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Rex Tillerson at State: What Will He Mean for U.S.-China Relations?

A ChinaFile Conversation

On December 13, President-elect Donald Trump’s transition team announced the selection of ExxonMobil Chief Executive Rex Tillerson as Secretary of State. We asked ChinaFile contributors to respond to the choice with a specific focus on how Tillerson might affect U.S.-China relations. —The Editors

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Donald Trump’s nomination of Rex Tillerson as Secretary of State should be rejected by the Senate. Much has already been said about Tillerson’s close relationship with the Russian government. But putting the CEO of the world’s largest private oil and gas company in charge of U.S. foreign policy also threatens to derail the serious bilateral progress being made on climate change by the U.S. and China, the world’s two largest carbon emitters.

Although Tillerson has said he accepts the scientific reality of climate change, he has made false statements about the reliability of global climate models. Under his leadership, ExxonMobil, despite a public pledge to stop, continues to fund organizations that promote climate denial, such as the American Enterprise Institute, the American Legislative Exchange Council, and the Manhattan Institute. Most troublingly, Tillerson claims that climate change is simply an “engineering problem” that can be “managed,” presumably while the world continues to increase its consumption of oil and gas. ExxonMobil predicts that in 2040, oil and natural gas will make up nearly 60 percent of global energy supplies.

Tillerson’s perspective is untenable, especially since oil and gas were responsible for 53 percent of total global CO2 emissions last year. It is particularly worrisome when applied to China, where the increase in passenger and freight transportation has been one of the major contributors to the rapid growth of China’s total CO2 emissions.

Under Presidents Barack Obama and Xi Jinping, the U.S. and China have been working closely together to reduce oil consumption in both countries as part of a strong and comprehensive program of climate change cooperation. In their September 2015 Joint Statement on Climate Change, for example, China pledged to ensure that the share of public transit in all motorized urban transport reaches 30 percent by 2020—presenting the potential for huge reductions in the People’s Republic of China’s CO2 emissions. China recently increased that public transit target to 60 percent for cities with over three million residents.

China and the U.S. also announced that they will finalize next-stage fuel efficiency standards for heavy-duty vehicles in 2016 and implement them in 2019. In the U.S.-China Climate Change Working Group, the two countries are also cooperating to develop clean fuels and vehicle emission control technologies; to promote efficient, clean, freight; and to develop best practices for green ports and vessels. The U.S. is also providing technical guidance on China’s greenhouse gas accounting guidelines, with a focus on the oil and gas sector.

A U.S.-China Clean Vehicles Consortium is performing transformational research on electric vehicle technologies. China now plans to produce 2 million EV/plug-in hybrid cars per year by 2020 and sell 5 million EV/plug-in hybrid cars by that date.

Finally, in September, 2016, both countries pledged support for a new deal to curb carbon emissions from the aviation industry, which helped to lead to a historic global agreement in October. In sum, a whole lot is at stake if the Trump Administration walks away from the carefully crafted structure of bilateral cooperation between the two countries after January 20.

Fortunately for the planet, combating climate change is good for business, as a group of some 360 major U.S. corporations wrote to Trump last month. But it may not be good for fossil fuel companies like ExxonMobil, if they bet on the future being the same as the past.

Donald Trump, who famously called climate change a hoax manufactured by the Chinese, is already on a path to cede the clean-energy future to China. If Rex Tillerson is confirmed as the next U.S. Secretary of State, he could use his position to push both countries further backwards. Tillerson needs to put U.S. interests above those of the company that has employed him for his entire working life. But Tillerson’s track record of repeatedly ignoring U.S. interests in the pursuit of profits does not offer much hope.

The President-elect’s choice of Tillerson indicates that Trump will tap Tillerson’s rich experience in conducting international business and negotiation. The nomination conforms with Trump’s pattern of bringing successful businesspeople into his cabinet, to “make America great again.”

Presumably, Tillerson has been nominated for his competence in international negotiation. The President-elect seems to have great expectations of conducting “fair” international business, so as to bring many jobs home. As long as this is his intent, nominating Tillerson could bode well for America and the world, as Trump would prioritize negotiation as the chief means to settle international disputes over trade and investment.

Rex Tillerson is not new to Moscow and Beijing. Through his company’s business, he has been acquainted with his counterparts in Russia, and even with the latter’s political élites. He has been well accepted by the Kremlin, so he doesn’t need to build chemistry from beginning with Russian President Putin. He also knows China quite a bit, including the issue of the South China Sea, due to ExxonMobil’s business with China. Though such business has not been always smooth, he has kept traveling to Beijing to promote cooperation.

As Secretary of State, if Tillerson maintains his pattern of engagement to conduct relations with other countries, this will be a diplomatic plus for the United States. Surely his new job will have human rights as well as geopolitics added to his agenda, so business will not be conducted exactly as usual. However, bargaining and negotiating will remain a major tool in his kit. And that won’t hurt.

One might question his credibility as Secretary of State, as he is known to be close to Russia. However, this does not necessarily mean he is unwilling or unable to defend America’s interests. Given a challenge like Crimea, he could well defend Ukraine, possibly with a more skilled approach, to better communicate with Moscow while pressuring it. In this case, despite the challenge of Crimea, the U.S. and Russia might be less confrontational on issues such as Syria.

Tillerson’s good relations with Russia don’t necessarily mean a more negative partnership between China and the U.S. First, despite Trump’s push, the chance of fundamental improvement of relations between the U.S. and Russia might be limited, as the Congress and American élites will have a difficult time accepting Putin’s unyielding position on Crimea. Second, Russia might enjoy both a strong partnership with China and a certain degree of improvement in relations with America at the same time. Moscow has no need to lift the latter at the cost of the former. U.S.-China-Russia trilateral relations don’t necessarily need to be a zero-sum game, and China could hopefully be better off with the improvement of Washington-Moscow ties.

While Secretary of State plays an important role in China-U.S. relations, when all is said and done, Rex Tillerson will carry out President-elect Donald Trump’s foreign policy, rather than his own policy. So we should not over-exaggerate the role of the top U.S. diplomat.

What Barbara worried about above—a possible setback on the climate change front—is really an issue for Trump, rather than for Tillerson. It means that no matter who becomes secretary of state, it is hard to see the same kind of enthusiasm on the climate change abatement front coming from the Trump administration as compared with the Obama administration.

I believe Tillerson was chosen for his rich business and international experience that could be useful in U.S. diplomacy.

ExxonMobil has a long and huge presence in China, so Tillerson, as CEO for the past decade, is not new to China. He knows the huge potential of win-win cooperation between the U.S. and China and also the problems that exist in bilateral relations. And that potential, if fully exploited, could help boost the growth of both U.S. and Chinese economies. Win-win cooperation could indeed help Trump achieve his stated goal to “Make America Great Again.”

On the other hand, if Trump plays a lose-lose game by triggering a trade war by imposing a 45 percent tariff and naming China a currency manipulator, it will hurt both economies and make Trump’s goal of growing the U.S. economy less likely to be achieved.

Tillerson, as a businessman, is more likely to be a positive force to convince Trump to move on the win-win path forward. Trump, a businessman, should know this well himself.

President Obama also has pursued win-win cooperation with China, but the U.S. opposition to the China-led Asian Infrastructure Investment Bank (AIIB) and its lack of enthusiasm for the One Belt One Road initiative, not to mention the U.S. bid to exclude China from the Trans-Pacific Partnership (TPP) as a part of Obama’s Rebalance to Asia strategy, do not reflect a win-win mindset. For example, when the U.S. tried to isolate China on the South China Sea issue, both countries lost many opportunities for mutual cooperation.

Also, I’ll never understand why Secretary of State John Kerry appointed undersecretary of state Sarah Sewall to be special envoy for Tibetan issues. Such an appointment would only invite animosity from China and complicate the situation. Should China’s Foreign Ministry appoint special envoys for U.S. racial relations and Native American issues?

I believe as a businessman, Tillerson will be more pragmatic and less likely to be an ideologue, as many previous top U.S. diplomats have proven to be.

Some problems between China and the U.S. won’t be solved for a long time. If we continue to be obsessed with that, it’s just going to cost both countries more resources and opportunities. It’s just like a couple, if they keep pointing to the other’s problems every night, both won’t have a happy life.

In that regard, I am hopeful about Tillerson. But it really depends on how his boss, Trump, will perform after January 20.

Tillerson’s resumé suggested a businessman with some reserve of policy-related wisdom, a scaled down Averill Harriman or Thomas Lamont. He is after all a trustee of a think tank that treats war and prospects for war respectfully, and Sam Nunn, more or less representing that think tank, showed up to extoll Tillerson’s potential statesmanship. But Tillerson’s performance before the Senate Foreign Relations Committee suggested something else entirely. He’s been retired not even a month from over forty years at a single resource company that is bigger than several State Departments put together. No principles apply. He’s not a pragmatist or a realist or a hawk or a dove. He sees the U.S. government as an appliance for the furtherance of corporate goals. As an oil man, he knows Russia, Saudi Arabia and Iran are all to be indulged. But his plan for China comes from the two-dimensional strategies for war, football and board games. China must be “denied” the South China Sea, or at least the islands it has built there. No more with the protests, the reasoned objections. Deny.

The number of absurdities dangling from this idea is terrifying. How does a man who acknowledges the economic interdependence of China and the USA, the precarious strategic tolerance of the two, come up with an inflexible public dictum like this? American trade is heavily dependent upon free transit across the South China Sea, which China may soon be in a position to interrupt any time it pleases; to Tillerson this evidently means, start with the ultimatums. Like you can settle out of court later. There are maybe 11 billion barrels of oil and 190 trillion cubic feet of natural gas under the South China Sea, and China is threatening to grab it, or at least delay exploitation indefinitely by prolonging the hegemony soap opera; clearly a stronger case for ultimatums. It seems to not cross his mind that America’s future in the South China Sea is in the hands of the Philippines and Vietnam and Malaysia and Indonesia, all of whom were gradually shifting allegiance to China and now will probably accelerate. He is unconcerned about the consequences for the ASEAN countries, or Australia, of taking a stand that would require outright war. If a show-down with China will get the deal he wants, then little guys sitting on the rim of the South China Sea, and little guys in Kentucky unloading the goods at Walmart, will have to live or die with that.

When it comes to human consequences, Tillerson was chillingly direct in response to Marco Rubio’s question on war crimes: “These things happen.” Journalists, historians, social activists get flattened if they get in the way of their “authoritarian” betters. The prospective Secretary of State appears bemused that anybody would think otherwise. Little countries who get between Tillerson and his oil can expect the same. Is it too much to ask that a candidate for this office assume at least some veneer of civilization and informed deliberation?