New US-China rivalry will force the world to take sides
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When a new great power emerges to challenge the status quo, disturbance is inevitable — so it was only a matter of time before the US and China clashed.
The gulf between the two nations has grown in the past two years, although neither the Bush nor Obama administrations were unfettered fans of the Beijing regime; they were happy for US companies to collaborate with China and for supply chains to become more integrated, but they understood that while China was open to trade and entrepreneurship, the US and Chinese governments differed greatly on democracy and human rights.
Donald Trump is not particularly perturbed by a country’s record on those two issues. His aim is to “make America great again” and return jobs to its rust belt. He went toe to toe with Beijing on trade. He had valid points as far as a level playing field was concerned, in terms of opening the investment market, limiting the preferred status of Chinese state-owned enterprises and stopping the theft of intellectual property. There were trade negotiations, and a phase 1 trade agreement.
However, there was acrimony about Huawei and fears that China could spy on the US and its allies if they integrated Huawei equipment into their 5G infrastructure. Then the COVID-19 pandemic ratcheted up the controversy as Washington accused Beijing of not reacting appropriately and quickly enough to the virus, allowing it to spread globally.
China’s new security law for Hong Kong made the rift all the more apparent. It supersedes Hong Kong’s constitution, the Basic Law, restricts the civil liberties of Hong Kong citizens, and effectively ends the “one country, two systems” structure that was supposed to last until 2047 under the terms of the Sino-British declaration of 1984.
This month Trump terminated Hong Kong’s special economic status, and said he did not think there was currently room for further developing a US-China trade deal.
Some have suggested that we are on the verge of a new Cold War. We are not. The original Cold War between the Western and Soviet blocs was defined by an arms race and proxy military stand-offs across a series of borders throughout bthe world. Although this new power struggle has the potential to become military, it is mainly about economic influence.
China has embarked on rapid economic and geopolitical expansion. Western nations took some time to realizehow far the $1 trillion Belt and Road Initiative was designed to extend China’s reach. It was not until Sri Lanka was forced to lease the port of Hambantota to a Chinese state-owned ports company for 99 years in compensation for debt on which it would otherwise have defaulted that Western nations fully understood the BRI’s geopolitical dimension.
When a new great power emerges to challenge the status quo, disturbance is inevitable — so it was only a matter of time before the US and China clashed.
Cornelia Meyer
Now the Huawei controversy threatens to split the world into pro-China and pro US camps. The UK hasexcluded Huawei from its 5G infrastructure, which is a clear victory for Donald Trump.
The controversy over Hong Kong has also raised questions about the status of Taiwan, which Beijing regards as part of one China but most Western nations see as independent. Taiwan matters, not just to Japan, which has an old and close relationship with it, but to many other countries too. Taiwan is also one of the leading manufacturers of semiconductors, so its status matters to the world economy at large.
Many of China’s southeast Asian neighbours are concerned about its increased military presence, particularly in the South China Sea. China’s defense budget has grown steadily in lockstep with its economy; at $178 billion in 2020 it is the second-largest in the world, and increased by 6.6 percent from 2019 to 2020.
China’s divergence from the US is therefore ideological, economic and increasingly military too.
Washington may have its reasons to ratchet up the rhetoric against Beijing, but in the past three years the US has also withdrawn from multilateral frameworks such as the Paris treaty on climate change and the World Health Organization. China steadfastly supported these organisations, giving it in the eyes of many the status of a friend of the multilateral global order.
We are back to where we started: The economic and geopolitical rise of China has coincided with America’s skepticism and withdrawal from the post-1945 world order, which is based on multilateralism.
It is self-evident that this will lead to friction. Even if Donald Trump loses November’s presidential election, we should not expect matters to revert to how they were before. The world and the US have moved on. Anti-China rhetoric has ratcheted up on both sides of the political divide in the US, as Democratic candidate Joe Biden vies with Trump in his skepticism of Beijing.
It is now up to the rest of the world to choose where they want to align in this debate, which is not an easy decision. Stay tuned …
- Cornelia Meyer is a business consultant, macro-economist and energy expert. Twitter: @MeyerResources
