The recently-concluded G-20 Summit at Osaka, Japan, has had one good result, namely, defusion of the US-China Trade war which was launched unilaterally by the US two months earlier. It’s important to get the context right, and to prevent escalation, since there are pointers from the American Establishment that the trade war may mark the makings of a new Cold War. Consider these facts.
Coincidentally, just as President Trump was planning to announce the end of the trade deal with China on May 5, President Xi Jinping was preparing the biggest demonstration of Chinese power, both ‘hard’ and ‘soft’. On April 26, Xi hosted 37 world leaders for his signature Belt and Road Initiative (BRI) summit in Beijing. Launched five years ago, this is arguably the biggest diplomatic and developmental initiative of the 21st century, in terms of scale, size and speed. Almost 75 countries are enlisted in a massive connectivity of countries and continents, driven by energy and infrastructure, knit together by roads and railways, ports and pipelines.
On May 15, President Xi Jinping hosted the first ever Conference on Dialogue of Asian Civilisations (CDAC), attended by some 1500 delegates from 50 countries. I happen to attend both the mega events in Beijing.
Consider the contrasts. The United States, once the leader of the ‘Free World’, an exponent of free trade and open economy, is today barricading itself behind barriers of tariffs. Conversely, China, ruled by the Communist Party, is in the vanguard of globalisation, opening corridors of commerce. That economic endeavor now has a robust ‘people-to-people’ cultural flank.
The trade war seems to be spawning a struggle between the two global giants, which can slide into a roller coaster ride to a New Cold War.
I have been fortunate to have had close exposure to both societies. Since my first visit to China in the early 70s and my student days in Georgetown in the late 70s, I have had dozens of trips to both countries. During that period, the US-China relationship has developed into an important determinant of the direction of the world. It has been patiently stitched together through decades of close collaboration on a host of bilateral and multilateral issues.
There is legitimate concern that Trump Administration may become hostage to its own rhetoric if the crisis escalates and mutual paranoia can push these two great countries towards a collision.
After participation in these two major events in Beijing, an important takeaway is that China seems ready, willing and able to dig in for what Chairman Mao once described as a ‘protracted war’. In his April 26 Keynote at the BRI Summit, President Xi, echoing Mao, asserted with quiet confidence: “We Chinese have stood up and hold the future in our own hands”. At the CDAC, Xi cobbled a cultural coalition of icons: Hollywood (Jackie Chan), Bollywood (Amer Khan), topped with the popular Italian tenor Andrea Bocelli’s masterly rendition of Nessun Dorma, a fusion of the best from the West and the East.
These extravagances, displays of Chinese economic muscle and cultural outreach, are pointers to Beijing’s multi-faceted role as a global player.
Somewhat worrisome is the queasiness one gauged in Beijing, shared by many in Asia, that the US-China standoff is no longer about trade, this may be more about ‘containing’ China. It doesn’t require a conspiracy theorist to connect the dots. Last year, the US National Defence Strategy already declared China a ‘revisionist' power, a 'threat' greater than global terrorism. Washington has publicly proclaimed its strident opposition to the BRI. The Huawei episode is becoming an ‘existential’ struggle for technological primacy in the 21st century, ultimately, as to which country defines and dominates the digital world. At the May 2019 Shangri-La Dialogue on Security in Singapore, the US unveiled its Indo-Pacific Strategy Report, which accused China of seeking “regional hegemony in the near term and ultimately, global preeminence in the long term”.
There are cogent reasons why Asians, and the world, fear the wider negative fallout of this needless trade war. Such a confrontation is counterproductive, avoidable and unwinnable for both sides. And it could unravel the US-China resilient relationship of the past almost 50 years.
The trade war hurts both the US and the global economy. Take agriculture. China is the largest export market for US agricultural produce, now touching $ 25 billion. The trade war could be devastating for the American farmer. On June 2, the American investment bank, Morgan Stanley, predicted that because of the tit-for-tat tariffs “the global cycle will be at risk’, resulting in a global economic recession in the ‘next three quarters”.
Unlike the previous US-USSR rivalry, today there are more areas of convergence, than divergence, between Washington and Beijing. Take two of the most troubled Asian hot-spots: Afghanistan and Korea. The US and China are on the same page, jointly pushing negotiations to defuse conflicts in Kabul and the Korean Peninsula. The Afghan peace process prompted by the US, with the help of Pakistan, has Chinese support. Just before the Trump-Kim Jong Un historic handshake across the DMZ, President Xi Jinping made his first visit to Pyongyang.
Beijing and Washington have worked together for decades to become pivotal stakeholders of the international economic and political status quo. China’s rise should not necessarily equal an American decline. Nor their competition in different domains be conflictual. In such situations, miscalculations can occur. The Trump administration may underestimate Chinese resolve, while overestimating its own capacity to control the consequences of its actions. Given these high stakes, the recent G-20 Summit in Japan has provided an opportunity for President Trump and President Xi Jinping to ‘seize the moment’ and reset their relationship before it’s fractured further. If Trump blinked to prevent a further worsening of ties with China, there is an irony to that as well, as it shows him to be the most ‘moderate’ in his Administration, surrounded by hawks like Pompeo and Bolton who are in search of ‘enemies’ to ‘fight’ from Iran to China to North Korea. While both the Osaka Summit and the handshake with Kim Jong Un are a step forward, it is incumbent upon President Trump to avert a new Cold War with China, which could be damaging to American interests and destabilising for global economic and political stability.