Will the Sino-US trade spat plunge the world into a new cold war?

Ostensibly, trade tussle will overshadow Sino-US relations in the long term, with any possible truce short-lived, the strategic rivalry will be a lasting one, considering the tactics employed by Trump will only precipitate the head-on standoff between two biggest economic powers. As the distrust deepens, the economic decoupling of the two countries will come true and it would make the world much more dangerous, given the strategic conflict between the US and China would no longer be constrained by shared economic interests.

Photo: CNN

Trade war to be prolonged and excruciating

In the heat of the trade war, Chinese government released a white paper to express its views and stance on dealing with the Trump administration. The paper expounds on issues like: mutually-beneficial and win-win China-US cooperation in the trade and economic field, clarification of the facts about China-US trade and economic relations, the trade protectionist practices of the US administration, the trade bullying practices of the US administration, damage of the improper practices of the US administration to global economy, and China's position.

In essence, the paper put all the blame for the trade war on the US. It condemned the US as the greatest source of uncertainty and risk for the recovery of the global economy for preaching unilateralism, protectionism and economic hegemony, making false accusations and imposing its own interests on China through extreme pressure while the paper also touted China's efforts to demonstrate utmost patience and good faith and upholds the common interests of both parties as well as the world trade order. Apparently the white paper sought to seize the moral high ground by positioning China as the undeserving victim in its trade fight with the U.S. and the global standard-bearer for fair trade. And this, some analysts believe, will only further irritate the Trump administration filled with China-bashing hawks.

The hard-line attitude China adopts in the paper may underscore its confidence that its GDP growth will only be detracted by 0.5% at most due to the impact of the trade war, and it can compensate for that loss by boosting domestic demand and improving the environment for private businesses. And more importantly, the theatrics of the ongoing trade war will discourage Beijing from appearing soft publicly. China could hardly back down as it is striving for the “great rejuvenation of the Chinese nation,” which will stand in stark contrast to its century of humiliation by Western powers.

For Trump's part, he is demanding a substantial reset of trade ties with China and opposing what he called unfair industrial policy working in favor of state enterprises. China has long supported its export-oriented firms and national tech champions by doting on them various financial and policy incentives, most stinging of them all is the “Made in China 2025” program, which the US and some of its allies believe, aims to achieve global tech supremacy by replacing market share of foreign rival. In Trump’s word, the program is trying to pry intellectual properties from the US through theft or forced tech transfer. Now, with a robust US economy and surging stock market, Trump is emboldened to play a even tougher hand in demanding significant changes to China’s trade policies, state support and subsidy to state sector of the national economy.

Ostensibly, trade tussle will overshadow Sino-US relations in the long term, with any possible truce short-lived, the strategic rivalry will be a lasting one, considering the tactics employed by Trump will only precipitate the head-on standoff between two biggest powers.

As the distrust deepens, the economic decoupling of the two countries will come true and it would make the world much more dangerous, given the strategic conflict between the US and China would no longer be constrained by shared economic interests.

The advent of a new cold war

As strategic competition heats up in international relations and global preeminence, the US and China, the world's two largest economies, each representing a distinctively different value systems, are set for a collision course on various fronts other than trade. In the UN Security Council, the Human Rights Commission or UNESCO, China has adamantly aligned itself with nemesis of the US and its allies by exercising its veto power in the Security Council to protect regimes in the DPRK, Iran, Syria and other countries branded as authoritarian by the US. Globally, China is expanding its influence and threatening to erode, willingly or unwillingly, the US power through the Belt and Road Initiative, SCO, China-Africa summit.

It may look like a new cold war is returning to us albeit taking a morphed form, critics of Mr. Trump held him accountable for  igniting the new cold war by launching a trade war with China and slapping various sanctions on Russia, Iran, North Korea etc. However, the advent of the new Cold War was evident even before Trump took office as China adopted a more assertive or aggressive approach to regional flash points like South China Sea, Taiwan, Japan, North Korea, Syria. It also aims to project its global soft power by proposing and advocating "Chinese model", "Chinese solution to global issues" and "A community of shared future for mankind".

A new cold war is also divided into two camps: one is the traditional liberal democracy camp headed by the US, and the other includes China, Russia, Iran, North Korea, Syria, Turkey, etc. Unlike the former socialist bloc, all of rival camp have embraced market economy which gives the new camp a relatively stronger economic footing.  Among them, China has far greater economic strength than the former Soviet Union and taken by hawks in Washington as the biggest challenge to the US. 

In a globalized world, the iron curtain that separated the last cold war no longer exists, the new cold war rivals are economically intertwined, with authoritarian camp relying on the market, capital and technology of the liberal camp. And in the absence of a cohesive ideology, the so-called authoritarian camp has to resort to "Nationalism" to counter the "Universal values" promoted by the liberal camp.

Confronting the trade war and sanctions, the so-called authoritarian camp can fight back due to their strong control over the society and ability to quickly mobilize national resources to cope with problems brought about by the trade war or sanctions.


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