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Express Tribune
an hour ago
- Business
- Express Tribune
Sino-US rivalry — collusion, competition, conflict
The writer is a retired major general and has an interest in International Relations and Political Sociology. He can be reached at tayyarinam@ and tweets @20_Inam Listen to article The US-China competition remains the 'defining issue' of international politics. My last piece titled the "Sino-US rivalry" was published in this space on January 11, 2024, where some relevant writings of the CNN-famed Fareed Zakaria and others were discussed. Given the comparative National Power Potential (NPP), the world seems to be drifting from unipolarity, ushered in after the collapse of the Soviet Union in 1990s; to the 'present state' of bipolarity (the US and China); and to the likely future scenario of multipolarity (China, Russia, EU, India and Brazil). First, a bipolar comparison. Conventional view is that China is 'already a US peer or near-peer, economically'. However, as I had pointed out, in the present state of competition, China still needs to do a lot of catching up, as the American NPP — especially its military strength, power of alliances and its cosmopolitan, multicultural and educated demography — far outpaces China, the 'hesitant regional power' that is trying to become a more assertive superpower. The US GDP is almost twice as large as China's and some analysts believe that the Chinese official figures are fudged, with Beijing manipulating key economic metrics, including GDP. China is heavily dependent upon fuel imports; has almost 20% housing vacancy rates and over $1 trillion in debt from its 48,000 km high-speed rail networks. The US by comparison leads in key high-technology sectors like the IT/software and services sector (80% of global profit shares); aerospace and defence (66.35%); drugs and biotechnology (60%) and semi-conductors/chips (58%, compared to China's miniscule 2.6% share). Then there are studies indicating that in a full-blown trade war, 'decoupling' China from the international economic system (sanctions) will disproportionately hurt Beijing, if China has not undertaken economic hardening like Russia. Moscow, in anticipation of the West Plus's reaction to Ukraine, had taken on years of pre-emptive economy-hardening steps to mitigate the ill-effects of sanctions. China's other handicaps include demographic weakness (overpopulation, effects of one-child policy, aging population); lack of alliances; its lighter presence in important global regions (Europe, the Middle East); its comparatively subdued power to influence others; China's lack of experience and exposure to act big, unlike the US, having the benefit of history and multicultural pluralism; and China's nagging legacy of trouble-spots (Spratly Islands, Tibet, Turkestan, human rights, etc). So far, there is no alternative to US power. But that does not mean China is and will not catch up. Second, the prospect of a Sino-US conflict. One had disagreed with the likelihood of conflict, as Beijing is likely to blink first, because the global status quo is protective of its core interests. Additionally, China is not a 'spoiler state' like Russia. President Xi abandoning his 'lone-wolf diplomacy' has often asked the US to lift sanctions, especially on technology transfers. And President Trump recently lifted ban on the sale of America's Nvidia-made semiconductors (especially the H20) to China. US's I-Phone is designed in California and assembled in China by a Taiwanese company, Foxconn. And in more curious case of inter-dependence, China monopolises supply of rare-earths, needed for US-manufactured semiconductors, to be used in China's high-end products, for export to the US/Western markets. There are more anti-conflict indicators, especially about the much-touted US-China conflict over Taiwan. There is a great deal of soul-searching in the American policy establishment about the cost-benefit of a war to defend Taiwan against a Chinese invasion. The US rationale in defending Taiwan is to prevent China from gaining a new foothold to project power in East Asia and disrupt trade routes in the western Pacific, thus upsetting the western-dominated global economy. America's 'vital' interest, however, is to prevent China from regional hegemony in Asia. In reality, Taiwan does not confer any outsized military advantages to China, other than extending the range of its missiles, AD assets and surveillance systems by a couple hundred 'unneeded' kilometres. Beijing can still target US regional assets in Guam, Japan and Philippines. China's under-sea gains would similarly be modest. In sum, Beijing's control of Taipei hardly overturns the regional military balance. Military logic and economic considerations, hence, do not warrant direct US involvement to defend Taiwan. Taiwan's TSMC still produces 90% of the world's most advanced chips. However, by 2032, the US company, Boston Consulting Group, will be producing 28% of the most advanced semiconductors. Likewise potential blockade of the narrow sea-lanes in East and South China seas by China marginally affects the global sea trade, as bypassing options exist through Indonesian and Philippine archipelago. Similarly, the notion that Chinese invasion undermines the US credibility is also geostrategically flawed, as fighting China over Taiwan unnecessarily binds US resources, needed elsewhere for the bigger objective of containing China. The US military prioritises developing the 'second island chain' of Guam, Marshal and Northern Mariana Islands, Micronesia and Palau for this purpose. In the US reckoning, Taiwan certainly matters, but not enough to justify war with China, as composite deterrence would likely work to dissuade China. And if push comes to shove, PLA will prevail in a conflict with Taipei with or without the US, the former scenario being more costly for the US Armed Forces. The suggestions that Taiwan should become a 'porcupine' in its denial-focused strategy against Chinese invasion is also not likely to work, as the island just does not spend enough on its defence, and ignores acquisition of anti-ship defence, naval mines, uncrewed weapons and drones. Taiwan can make the invasion slow, long and costly but not impossible, as its geography, low and dwindling materiel stockpiles in case of a Chinese naval blockade would ultimately tilt the operational balance in China's favour. So, no wonder, Washington officially supports 'One China' policy, respects China's redlines and there is much noise in Washington about 'competitive co-existence' with China. Third, alliances and economic integration. China remains one of the most important markets for EU especially Germany's export-driven economy. It meanders carefully through bloc politics, tries to be a peacemaker in the Middle East and vies for leadership mantle in the Global South. It is wary of a conflict with the US and so is the US. So, collusion, competition short of conflict will persist and recur.
New Indian Express
11 hours ago
- Business
- New Indian Express
China seeks to 'strengthen cooperation' with US at next week's trade talks
BEIJING: China said on Wednesday it will seek to "strengthen cooperation" with the United States at next week's trade talks in Stockholm. Washington and Beijing slapped escalating, tit-for-tat levies on each other's exports earlier this year -- reaching triple-digit levels -- stalling trade between the world's two biggest economies as tensions surged. US Treasury Secretary Scott Bessent said Tuesday he would meet his Chinese counterparts in Stockholm next week for tariff talks. The third round of high-level negotiations would see a likely postponement of a mid-August deadline for levies to snap back to steeper levels, Bessent told Fox Business. Chinese foreign ministry spokesman Guo Jiakun said Wednesday that Beijing hoped the two sides could work together "on the basis of equality, respect and mutual benefit." "We will enhance consensus, reduce misunderstandings, strengthen cooperation and promote the stable, healthy and sustainable development of Sino-US relations," he said. China's vice premier will attend the talks in the Swedish capital. "He Lifeng will go to Sweden from July 27 to 30" for the negotiations, a commerce ministry spokesperson said in a Wednesday statement. After top officials met in Geneva in May, both sides agreed to temporarily lower their tariff levels in a de-escalation set to expire next month. Officials from the two countries also met in London in June.
RTHK
12 hours ago
- Business
- RTHK
HK stocks surge on hopes of Sino-US deal
HK stocks surge on hopes of Sino-US deal The Hang Seng Index ended trading on Wednesday at 25,538 on gains of 408 points or 1.62 percent. File photo: RTHK Hong Kong stocks were lifted by hopes of a Sino-US trade deal on Wednesday after an announcement that Tokyo had struck a deal for lower tariffs with Washington. The benchmark Hang Seng Index ended 408 points, or 1.62 percent, up at close at 25,538. The Hang Seng China Enterprises Index rose 1.82 percent to end at 9,241 while the Hang Seng Tech Index rose 2.48 percent to 5,745. The gains came as the Commerce Ministry in Beijing announced that Vice Premier He Lifeng would visit Sweden from July 27-30 to hold economic and trade talks with US officials. Trading on the mainland ended up being mixed and much more subdued. The benchmark Shanghai Composite Index rose 0.01 percent to 3,582 while the Shenzhen Component Index closed 0.37 percent down at 11,059. Their combined turnover was more than 1.86 trillion yuan, down from 1.89 trillion yuan on Tuesday. Stocks related to aesthetic medicine, new medicine and insurance led gains while stocks related to cement and building materials and power grids suffered major losses. The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, lost 0.01 percent to close at 2,310. In Tokyo, news of the Japanese-US tariff deal saw the benchmark Nikkei stock index climbing almost 4 percent to its highest in a year, led by stocks in automakers with gains of more than 14 percent for Toyota and nearly 11 percent for Honda. (Reuters/Xinhua)
RTHK
13 hours ago
- Business
- RTHK
China eyes stronger US cooperation at tariff talks
China eyes stronger US cooperation at tariff talks Spokesman Guo Jiakun says China-US ties should be developed on the basis of equality, respect and mutual benefit. Photo courtesy of Foreign Ministry website China said on Wednesday it will seek to strengthen cooperation with the United States at next week's trade talks in Stockholm. "On the basis of equality, respect and mutual benefit... we will enhance consensus, reduce misunderstandings, strengthen cooperation and promote the stable, healthy and sustainable development of Sino-US relations," Foreign Ministry spokesman Guo Jiakun said. US Treasury Secretary Scott Bessent said on Tuesday he would meet his Chinese counterparts in Stockholm next week for tariff talks, eyeing an extension to a mid-August deadline for levies to snap back to steeper levels. Bessent told Fox Business he will be speaking with Chinese officials in the Swedish capital on Monday and Tuesday for a third round of high-level negotiations, to work out what he said would be a likely postponement of the deadline. Washington and Beijing slapped escalating, tit-for-tat levies on each other's exports earlier this year, reaching triple-digit levels, stalling trade between the world's two biggest economies as tensions surged. But after top officials met in Geneva in May, both sides agreed to temporarily lower their tariff levels in a de-escalation set to expire next month. Officials from the two countries also met in London in June. "That deal expires on August 12, and I'm going to be in Stockholm on Monday and Tuesday with my Chinese counterparts, and we'll be working out what is likely an extension then," Bessent said in the interview. He noted that Washington also wanted to speak about a wider range of topics, potentially including Chinese purchases of Iranian and Russian oil. (AFP)
The Star
2 days ago
- Business
- The Star
Enhancing economic resilience crucial in trying times
How should China strengthen the resilience of its economy? In April, the Trump administration announced a surge in global tariffs, triggering strong responses from governments around the world and causing sharp turbulence in financial markets. Within three days of the announcement, global stock markets lost over $9.5 trillion in market capitalization, and volatility intensified significantly across bond, foreign exchange and commodity markets. In the United States, stocks, bonds and the dollar all fell simultaneously. The yield on 10-year US Treasury bonds also posted its biggest weekly gain since the Sept 11, 2001 attacks. The shockwaves from the tariff moves continue to ripple across the world, with escalating confrontations on all sides. Faced with the Trump administration's high tariffs and erratic behavior, China must resolutely implement countermeasures. Any concession would only lead to further pressure from the other side. Only through firm resistance can space for negotiation and cooperation be created. On April 25, a high-level meeting for the first time proposed coordinating domestic economic work and international economic and trade struggles, aiming to use the certainty of high-quality development to cope with the uncertainty of dramatic changes in the external environment. On May 7, the People's Bank of China, the China Securities Regulatory Commission and other government authorities jointly introduced a package of incremental policies to stabilize market confidence. On May 12, China and the US released a joint statement after economic and trade talks in Geneva, in which the US agreed to remove some additional tariffs, and China reciprocated accordingly, temporarily easing tariff pressures. However, over the medium-to-long term, challenges in Sino-US economic and trade relations persist. It is worth noting that tariffs may not be the Trump administration's ultimate goal, but rather a bargaining tactic aimed at achieving the dual objectives of reducing the US trade deficit and maintaining the dominance of the greenback. In fact, since the onset of the trade conflict in 2018, the US government has been exerting significant pressure and imposing extreme restrictions on China in both trade and technology sectors. We must be fully aware of the worsening international economic and trade environment in the foreseeable future and recognize that China and the US will continue their strategic contest for a long time. So, against this backdrop, how should China enhance the resilience of its economy? We believe the most important approach is to focus on doing our own job well, remain self-reliant and persist in expanding domestic demand. At the same time, we must unswervingly expand high-level opening-up. Expanding domestic demand is the top priority for 2025. Following the directives from the Central Economic Work Conference in December 2024, expanding domestic demand became the top priority of economic work this year. This is because insufficient domestic demand is currently the main stumbling block in China's economy. In 2024, total retail sales of consumer goods grew by only 3.3 percent year-on-year, significantly lower than the 9.7 percent average between 2015 and 2019. From the perspective of the three engines of GDP — consumption, investment and exports — final consumption in 2024 contributed an average of only 2.3 percentage points per quarter to GDP growth, much lower than the 4.2-percentage point average between 2015 and 2019. Breaking down the three factors influencing household consumption — changes in income, wealth and expectations — we find that in the short term, the main constraint on consumption growth is the sharp slowdown in household income growth since the COVID-19 pandemic. In 2024, cumulative year-on-year growth in per capita disposable income was 4.6 percent in urban areas and 6.6 percent in rural areas, well below the 7.9 percent and 9.6 percent levels of 2019. Over the long term, two main factors constrain consumption: first, weak expectations and confidence about future employment and income; second, evident imbalances in income distribution across households, the government and enterprises, as well as within the household sector itself. Rising risk aversion among residents has led to an increase in precautionary savings, reflected in the sharp rise in new deposits and continued decline in new loans since 2022. In terms of income distribution, profits generated by enterprises have not been sufficiently transferred to households, and the income distribution within the household sector also needs improvement. Beyond the income gap between urban and rural residents, an even more important issue is the much wider gap in property and social security entitlements. To sum up, we believe that to stimulate consumption, macroeconomic policy stimulus is needed in the short term, while structural reform should be accelerated in the medium term. Based on the logic of moving from short-term stimulus to long-term reform, the following policy recommendations are proposed. First, a more proactive fiscal policy and a moderately accommodative monetary policy are keys to driving a rebound in China's nominal GDP growth. The main issue facing the Chinese economy is insufficient aggregate demand and a negative output gap. In the short term, to address the lack of domestic demand, central government finances should increase borrowing and spending to drive a rebound in consumption and investment. In addition to promptly implementing the expansionary policies outlined in the Government Work Report, additional stimulus measures should be planned for the second half, especially through greater issuance of special treasury bonds. To make full and effective use of proactive fiscal policy, we recommend accelerating the issuance of the remaining quota of local government special bonds and special treasury bonds in the second quarter, and issuing an additional 2 to 3 trillion yuan ($411.6 billion) in special treasury bonds for the year. Second, increasing short-term incomes for low and middle-income households through fiscal subsidies is advised. We recommend issuing universal consumption vouchers to encourage spending, especially among low and middle-income earners. To maximize the multiplier effect of consumption vouchers, they should be issued without being tied to specific products or services. Third, lifting asset prices from the bottom can also help restore consumer confidence. On real estate policy, housing prices in core areas of the largest cities should be stabilized promptly, and support should be given to leading well-managed private developers. All purchase and loan restrictions should be lifted to unleash demand from first-time and upgrading buyers. Special-purpose bonds should be issued to provide low-cost, long-term financing for high-quality developers. The government can also purchase idle commercial housing in second and third-tier cities and convert it into rental-based public housing. In the stock market, efforts should be made to cultivate a long bull market. In addition, with an aging population and slowing investment-driven growth, China's potential economic growth rate is trending downward. To reverse this trend and restore confidence among microeconomic actors, bold structural reforms are needed. These include reforms in income redistribution, education, healthcare, pensions, housing, development of a unified domestic market and support for private enterprises. The writer is deputy director of the Institute of Finance and Banking of the Chinese Academy of Social Sciences. The views do not necessarily reflect those of China Daily. - China Daily/ANN
