly on the matter of trade deficits and surpluses.

America’s relations with what Trump has now taken to calling its most serious strategic competitor, China, have been rather fraught in recent years (and not just beginning with Trump’s presidency) over precisely such fears.

For this very reason, many academics and analysts have revived talk about the Thucydides’ Trap in which Athens’ rise led to fears in established power Sparta in ancient Greece which, in turn, escalated into war. Is China’s rise (and America’s apparent relative decline) thus destined to inexorably lead to war between the two global powers?

The omens are anything but encouraging. A Sino-American trade war is particularly worrying precisely because of the dimension of overall strategic rivalry between the two powers. It thus may not be confined only to the trade front once confrontation is set in motion.

As if to make matters worse, highly combustible and unresolved strategic matters crowd the agenda in East Asia. The North Korean nuclear threat is not going away anytime soon and may simply be unresolvable. Is there anything but bluster to Trump’s tweet that a nuclear North Korea just “won’t happen”?

Now that the US president’s patience with China on economic issues appears to have run its course, does that also mean his depending on the one nation which has any real leverage over Pyongyang (China) to tame the North’s nuclear ambitions is coming to an end?

Is nothing really off the table as far as US Korea policy goes? Should the world be bracing to think the unthinkable: nuclear war over the Korean peninsula?

As if such nightmarish scenarios are not enough, cross-straits relations between China and Taiwan have lately been fraying, to the extent that Taiwan’s independence-minded president has lately taken to warning Beijing that any invasion of Taiwan will be costly.

China has, of course, never renounced force in bringing what it considers to be a renegade province back under Chinese control.

Might Trump be tempted to push the envelope on Taiwan as well, seeing it as a very irresistible lever to pull with Beijing? In the process, will overall Sino-American ties not be pushed right over the precipice?

Chinese President Xi Jinping looks to be the steady hand in all this, having just secured a very strong second-term endorsement of his leadership last year . But, even he may not be able to restore calm if the one seeking to upend the current US-established order is none other than the current occupant of the White House.

Trump has proven over time that conventional political wisdom does not apply to him. Politicians and pundits alike have all come undone trying to make any predictions about where things will go with this American president.

In short, Trump may be the ultimate disruptor-in-chief.

As The Economist had notably said about him, his “supporters take him seriously but not literally while his detractors take him literally but not seriously”. 2018 may well be when we need to take him very seriously.

John Teo views developments in the nation, the region and the wider world from his vantage point in Kuching, Sarawak.


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