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The confrontation between China and the United States has only just begun, and those who are confident that the good times will return, when trade and the division of labor between the two countries have expanded nicely, will be disappointed. The world will be a worse place.
When a situation that has been developing for a long time changes unexpectedly, in accordance with human nature, those involved believe that things will soon return to their usual course. It’s hard to bear the thought that nothing will ever be the way it used to be. We have seen this well during the coronavirus epidemic, and it is slowly being felt in China-US relations as well, writes Gideon Rachman, a publicist for the Financial Times (FT).
Since the 1970s, the economies of the two countries have become more and more integrated, so it’s hard to imagine this not happening. Many business decision-makers believe that when politicians in Washington and Beijing see the economic cost of the confrontation, they eventually make common sense and resolve their differences. They trust that the resumption of trade will shake commercial ties to the right place; at most, we have to wait for the American White House to be a new resident.
It’s a vain hope
However, this is a vain hope, according to the France Télécom publicist. The reality is that the division has already moved beyond technology, extended into financial services and, over time, will affect all important sectors, from machinery to manufacturing. In addition, it will have an impact on everything big, including Europeans, as it will dismantle established supply chains and also reform legislation in the US and China.
The fact is that the relationship between the two large countries is reversed: the logic of business cooperation is assumed by strategic rivalry. The new rule will be that political considerations prevail over economic ones. And even if a new American administration comes along, the two major parties agree that tough policy against China should be pursued, even if it is to the detriment of corporate profits. This is evidenced by the fact that the law requiring Chinese companies to be listed on US stock exchanges if they do not allow US authorities access to their books. It was passed unanimously in Congress. .
In China, politics also prevails over economics, that is, to avoid provoking the United States for economic reasons. After Xi’ing Qing-ping became head of state in 2012, Beijing began building military bases in the South China Sea, abolishing Hong Kong’s autonomy and acting violently against millions of Uighur Muslims. Furthermore, the military threat from Taiwan is becoming more pronounced.
Pointing at each other
The parties accuse each other of hostility. Beijing points to US President Donald Trump, under whose leadership the US imposed unilateral criminal tariffs on small Chinese products. Washington is spewing the Chinese blockade of Google and Facebook, which was a decade before the United States’ action against Huwai and other Chinese high-tech companies. Whoever struck first, the point now is that both countries are adhering to discriminatory regulations.
In response to the ouster of Chinese tech companies in the US, a boycott of American consumer brands will ensue in increasingly nationalized Chinese society. China could become self-sufficient in many technologies, such as chip development, in which it has worked with American companies so far, in response to Apple’s production of its next iPhone, for example, not only in China, but there and in India. .
Now comes the java
And the war on financial services could be even worse. The United States has caused severe damage to countries such as Iran or Venezuela during the last decade by imposing financial restrictions on them, mainly international remittances, and now it has also begun to arm this weapon against China. And here again, it won’t matter that Wall Street banks do badly if they restrict their services to Chinese companies, and the restrictions will have an impact on Europe and other parts of the world as well.
Big companies, investors, banks and stock exchanges want to take a neutral stance in the new Cold War between the United States and China, but that may be impossible, says the author of the FT article. Two major trends in the last forty years have been globalization and the economic merger of the United States and China. Yet this world is shattered before our eyes in the smoke of gunpowder from gunfire at spoiling parties.
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