China and the US: a deteriorating relationship

Sharply deteriorating relations between the United States and China will have serious consequences for the world. Relations between these two superpowers have already been through three phases, each phase leading to worsening of the way the two countries deal with each other. First came the verbal articulation of their different approaches within their own countries and with the world outside. These differences were expressed by the senior leadership of both countries. The tone of exchange became sharp during the four years of the Trump presidency, from 2017 to 2021. On the Chinese side, President Xi Jinping, upon getting another unprecedented term in office, made it clear to the assembled members of the Chines Communist Party that he strongly believed that the Chinese way of governance would serve the country’s large population well, while the Western system, espoused by the United States, did not reduce economic and social disparities among the people.

The second phase also began during the Trump era but picked up momentum when President Joe Biden took office. This phase has been described as “decoupling” when the United States adopted several policies to reduce the level and nature of economic contacts between the two countries. For more than thirty years, beginning with the early 1980s when Chairman Deng Xiaoping began to open his country’s economy to the world outside, China welcomed both financial and technical inflows from the West. Significant amounts of these came from the United States. During this time China became a major supplier of cheap merchandise to the markets in the United States and other parts of the developed world.

Over time China developed supply chains that fed parts and components to the industrial producers in the United States. Apple is a good example of this relationship. While it designs its product in its headquarters in the United States’ West Coast, the manufacturing is done in a giant assembly plant in southern China. This facility imports parts and components from a dozen countries in Southeast Asia. The result is a supply chain that benefits all those who are involved in it. However, in the Trump and Biden eras, Washington’s policymakers came to believe that these kinds of arrangements were not working in favour of the United States. A series of policies were adopted by Washington that reduced the contacts between economic enterprises in the United States and China.

Behind the third phase is President Joe Biden and his senior associates, including Anthony Blinken, the Secretary of State, and Jake Sullivan, the National Security Adviser. This phase is leading to the building of alliances in Asia as well as the Middle East that are designed to check China’s advance in the geographic areas of great interest to the United States. Beijing interprets this as the “contain China approach” and sees it as a repeat of the approach when Russia was a major part of the Union of Soviet Socialist Republics, the USSR. To ensure that relations between the two countries don’t deteriorate to the point where a Soviet Union-United States type of cold war gets launched, Biden administration sent three senior officials to Beijing to hold discussions with the senior leadership of China. Among those who went across were Antony Blinken, the Secretary of States; Janet Yellen, the Secretary of Treasury; and Gina Raimondo, Commerce Secretary. Since trading relations between the two countries were central to the way Beijing and Washington were seeing each other, the most consequential of these visits was by Raimondo.

She went to Beijing seeking to stabilise business ties and boost exchanges with China, focusing on both government officials and businesspeople. She was the first commerce secretary to visit China in five years. She prepared for her visit by holding extensive discussions with business people. “To the 100-plus business leaders with whom I spoke before this visit, I am happy to say that we are delivering,” she told a group of American and Chinese businesspeople in Beijing.

Her first meeting was with Wang Wentao, her Chinese counterpart, with whom she spent four hours. The two agreed to establish an information exchange on export control enforcement. The aim of this group, she explained, would be to “reduce misunderstandings of U.S. national security policies”. Explaining the purpose of her visit, she said that Washington was not seeking to curb China’s economic growth. “A growing Chinese economy that plays by the rules is in both of our interests,” she told Wang. In response, the Chinese minister said that Beijing was “ready to work together to foster a more favorable policy environment”. He insisted that China’s economic slowdown which brought the growth in the country’s economy to the lowest point in half a century makes China’s need for foreign investment even more acute.

The United States Commerce Department has imposed stiff export controls on Chinese technologies which Beijing has declared as malicious attempts to suppress Chinese companies working in the area. “Raimondo has an extra card to play because she can initiate a dialogue on export controls since that’s her portfolio — and that’s what the Chinese want to talk about,” said Bill Reinsch who was undersecretary of commerce for export administration during Bill Clinton’s administration and now works at Washington-based Center for Strategic and International Studies. The CSIS has made China studies an important area of its research and advises the government in power, both Republican and Democrats on its approach towards Beijing.

The controls on enterprise activities put in place affect just one per cent of the $700 billion in bilateral trade between the United States and China. Raimondo may repeat the statements she has often made that the United States is not seeking to decouple from China, said He Weiwen, a senior fellow at the Center for China and Globalization, in an editorial published by the Chinese state-affiliated Global Times. “But the United States has said that many times. The key is to see what the United States has actually done, not what it has said.” This skepticism also informed official thinking in Beijing.

Other foreign relations experts working in various institutions in China also worried about the extensive effort the Biden administration had launched to recruit both Asian and Arab nations to its side of the American-China relations. The alliances Washington is in the process of putting in place deserve a more detailed discussion. The American administration has excluded Pakistan from these arrangements. I will take up this subject in the article next week.

Published in The Express Tribune, September 25^th, 2023.

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