Escalating China-US conflict risks ‘hot war,’ warns Kissinger

The trade dispute between China and the US left both countries ‘in the foothills of a cold war,’ Henry Kissinger told the New Economy Forum in Beijing. (Reuters)
Updated 22 November 2019

Escalating China-US conflict risks ‘hot war,’ warns Kissinger

  • Former US hawk leads calls for restraint as trade dispute dominates opening day of Beijing New Economy Forum

BEIJING: The increasingly hostile stand-off between the US and China dominated the first day of the Bloomberg New Economy Forum in Beijing, with speaker after speaker returning to the possibility that tensions between the two countries could escalate out of control.

Henry Kissinger, former US secretary of state and national security adviser, told the forum that the two countries were “in the foothills of a cold war,” and that the situation could be “cataclysmic” if allowed to deteriorate further.

“China and the US are bound to step on each others toes all round the world. If the conflict is allowed to run unconstrained, the outcome could be worse than the wars last century in Europe. The weapons are so much more powerful and sophisticated. The worst-case scenario would be a ‘hot’ war,” he said.

In addition to the greater destructive power of 21st-century weapons, Kissinger highlighted the degree of interdependence between the US and China in the global economy, which contrasted with the almost total isolation of the Soviet Union’s economy in the last “cold war.”

However, he added that the situation had not yet reached a stage of such escalation.

“History does not always repeat itself,” he said.

But he saw some worrying signs in the recent legislation of the US Congress over the continuing turmoil in Hong Kong. “Congress is an institution influenced by domestic considerations and does not understand all the nuances,” Kissinger added.

Earlier the forum had heard from Wang Qishan, China’s vice president, who gave a keynote address that failed to mention the US at all, but contained lots of code words that the Chinese use when they want to obliquely criticize the policies of the Trump administration.

Qishan noted the continued rise of “protectionism, unliateralism and populism,” and warned that “globalization is facing headwinds, and liberalism is under attack,” threatening the prosperity of the global village.

“Between war and peace, there is no doubt that we should chose peace, and this is China’s choice. We reject the zero-sum game of strategy and the cold war mentality,” he said.

The Chinese policy-maker’s line was picked up by Hank Paulson, former US treasury secretary. “It should concern every one of us who cares about the state of the global economy that the positive sum metaphors of healthy economic competition are given away to the zero sum metaphors of military competition,” he said.

“It’s sad to say that the pressures in Beijing and Washington have not lessened in the past year. In fact, they are increasing. If either country tries to force a comprehensive decoupling on third countries, these others simply will not follow. We would risk isolating ourselves, the US and China, from the rest of the world.

“Decoupling in flows of goods will likely continue because the very bad idea of tariffs has been re-legitimated after taking a wallop from the dismal failures of the 1930s,” Paulson added.

Michael Bloomberg, founder of the Bloomberg information and media giant, did not attend the forum. “He made a decision to serve his country,” Paulson said. The former Republican mayor of New York is running as a Democrat in the US
presidential race.


Trump calls for World Bank to stop lending to China

Updated 07 December 2019

Trump calls for World Bank to stop lending to China

WASHINGTON: US President Donald Trump on Friday called for the World Bank to stop giving loans to China, one day after the institution adopted a lending plan to Beijing over Washington’s objections.
The World Bank on Thursday adopted a plan to aid China with $1 billion to $1.5 billion in low-interest loans annually through June 2025. The plan calls for lending to “gradually decline” from the previous five-year average of $1.8 billion.
“Why is the World Bank loaning money to China? Can this be possible? China has plenty of money, and if they don’t, they create it. STOP!” Trump wrote in a post on Twitter.
Spokespeople for the White House and the World Bank did not immediately respond to requests for comment.
The World Bank loaned China $1.3 billion in the fiscal 2019 year, which ended on June 30, a decrease from around $2.4 billion in fiscal 2017.
But the fall in the World Bank’s loans to China is not swift enough for the Trump administration, which has argued that Beijing is too wealthy for international aid.