Sunday, September 15, 2019
logo economy journal
< view full issue: USA-China, cold war 21st century
Jaime Ensignia

​China-USA: cold war 21st century

Sociologist, Ph.D in Social and Economic Sciences from the Free University of Berlin

CONTEXT


In the fulfilment of Trump's electoral promises and under their slogan America First, the following could be succinctly highlighted: he has removed the US from the Paris Climate Agreement and the TPP; he has reduced the taxes to the middle "class" and businessmen, favouring the latter by the way; he has established more drastic barriers for the entry of migrants, even violating human rights, by separating parents from their children; he has recognized Jerusalem as the capital of Israel; he has strengthened their relations with Putin and at the same time has distanced themselves from its traditional allies of the European Union; he has reviled and weakened the North Atlantic Treaty Organization (NATO) and started the path of protecting national industry by raising tariffs on Chinese and other countries' products; all This is left to do is to construct the promised wall on the border with Mexico with the objective of preventing the immigration of Central American countries. Recently, Trump imposed tariff measures against Mexico in retaliation to the Mexican authorities allowing the free transit of immigrants. All these policies challenge the international order, based on rules and introduce high-calibre protectionist measures in the economic sphere.


Huawei



NOW, THE "COMMERCIAL WAR" IS UNDER WAY


At the global level, the international diary was tensioned by the Trump administration's measures as regards tariffs on Chinese products in particular, but also on European products and other countries of the so-called first world in what is has called the "commercial war". In this respect, Trump faithful to their protectionist policy has intensified their tariff offensive against the leading exporting powers. 


China has reacted by imposing high tariffs on American products and at the same time it has sought economic and political alliances with the European Union. 


On July 9th last year, Angela Merkel and Li Keqiang, China's prime minister, signed 22 agreements in Berlin, which strengthened political and commercial relations. At the same time, they declared that Germany and China are governed by the rules of the World Trade Organization (WTO), with both countries multilateralism as a tempered way of addressing trade relations (www.dw.de, July 9, 2018). In their column: Chile and the Trade War, (www.emol.com, July 18, 2018), the economist Osvaldo Rosales points out the following: "Trump's trade war has begun. It is not only against China. It is affecting the EU, its NAFTA members, India, Russia, and the total have responded with retaliation measures. In the short term, this will reduce world economic growth half a point and international trade more so... The medium-term scenario is more worrisome. Trump posits a sixteenth-century unilateralism, when economic power was associated with the trade surplus. A vision not contradictory to the denomination of "commercial war", is the one analyzed by Alexis Guardia in www.elmostrador.cl, August 4th, 2018, in their article: "A technological battle behind a commercial war? in which it seems that the conflict between the United States and China is not focused exclusively on trade but rather on the threat that China poses to American technological domination: this is quite clear in a recent statement by the American trade representative (R. Lihhthizer) when he says "We have to take strong defensive actions to protect the American leadership in matters of technology and innovation in the face of the unprecedented threat represented by theft by China of our intellectual property, the forced transfer," Guardia delicately points out that: "From the economic angle, the Trump administration has shown clear signs of blocking the investment of Chinese companies in particular in American companies related to new technological sectors of robotics and artificial intelligence, even citing cold-war-type security reasons. Side effects of this "commercial war" that for some analysts is the biggest commercial war in history was the case of the US cargo ship in July 2018, which was transporting soybean worth US $20 million that had been a month sailing aimlessly around the pacific ocean.


When the levies were applied to Chinese products by Trump, the Chinese government responded with a wave of tariffs on US goods, particularly agricultural products, specifically soybeans.


Centres and Institutes for research and analysis of the international situation, such as the International Institute of Studies for Peace (SIPRI) and the International Monetary Fund (IMF), confirm that exports from China to the US (2017) are of the order of 506,000 million of dollars, while the US exports to China reach the sum of 130,000 million dollars. 


Both powers already competed with each other for some time in areas ranging from technology to the control of the South China Sea.


Mutual distrust is on the rise. The Trump administration has described the Asian country as a "strategic rival" in one of its latest national security assessments. It has passed legislation to veto Chinese investments in the technology sector and has intensified its gestures to Taiwan, which China considers part of its territory. In the last General Assembly of the United Nations, an annual event which brings together the leading world authorities, the Chinese representation led by Foreign Minister Wang Yi, openly criticized the unilateral actions of the US, declaring its support for multilateral organisations such as the Organization World Trade Organization (WTO). In their discourse lasting more than 20 minutes, Wang referred to China as "an advocate of multilateralism, and that China has always defended the international order" (see: www.emol.cl, Saturday, September 29th, 2018: "China and Russia denounces Trump's protectionism as "political blackmail", page A6.). In their article: "Commercial war between the US and China. What is happening?", the Director of the Institute of Advanced Studies of the University of Santiago, Fernando Estensoro Saavedra, notes the following: "Trump dreams of returning to that golden age of the first 30 years after the Second World War. For this reason, he has unleashed a protectionist policy that directly threatens the global neo-liberal economic order, constituted by their predecessors with effort and patience. However, that glorious past will not come back. The world order is inexorably changing, marked by the structural decline of American economic power, "(see: www: lemondediplomatique.cl, August 2018, page 9).


THE SOLUTIONS TO THE CHINESE-US CONFLICT DO NOT SUCCEED


The attempts to attenuate the "commercial war", initiated by the US against the People's Republic of China, have not yielded the results that were expected of them. There were numerous meetings between high-ranking authorities of both countries with the aim of straightening out crucial elements of this "explosive" conflict. At the present moment, the talks are on hold. The media and the international press have focused on US economic trade sanctions against Chinese products, raising tariffs and boycotting Chinese exports in the US domestic market and the pressure exerted by the US government on European and Latin American countries to keep their distance from China economically, commercially and technologically. In this regard, 


China has responded to the Trump government attacks calmly and patiently, but also firmly, raising tariffs on US exports. 


However, in the experts' opinion, the core of the controversy initiated by the United States against China is in what could be called the "technological war", not merely in the commercial sphere. Indeed, in a quite enlightening article by Manuel Castells, entitled "The 5G revolution" (see: www.lavanguardia.es, 03/30/2019), as regards the presentation of Huawei's new Mate X model from the China's leading technology company, private and non-state, he notes that this "has unleashed a violent reaction of the US government against the participation of Huawei in the design and construction of the network. and it turns out that, in the opinion of most experts, Huawei has the world's most advanced design and manufacturing technology in 5G communication networks." Specifically, with this new Chinese model, it is a profound technological transformation with significant business, social and geopolitical consequences, since, as Castells argues, "the construction and management of the 5G network(s) has becomes an essential field of the struggle for power and money, because we live in the age of data capitalism and data is only useful when it can be processed and connected ".


In this scenario, and as analysts and media experts in international politics point out: "As China's economic and political power increases, the United States fear of losing its global leadership intensifies. However, the geopolitical and economic measures applied to avoid this are ineffective and could deeply harm the interests and welfare of their own people." (see: www.eldiplo.org edition 238/April 2019, page 16).


CHINA-USA AND LATIN AMERICA AND THE CARIBBEAN


Succinctly put, the countries in Latin America and the Caribbean cannot be excluded from the Sino-American conflict. If there is no solution to this controversy, the tensions in the international economy between these two planetary giants, the economic output and growth will be affected and in turn will affect that of the other nations of the continent. The USA, historically, as in the last decades, and China, have a significant weight in the region. Thus far in the 21st century, China has increased considerably its influence in key countries of South America, in Argentina, in Brazil, Uruguay and Chile, to name but a few. 


In Central America, Chinese investments are becoming deeper and never cease growing. 


In the case of Chile, the country will not be immune to the effects of the confrontation between these two great commercial powers. Chile, a country with one of the most open economies in the world, with 26 Trade Agreements with 64 markets, representing 64.2% of the world's population and 85.3% of global GDP, will be seriously affected by the increase of protectionism. In 2018, Chilean exports to China exceeded 30%, while those to the United States amounted to 17%. China is by far the leading Chilean trading partner. For Chile, the best scenario -in this trade war- "is one where trade and investment respond to a set of multilaterally-agreed rules". Whereas, "the degradation of multilateralism and the politicization of trade and investment, with regard to the US-China disputes, threaten to bring a 21st-century cold war to our region. Latin America should not allow it "(See: www.emol.com" Latin America and the new cold war, April 11th, 2019, p.A2).

Previous
Next

THE ECONOMY JOURNAL

Ronda Universitat 12, 7ª Planta -08007 Barcelona
Tlf (34) 93 301 05 12
Inscrita en el Registro Mercantil de Barcelona al tomo 39.480,
folio 12, hoja B347324, Inscripcion 1

THE ECONOMY JOURNAL ALL RIGHTS RESERVED

THE ECONOMY JOURNAL

THE ECONOMY JOURNAL ALL RIGHTS RESERVED

Aviso legal - Cookies