18 | ENE | 2020
United States-China trade and geopolitical tensions will extend into 2020
A U.S. $100 banknote is placed next to 100 yuan banknotes – Photo: Petar Kujundzic/REUTERS

United States-China trade and geopolitical tensions will extend into 2020

13/12/2019
14:36
Gabriel Moyssen
Mexico City
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The trade and geopolitical tensions between the U.S. and China will extend into 2020 with its potential to disrupt global economic growth

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The trade and geopolitical tensions between the United States and China that characterized this year will extend into 2020 with its potential to disrupt global economic growth, judging from the latest Washington steps regarding the protests in Hong Kong and U.S. interventionism in the Muslim region of Xinjiang.

Although negotiators are still working in order to hold off on new U.S. 15% tariffs on about USD $160 billion in Chinese exports that were set to go into effect next Sunday, according to the U.S. Agriculture Secretary Sonny Perdue*, the reality is that the political measures enacted by the White House and Congress are contributing to creating “a mountain of mistrust,” in the words of Christopher Hill, former Assistant Secretary of State for East Asian and Pacific Affairs.

“China is concerned that they cannot really reach a deal because they cannot rely on it. On the U.S. side, there is a perception that China also has credibility problems,” Hill told the South China Morning Post on the sidelines of an economic forum in Sanya, in the Chinese province of Hainan over the weekend.

The world’s two largest economies have been waging a 17-month long trade war, triggered by U.S. President Donald Trump’s protectionist policies. Negotiations were believed to have reached an agreement last May, yet talks collapsed, with Washington accusing China of backtracking on concessions and Beijing accusing the U.S. of flip-flopping and making unreasonable demands, such as expecting China to change its state-led economic development model.

However, new efforts were made to sign a “phase one” agreement this month during the Asia-Pacific Economic Forum summit in Chile; its cancellation, due to local protests against the Santiago government, added uncertainty to an environment further stressed by the promulgation of the so-called Hong Kong Human Rights and Democracy Act on November 27, despite the fact that Trump himself admitted that it would not make trade talks easier.

In its response, the Chinese Ministry of Foreign Affairs called the bill “a blatant hegemonic move,” announcing that Beijing will suspend reviewing requests of U.S. military vessels and aircraft to visit Hong Kong.

In addition, China will impose sanctions on U.S.-based non-governmental organizations involved in the financial hub’s turmoil, including the National Endowment for Democracy, the National Institute for International Affairs, the International Republican Institute, Human Rights Watch, and Freedom House.

These NGOs stated People’s Daily in a commentary, “are also notorious for their misdeeds in ‘color revolutions’ across the world.” The official newspaper of the Central Committee of the Communist Party of China remarked that Beijing has sent clear signals of opposition to the interference; nevertheless, “Washington is still obsessed with its wrongdoing, walking steadily on the evil path.”

Electoral process
Earlier this month, Trump suggested he could wait until after the 2020 U.S. election to strike a trade deal because he has “no deadline,” a position that will probably be strengthened by the successful negotiation of the Agreement between the United States, Mexico, and Canada (USMCA) amendments on Tuesday.
In the midst of his impeachment process, the White House is insisting that China agree to purchase USD $50 billion annually in U.S. farm products such as soybeans and pork, so Trump can claim a political victory and shore up his support in key Midwestern farm states.

United States soybean exports to China sank to USD $3.1 billion in 2018 from USD $12.2 billion in the prior year, Census trade figures show. Farmers, affected as well by the slump in global prices, poor weather, historic floods, and foreign competition, have received nearly USD $20 billion in aid in the last two years, said the American Farm Bureau Federation.

Trump’s aspirations, nonetheless, are also being complicated by yet another bill, the Uyghur Human Rights Policy Act of 2019, passed by the House of Representatives on December 3; NGOs and activists say China has detained roughly one million Uighurs in detention camps in the northwestern Xinjiang Uygur Autonomous Region.

Beijing underscores the centers are part of a program designed to tackle terrorism since thousands of Uighurs joined the jihadist groups in Syria -sponsored by the U.S., the Atlantic Alliance, Saudi Arabia, and Israel- during the last years.

As in the case of the Hong Kong bill, China’s response has been harsh, ordering this week all government offices and public institutions to remove foreign computer equipment -some 30 million pieces of hardware- and software within three years, increasing the country’s reliance on home-made technologies, The Financial Times reported.

Microsoft, Dell, HP, and other U.S. technology companies generate as much as USD $150 billion a year in revenues from China, although much of that will come from private sector buyers.

Still, it is probably just a matter of time before Beijing expands the rule to all national organizations, both public and private, as part of the “Made in China 2025” program, aimed at decoupling from the U.S. and lifting the Chinese economy up the value chain through the advancement of new technologies.

Beyond the trade talks juncture, it is evident that Washington is pursuing a policy of destabilization in Hong Kong and Xinjiang exploiting political, ethnic, and religious problems in order to hamper China’s road to global supremacy. Defense Secretary Mark Esper declared that the U.S. aims to prioritize the deployment of forces to the Asia-Pacific region from other areas, including Afghanistan.

“Our war-fighting advantages over strategic competitors are being challenged,” Esper told the Reagan National Defense Forum in Simi Valley, California. “China and Russia, today’s revisionist powers, are modernizing their militaries while seeking veto power over the economic and security decisions of other nations,” he added confirming the 2012 policy to “pivot” toward Asia, established by the Obama administration.

In the same framework, it is worth remembering that Trump has been following in his predecessor Barack Obama’s footsteps, mounting “freedom of navigation operations” in the South China Sea, where territorial disputes persist between Beijing and U.S. allies such as Taiwan.

On the economic front, Obama’s masterstroke was the Trans-Pacific Partnership, marginalizing China from future trade flows in the vast region; surprisingly, the White House withdrew from the agreement in 2017, ceding the initiative to its Asian rival.

It is no coincidence that former Secretary of State and National Security Adviser Henry Kissinger warned of an inevitable “conflict” between the U.S. and China, with a potentially “catastrophic” outcome.

“There is no doubt many aspects of the evolution of China are challenging to the U.S. What is imperative is that both countries understand that a permanent conflict between them cannot be won. There will be a catastrophic outcome if it leads to a permanent conflict,” he stressed in an event organized by the National Committee on U.S.-China Relations in New York in November.

Considered the architect of the 1972 historic bilateral rapprochement that facilitated China’s modernization and the end of the Cold War, Kissinger added that if no resolution is achieved, the ensuing conflict “will be worse than the world wars that ruined European civilization. It is no longer possible to think that one side can dominate the other. They have to get used to the fact that they have that kind of rivalry.”

*United States President Donald Trump declared today that “a very large phase one deal with China” had been reached. “They have agreed to many structural changes and massive purchases of agricultural product, energy, and manufactured goods,” he tweeted, yet Trump said that existing tariffs will remain in place.

For its part, China’s Vice Commerce Minister Wang Shouwen said Beijing and the U.S. agreed on the text of a phase one deal that includes the removal of tariffs on Chinese goods in stages. Vice-Chairman of the National Reform and Development Commission Ning Jizhe affirmed that the specifics of agricultural purchases would be released later, as the text of the agreement is still under review.

Editing by Sofía Danis
More by Gabriel Moyssen
 

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