Sun, Jun 10, 2018 - Page 6 News List

US-China trade spat facilitates war

By Minxin Pei 斐敏欣

For most observers of the unfolding trade war between the US and China, the casus belli is the convergence of China’s unfair trade practices with US President Donald Trump’s protectionist credo. However, this reading misses a critical development: the demise of the US’ decades-long policy of engagement with China.

Trade spats are nothing new. When allies engage in such disputes — as the US and Japan did in the late 1980s — it is generally safe to assume that the real issue is economic, but when they happen between strategic rivals — such as the US and China today — there is likely to be more to the story.

Over the past five years, Sino-US relations have changed fundamentally. China has increasingly reverted to authoritarianism — a process that culminated with the elimination of presidential term limits in March — and pursued a statist industrial policy, embodied by its Made in China 2025 program.

Moreover, China has continued to construct islands in the South China Sea to change territorial facts on the ground. It has plowed forward with its Belt and Road Initiative, a thinly veiled challenge to the US’ global primacy.

All of this has served to convince the US that its China engagement policy has utterly failed.

Although the US has yet to formulate a new China policy, the direction of its approach is clear. The US’ latest National Security Strategy, released in December last year, and National Defense Strategy, released in January, indicate that the US now views China as a “revisionist power” and is determined to counter Chinese efforts to “displace the US in the Indo-Pacific region.”

It is that strategic objective that underlies the US’ recent economic maneuvers, including Trump’s extravagant demand that China cut its trade surplus with the US by US$200 billion in two years.

In addition, the US Congress is about to pass a bill restricting Chinese investments in the US, and plans are being drawn up to limit visas for Chinese students who study cutting-edge science and technology at US universities.

That the current trade spat is about more than economics will make it much harder to manage.

While China might be able — with substantial concessions and a healthy dose of luck — to avoid a devastating trade war in the short term, the long-term trajectory of US-China relations is almost certain to be characterized by escalating strategic conflict, and potentially even a full-blown cold war.

In such a scenario, containing China would become the organizing principle of US foreign policy, and both sides would view economic interdependence as an unacceptable strategic liability.

For the US, allowing China continued access to its market and technology would be tantamount to handing it the tools to beat the US economically — and then geopolitically.

For China, too, economic disengagement and technological independence from the US, however costly, would be viewed as critical to stability and to securing the country’s strategic goals.

Decoupled economically, the US and China would have far less reason to exercise restraint in their geopolitical competition.

To be sure, a hot war between the two nuclear-armed powers would remain unlikely, but they would almost certainly engage in an arms race that fuels overall global risk, while extending their strategic conflict to the world’s most unstable areas, potentially through proxy wars.

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