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Foreign Policy

The China-U.S. Dispute Will Expand

Mar 07, 2019

The China-U.S. trade war has been going on for nearly a year. The two sides have found that in the era of economic globalization, it is impossible for only one side to win while the other loses. Not only has a global industrial chain already been formed, but the sharing economy created by information globalization has discouraged unilateralism in one country or one region. The trade war is a war of attrition; both sides will lose and in the end, there will be no winner. We should look at trade as one dimension, which cannot be separated from the three-dimensional or multi-dimensional spaces of investment, finance, exchange rates, high technology, and other non-trade areas. Therefore, the China-U.S. dispute will definitely develop from a two-dimensional war of trade to multiple dimensions. Thus, Chinese telecommunications giants, such as ZTE and Huawei, have also become the targets of Donald Trump’s sanctions.

History shows that the United States finds it necessary to establish an international rival or enemy. Recently, this author attended an event celebrating the Yan’an Spirit and China-U.S. Relations. At that time it seemed very strange. Why would the Communist Party of China establish a harmonious relationship with the United States as early as the Yan’an period? In fact, there was nothing surprising about it. At that time, the relationship between China and the United States was not based on a common ideology, but on a common enemy: the Japanese, who killed tens of millions of Chinese and tens of thousands of Americans.

What about the mechanism for the establishment of diplomatic relations between China and the United States in the 1970s? The answer: the joint action against the Soviet Union. The so-called China-U.S. dispute is not an ideological struggle or a struggle for values; it is about who can dominate the future globalization process and new economic growth.

Henry Kissinger says that the economic system has become global, but world politics are still based on the state, so the common problems we face are caused by globalization, such as the contradiction between human development and the environment; the exploration of space; diseases and natural disasters that endanger humans; and the information explosion.

China-U.S. relations need to be understood in the context of globalization. What are the differences between China and the United States? What do they have in common? The differences are that the United States has a large trade deficit, whereas Chinese government-backed state-owned enterprises are not fully market-oriented. Plus, China uses the market for technology. What they have in common is that both China and the United States endorse the market economy and the dollar-centered global economic system. In addition, both sides are trying to figure out how to develop domestic economies that are high in quality and efficient, and jointly face the problem of globalization and human destiny. In other words, it does not make sense for China and the United States to oppose each other; it makes sense for China and the United States to face the issue of globalization together.

Externally, even if United States policy makers unanimously regard China as the main enemy, this does not mean that they are on the same page. The interests of Trump representatives and the interests of Wall Street representatives are different. There are clear differences in policy between a group of Wall Street bankers and the military-industrial complex represented by Trump. For example, on the question of the U.S. dollar, should it be strengthened or weakened? At the beginning of Trump’s rise to power, the U.S. dollar index rose above 103 and it was predicted to hit 110 or even 120 in the short term. But in fact, the U.S. dollar index has fallen 10% all the way to 96 since he took office. The RMB also gained 6.7% against the U.S. dollar. This just confirms the author’s view that there is strong misalignment in the United States on its domestic situation and the international political and economic situation. The logic of starting a trade war was to weaken the U.S. dollar and take the traditional road of lowering the exchange rate to increase exports. One year later, U.S. policy has undergone a new leap. In the future, provided that the general trend of globalization remains unchanged, there will be further negotiations between China and the United States, unless the world becomes hemispherical or polarized.

In the course of the U.S.-China trade war, the United States has gradually shifted its focus from trade to tapping the economic potential of new economic fields, such as intellectual property rights and high-end services (finance). Chinese policy makers should review the situation, make use of China’s innovation advantages, adjust to U.S. policy in a timely manner, and lead the China-U.S. dispute to a higher dimension. On Jan. 3, China successfully launched the Chang’e 4 lunar probe on the far side of the moon. And on Feb. 24, Huawei announced the birth of the world’s first foldable 5G smartphone. Both examples are bound to affect China-U.S. negotiations. In addition, China has already launched the Mozi quantum communications satellite and built the giant FAST radio telescope, pitting the two sides against each other. Recently, Trump wrote in a tweet that he wants to see Huawei competing in the 5G market.

On February 25, Trump announced that he would delay an increase in tariffs on Chinese goods and expressed hope to meet with Chinese President Xi Jinping to sign an agreement to end the trade war, which shows that the dispute between the United States and China has risen from the trade war dimension to a multi-dimensional plane.

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