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The United States and China Cold War


The relationship between the US and China was already teetering close to the edge of a cliff before COVID-19, but the pandemic pushed it right off. 

The United States and China did not have a smoother relationship in trade in recent years. The conflicts did not seem to end well and there were predictions from the International Monetary Fund that the world’s economic growth will reduce due to ‘protectionism’. 
The dynamic between Beijing and Washington has become so contentious in the corona virus era that china experts now say the two major powers have stumbled into the early days of a new Cold War that could prolong the pandemic, exacerbate the economic devastation linked to the virus, and weaken the world’s ability to thwart common threats.

Image Credit- Law.com
“The consequences of the breakdown in US-China relations is going to be grace for the world and for the global economy, because the ability of the US and China to work together was the keystone of the whole arch of globalization and global trade. With that pulled out, there’s going to be a tremendous amount of disturbance.”


America and China are two among the powerful countries in the world. Both of them have massive economic, political and military capacities that allow them to project power and influence around the world.

The US has been the leading world power, on the other hand, China is nowhere considered less powerful nation either. China embarked on three decades of unprecedented economic growth and modernization as well.
Competition rules the relationship, and flexibility and mature handling are in short supply on both sides.

Uncertainty prevails, whether it is on the question of resolving trade problems, or on the maritime front in the East and South China Seas, on technology, or on mutual mud-slinging on COVID-19-related issues.

The reality is the tensions between the United States and China are rising considerably at moment.

Background: of the Conflict between the US and China

Relations between the two countries had started deteriorating well before the COVID-19 pandemic.

In 2017, the Trump administration’s National Security Strategy called China as “a revisionist power” seeking “to erode American security and prosperity”.

In September 2019, while responding to U.S. Assistant Secretary of State’s comment that the American government was formulating a strategy to address potential “security challenges” by China, the Foreign Ministry in Beijing urged the U.S. to abandon the Cold-War mentality.

COVID-19 appears to have aggravated the crisis.


The U.S.- China often lock horns and can not come to terms of peace in trade. Their conflict not only threatens them but the entire world will face the consequences of the trade war.
In April 2019, the International Monetary Fund reduced the projection for global growth in 2019 to 3.3%, from a 3.5% forecast made in January, citing slowing momentum in “70% of the world economy”. 

The fact is adding evidence that the trade war is not good for the world’s growth.
According to the World Economic Forum, a full-blown US-China tariff war could reduce global GDP growth by 0.7 percentage points (pp) to 2.8% in 2019. 

The impact would be greater on China’s growth (-0.9 pp), due to direct trade effects, and on Europe (-0.8 pp), due to indirect trade effects and financial links (see table). US GDP would decelerate by less (-0.4 pp), due to less direct trade effects and indirect financial links.
The increase in tariffs imposed on goods crossing international borders essentially represents a new tax on a global economy already facing a slowdown. 

In the multi polar, world there remains a struggle to stay strong and powerful.
The world is no longer dominated by two powerful nations US, and USSR. 

Today the power struggle remains between multiple countries like the US and China are also locking horns against one another.

What is a trade war?
A situation in which countries try to damages each other's trade typically by the imposition of tariffs or quota restrictions. 

Also, Read...
Going through history- one of the most famous examples of US protectionism came during the great depression after world war 1. Domestic US businesses faced increased international competition, as well as declining prices due to overproduction.
When the stock market crashed in 1929, domestic businesses largely supported the protectionist measure and in 1930, President Hoover signed the Smoot Hawley tariff act.

Recent Development: US-China Conflict

America imposed Aluminum and Steel tariffs in early March 2018 in order to protect its own industries. Some other tariffs imposed by the U.S were in the field of aerospace, information and communication technology, and machinery.

After all, tariffs imposed by the USA, China placed import duty on a wide range of US product. including scrap aluminum, wine, and apples.
The US again imposed tariffs on about 1,300 Chinese products.
 Later China came out with more tariffs this time taking aim at Boeing planes. America was entertaining the idea of another 100$ billion in tariffs.
The Pause: The G20 meeting in Buenos Aires, In November 2018
The U.S. and Chinese Presidents, Donald Trump and Xi Jinping, agreed to a 90-day truce. The two countries will try to find an amicable solution to the various problems plaguing bilateral trade relations, such as disputes over intellectual property rights and Chinese state support for domestic industries, through talks over the next three months. 
Meanwhile, the U.S. will refrain from raising the tariff on Chinese goods worth $200 billion from the current rate of 10% to 25% on January 1, 2019, as planned.

 In return, according to the White House, China will purchase agricultural and other goods from the U.S. in order to reduce the trade imbalance between the two countries. 

If talks fail, however, increased tariff rates are scheduled to come into force immediately.
In the beginning of 2019 to the end of April 2019 remained peaceful months for both of the countries. Both sides were trying to negotiate a deal, and that kept everything at hold. 

In May 2019, U.S. president, out of nowhere tweeted that he would raise 10% tariff imposed on $200 billion worth of Chinese goods to 25 %.
That the Trump administration pressed ahead with the increase even as China’s Vice Premier Liu He was still in Washington for the second day of talks with U.S. trade officials only underscores the businessman-turned-President’s ‘take no prisoners’ approach to negotiations.
 China promptly promised retaliatory action but was yet to spell out the measures. With Mr. Trump tweeting that “the process has begun to place additional tariffs at 25% on the remaining” Chinese goods worth $325 billion, the U.S. administration unambiguously signaled it was not going to be the first to blink.


The latest revival in tensions between the world’s two largest economies elevates the risk of a global trade war to its highest level since the first signs emerged in 2018.





Does it mean both countries are already in a Cold War? 

Experts point out that there are similarities between the current crisis and the Cold War.

The political elites of both China and the U.S., like the Soviet Union and the U.S. back then, see each other as their main rivals.

However, the kind of proxy conflicts between the U.S. and China which was seen during the Cold War is not to be seen now. Also, the world is not bipolar any more.

It is opined that there are third parties such as the EU, Russia, India and Japan. These parties increasingly have a choice whether or not to align with either power as they see fit and on a case by case basis. This leads to a very different kind of international order than during the Cold War.

A Cold War world be devastating’ and Force countries to choose side’

       The cold war between the US and Soviet Union was a product of the times. World War II devastated large swaths of Europe and Asia, and left the US and USSR as the most powerful nations on the planet. But they had fundamentally conflicting ideologies, which was at the heart of the decades-long standoff between the two superpowers.

Though China is an authoritarian nation and does not share the same worldview as the US, the two countries are far more intricately connected – especially on an economic level. Prior to the coronavirus pandemic, chine held $1.09 trillion in US debt, surpassed only by japan ad America’s top foreign creditor.

There are elements if US-China competition that “reminiscent of the US-Soviet Cold War,” there are also fundamental differences in terms of the extent of trade and people to people interaction.

Here is one big difference between the Cold War with Soviet Union and today with China: at the end of the Cold war America was importing something like $200 million worth of goods from the Soviet Union. America imports for China in 2018 were worth of $500 billion.

There’s an interconnectedness, economically and trade terms between the US and Chiba that just wasn’t there in the US-Soviet cold war, describing the dynamic between the two countries as the determining geopolitical relationship of the 21st century.

The US-Soviet cold war created massive ideologically, military, and political schism in the world, what Winston Churchill famously referred to as the Iron Curtain. There are concerns that the present day animosity between Washington and Beijing could lead to a similar global divide.

America’s relationship with China is vital to tackling future pandemics on top of the other most critical national security issues before us, “ranging from the proliferation of weapons of mass destruction to climate change.

Cold war II

The Cold War between the US and Soviet Union was characterized by an intrinsic distrust between the Washington and Moscow, and a hyper-nationalistic competition for economic, military, and technological hegemony.

Since his 2016 campaign, Trump has portrayed China as a global bully that’s taken advantage of the US even as he’s showered Chinese president Xi Jinping with flattery on numerous occasions. As president, Trump sparked a trade war with China, raising anxiety about the US economy across partisan lines. A deal signed in January seemed to put the trade war on pause, giving Trump a diplomatic victory to tout as he sought to campaign for reflection on a booming economy.


But then came coronavirus, which tanked the economy, put the deal at risk, and spiked any hope of a détente in the near future. Though Trump praised China’s handling of the virus in its early ways, before it was truly global, he’s shifted to bashing the Asian country at every turn and blaming it for the scale of the pandemic.

China has been widely accused of exacerbating the pandemic by suppressing information on the virus, which originated in the Chinese city of Wuhan.

The president and his advisers have taken this a step further, however, by suggesting the virus leaked from a Wuhan lab that researches bat coronavirus. The World Health Organization, among others has generally tied the origins of COVID-19 to a marker where seafood, wild, and farmed animal species were sold.

Meanwhile, Beijing has vehemently rejected the notion the virus leaked from a lab, and China’s Ministry of Foreign Affairs in March suggested COVID-19 came from the US military.

As both governments spread conspiracy theories about the other, trump has raised the possibility of seeking reparations from Beijing over the virus. The president last month also announced plans to slash funding to the WHO, which he accused of being too China-centric.

At the same time, the administration has moved to cut funding to American researchers who’ve collaborated Wuhan lab, jeopardizing progress on finding a cure for the virus in the process. Similarly, the justice Department has been working to squash Chinese influence in American Academia, which is reminiscent of the McCarthy era and the “Red Scare”.

The tit for tat between Beijing and Washington over coronavirus has also extended to the media world. After Trump placed limitations on the number of Chinese citizens who can work in the US for five state –run Chinese news organizations, China in March expelled American journalists working for three of the most prominent US newspapers.

The antagonism is not limited to the Chinese or US governments, and has seeped into the US public. Americans’ views of China have hit a historic low during the pandemic, according to a recent Pew research survey, giving Trump the backdrops for an aggressive China policy.



Who should be blamed?

There’s no doubt that some of the actions the Trump administration has taken have contributed to this. The president is “singularly unfit to do any kind of diplomatic negotiation with anyone.”

But it’s also undeniable that Beijing has been “the prime mover” in terms of driving a wedge between itself and the Washington. Problem of the myriad unlevel playing fields between the US and China before Trump came in.

Trump was right that the dynamic between the US and China was imbalanced. He’s quite wrong and chaotic in the way he’s gone about seeking to regroup and reformulate a new kind of relationship with China.”

“Xi Jinping has been equally remiss and short-sighted,” you have two leaders who are blinded to the necessity of working a new framework out and thus headed into spiral that puts us in the middle of a new kind of Cold war.”

Moment like this require experienced hands to engage where opportunists exist – and to push back and balance where inequalities need fixing and problems need solving.

This haphazard approach to the pandemic, the trade war and the China relationship has cost us jobs and even lies – and there seemingly no end in sight, barring a different electoral out come in November.












                         


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