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The United States approaches the next election more divided than ever in the history of its democracy. Consequently, many things will change depending on who, in just over a month and a half, is the winner. On one issue, the most important of all in foreign policy, there will be no substantial change: policy towards China will remain the same. Democrats and Republicans will be divided on how to navigate the relations agenda with the Asian giant, but the content of the agenda will be the same: challenge China to the end and by all means, excluding only, at least for the foreseeable future. , the military conflict.
Trump has decided to concentrate all his foreign and military policy towards the Asian quadrant and accompanied this change in strategy first with trade measures and then with a relentless fight for technological supremacy.
The trade war was at least temporarily successful, but it showed its limits for some important reasons. The first is that, over time, China’s dependence on its exports has gradually decreased. Chinese exports, despite having increased greatly in quantitative terms, have gone from 35% of Chinese GDP in 2006 to 17.5% today.
This is not only due to the incredible increase in national GDP, but also to the increase in the cost of labor and the exchange rate of the renbimbi. Today, China is less dependent on foreign trade as its domestic market has grown. The second reason is that more than a third of these exports come from the Chinese branches of multinational companies, mostly American, against which it is certainly not appropriate to be enraged by the American president. Nor should it be overlooked that, albeit incompletely, China’s foreign trade has become less dependent on the dollar. In fact, exports invoiced in renbimbi went from 2.5% in 2010 to 16.9 in 2016.
Therefore, a technological challenge has been added to the trade fight, an area in which the United States boasts undoubted superiority. Therefore, Chinese companies were affected, such as Huawei, which threatened to break this superiority in a sector as delicate as 5G, on which an important part of the future economic and productive development of the planet depends. The fight for primacy in this area is in full swing. Cards in the hands of the US government are powerful given that some key components of Chinese 5G are the result of American technology. In addition, the pressure from the United States on friendly governments not to have relations with Huawei is particularly strong given the strategic value of the products in question.
The fight for technical-scientific preeminence is just beginning. The end result is still uncertain because no one knows what the consequences will be of disrupting the flow of students and scientists between China and the United States. This uncertainty increases if even a highly authoritative American benchmark like Eric Schmidt, the legendary leader of Google, recently expressed the belief that, in the next technological revolution based on the development of Artificial Intelligence, China will finally prevail, given the enormous number of its inhabitants, the ease of accumulating data and, above all, the enormous amount of resources concentrated on research in this field.
Having no competence to enter this refined war of prediction over the future of technology, I limit myself to registering the current balance of power that still sees the United States prevailing, both in the scientific and strictly military fields.
However, the effects that Covid-19 is bringing on the development rates of the economies of the two countries are somewhat surprising. When the epidemic broke out, everyone expected the Chinese economy to suffer irreparable damage. In fact, the negative consequences have been considerable and, in 2020, growth, which was expected to be around 6.5%, will be limited to a value between 1% and 2%. At the same time, however, the United States and the European Union will see their GDP fall by no less than 8%, while forecasts were geared towards a positive figure of between 2% and 3%. Therefore, China’s race to the Western world, at least as is clear from the data referring to the end of August, is advancing at a faster pace than before the Covid-19 outbreak, with an industry operating at increasing speed. and with an unexpected jump in exports of over 9%.
Therefore, there are all the elements for the great challenge between China and the United States to continue, with toughness and determination, even after the next elections. We only hope that it does not turn into armed struggle, as has often happened in the challenge between a rising country and a stabilized leader. And we hope that Europe, comforted by its latest great and unexpected progress, will finally find the energy to play a leading role in the future transformations of the world.
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