US-China standoff

The United States and China have agreed to disagree. Their contentious calculus in trade is evenly pitched with both sides out to extract a pound of flesh from each other. Washington’s intent is to secure its ailing and uncompetitive industrial base, especially in sectors where Beijing has outclassed it in terms of price and production. But as far as China is concerned, it is a test case of demand and supply, and the lone superpower has no choice but to reconcile. Perhaps, this is why the four-day dialogue in Guangzhou and Beijing on US Treasury Secretary Janet Yellen’s visit were mostly flagged with concerns and suspicions with the US taking a position of protectionism to deter the phenomenon of ‘made in China’ over its capitalist articulation.

Chinese premier Li Qiang and Secretary Yellen, however, saved the day by agreeing to cooperate in tackling money-laundering and sharing notes in security-related deals primarily concerning defence production. The evolving competition in the Straits of Taiwan and the war in Ukraine are redlines for both side, and this is where astute cooperation in their relations is desired, rather than knee-jerk reactions. But as far as the US is concerned, it has a strategic problem to face as China’s cheap production and its penetration in the markets worldwide has pushed its industry to the verge of decimation. China’s desire to push its surplus production into five continents through BRI is a case in point souring bilateral relations.

This imbalance in trade has fomented a cold war and that is there to stay. The enigma for the US is that its capital markets are dominated by Chinese investment, and the China-isation of Manhattan and financial fiefdoms on the West Coast alike are turning into a nightmare for indigenous American businesses. Yet there is a long way to go as both sides must look at the broader prism in terms of addressing climate change concerns as well as debt-restructuring, and not merely entering into a deadlock on excess capacity conundrum.

Published in The Express Tribune, April 9^th, 2024.

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