16.10.2020 Author: Vladimir Terehov

Can Business Prevent US-China Relations from Becoming Fractured?


The flood of events that has occurred recently affecting the politics of relations between the two leading world powers (the United States and China) cannot bring about anything but a feeling of numbing hopelessness for observers. If it were not for the common sense that raises its head in the economic sphere. Notably (and mainly) on the part of private businesses, whose participants, even guided by selfish considerations of their own benefit, can achieve profit only provided that rationality prevails in the space of the relations that exist with their partners. The same rationality that today is hardly visible (if at all present) in the actions taken by those people in power who call themselves “politicians”. Their areas of activity are marked by canned phrases, most often designed to cover up the absence of any reasonable content in them and, quite the opposite, the presence of various kinds of psychological complexes. These are both personal and collective ones, and they are present in the views of the world around them by the establishment that they represent.

In public, “politicians” operate with categories like “democracy”, “freedom”, “human rights”, “authoritarianism”, “totalitarianism”, and “terrorism”. The attempts made to revive the bugbear of the “Communist threat” (particularly on the part of US Secretary of State Mike Pompeo) are completely farcical.

We previously reported that for one of the two world powers (more precisely, for an influential political group within that power itself), the category of “leadership”, which is now under the threat of slipping away, holds particular importance.

The world’s second power, which launched the global Belt and Road Initiative project with a proposal that as many countries as possible could take part in it, including its main geopolitical opponent, is viewed as the source of this threat. It is this project that is considered to be the main threat for “leadership”, meaning that nobody really knows for what.

Although it would seem that, from a more or less rational point of view, there is one reaction that could suggest itself: “Well, let them build their ‘belt and road’. For example, in Africa. And then probably the flood of hungry refugees into our own territory would go down.” However the answer that resounds is: “But what about leadership? We won’t allow that.” And not only will they “not allow that”, but they are trying to make life as complicated as possible for the new player in world politics that has “taken too much upon itself”.

Problems are being “organized” for the main competitor (PRC) in all aspects of its political activities. First, the tried-and-true experience of creating a military and political stranglehold along the periphery of China’s borders is being used. We are talking about the “Quad” of states, something which has been continuously reported by NEO, involving the prospect of forming a military and political alliance that comprises: the United States, Australia, India, and Japan. A meeting in Tokyo is scheduled for October 6th between the heads of the “Quad’s” foreign ministries, and a month afterwards there will be the first meeting between the leaders of these countries.

A suspicious increase in political and military activity in the region can be noted on the part of two of the world’s main former colonizers, meaning Great Britain and France; apparently, they continue to chase ghosts in the attic. However, no matter what, their role (if they have one) will be a secondary one.

The question of whether this or that anti-Chinese military or political project succeeds or fails will be decided in Delhi and Tokyo, meaning in the capitals of the two leading regional powers, whose relations with China are complex, but not at all beyond salvation. In this respect, the fact that the conflict’s “hot phase” in the highlands along the Sino-Indian border has ended is demonstrative, and extremely timely. We can only hope that, just as it was 2-3 years ago in similar circumstances, a “new Wuhan” in bilateral relations will follow.

As far as Japan is concerned, both the fact that there was a telephone conversation between Chinese President Xi Jinping and the new Japanese Prime Minister,  Yoshihide Suga, as well as its content, would seem to be encouraging. What stood out was the Chinese leader’s willingness to act in conjunction with his Japanese counterpart in a “side-by-side” format.

In addition, the forthcoming parliamentary elections in Japan in one year are worth keeping in mind, since their results can hardly be considered a foregone conclusion today, as it was during the previous eight-year premiership of S. Abe. Since in Japan, at last, a powerful center-left opposition party has emerged, and it has a more positive attitude toward China than the current ruling LDP. But so far the polls show an unprecedented level of support among the population for  Yoshihide Suga’s government.

The economy is the second area of focus for Washington’s strike against Beijing, because if it cannot rely on its powerful economic base then it cannot count on that same BRI project achieving success. We need to take particular note that the trade war with China waged by the current administration headed by “tariff Donald Trump” is beginning to go far beyond the framework of his (not unfounded) claims about the state of commerce with the PRC. Incidentally, both sides, despite the growing intensity of their extremely politicized rhetoric having to do with well-known problems that plague US-China trade, are not going to withdraw from the so-called “Phase 1 Agreement” signed on January 15th this year.

However, we should repeat that in recent times the politically motivated administrative repression against Chinese IT giants, such as Huawei, ZTE, TikTok, and WeChat do not have anything to do with those problems. Bans and restrictions are imposed under the pretext of certain classified information possibly leaking to the “Chinese intelligence services”, as well as the personal data of those who use the social networks run by those last two companies. We should also take note of Washington’s not unsuccessful attempts to involve Great Britain and France in the process persecuting those Chinese companies mentioned (primarily Huawei).

We emphasize once again that if Washington’s claims about some aspects of trade with China are not entirely groundless, then the aforementioned “reprisals” are completely political in nature. That threatens to undermine at least some rules governing international business. Prominent business leaders from not only China, Europe, and Japan, but also the United States and the WTO, are beginning to draw the attention of the American leadership to how counterproductive these measures are.

At the same time, D. Trump can allow himself to ignore a statement made by that last organization about how the “tariff war” against the PRC that he unleashed runs counter to existing rules, and he clearly hinted at the possibility of the US withdrawing from this organization. As he did earlier in regard to the World Health Organization – the act of the US withdrawing will take place in June 2021.

But the demarche put forth by four world automotive giants (Tesla, Volvo, Ford, and Mercedes-Benz), which have been growing their business in China in recent years, seems much more serious for him. On September 24th, representatives from these companies filed a lawsuit in the US Court of International Trade not only to repeal the decision to raise the import duties on their products that are sold in the United States, but also to compensate for any losses already incurred by them.

On September 27th, a District of Columbia court suspended the decision made by the US administration to restrict the operations format for TikTok in the country. China also believes that the prospects for the activities of the company WeChat in the United States are not hopeless at all.

After Huawei was banned in the US, it quickly became clear (as “it turns out”) that many American contractors were closely associated with it, and their businesses are now suffering losses. That is why some restrictions had to be eased on delivering microchips to Huawei that are manufactured in the United States.

One key conclusion from all the facts listed, and similar ones from recent times, which China has arrived at is to agree with those American experts who are extremely skeptical not only about whether it is useful, but even whether it is even technically practicable to put in place the (exclusively politically motivated) concept of “economically disengaging” the US from China.

Experts draw attention to the opposite overtones present in the recent (video) speeches given at the 75th UN General Assembly by the leaders of China and the United States. An illustration in the Global Times newspaper on the concept of “disengagement” quite accurately reflects the radical differences in the approaches taken by the parties toward solving the entire host of problems that have accumulated.

In conclusion, let us once again express our hope for the weight carried by common sense in the current, extremely difficult international situation, whose vehicles are (most often) not at all the “politicians” in power, but representatives from the business community.

This means people living in the real world, with its real problems, unwilling to plunge into the sea containing all kinds of fake news that many “politicians” continue to swim in.

Vladimir Terekhov, expert on the issues of the Asia-Pacific region, exclusively for the online magazine “New Eastern Outlook”.

Please select digest to download: