AP
Can a trade war halt the Middle Kingdom’s development?
Global media — including Russian outlets — are commenting on a brief account of the virtual meeting between Treasury Secretary Janet Yellen and Vice Premier of the PRC State Council He Lifeng, as posted on the U.S. Treasury Department’s website. The statement reads: «Secretary Yellen raised issues of concern, including those related to China’s non-market policies and practices and its excess industrial capacity, which are harming American workers and businesses and, if left unaddressed, will continue to negatively impact the U.S.-China economic relationship». It also mentions that «she (Yellen) underscored the significant consequences that companies — including those in China — would face for providing material support to Russia’s war against Ukraine».
The American administration repeatedly uses such warnings to frighten everyone around the world. In reality, however, this was a routine meeting conducted as part of «efforts to responsibly manage the bilateral economic relationship». According to the U.S. Treasury Department, «Secretary Yellen and Vice Premier He discussed macroeconomic developments in both countries and reviewed the work of the economic and financial working groups they jointly established last year». The goal here is to keep the rivalry to healthy competition.
Thus, the American financial agency almost openly admits: «The virtual call was open, substantive and constructive, and both sides noted the importance of communication and contact».
It’s worth noting that the full content of their conversation has not been made public, and it’s unclear what Vice Premier He Lifeng said in response. The Chinese generally do not disclose details of diplomatic discussions. However, we know from statements by Chinese officials that China has many grievances against the United States and is not afraid to voice them. In China, U.S. criticism of Beijing’s relations with third countries is publicly characterized as interference in internal affairs.
So one might be astonished at Yellen’s boldness in publicly rejecting the basic principles of the World Trade Organization and, indeed, the fundamentals of global trade. But the reality is that lately the United States has been ignoring more and more of the principles on which the modern world is built — whenever they run counter to American interests and threaten its hegemony. The WTO, which is supposed to protect free trade from Washington’s protectionism, remains indifferent. We could also point out the irony that the United States, which is supplying Ukraine with tens of billions of dollars worth of weapons, is denying China the right to trade with Russia. But that’s the reality we have to face.
Even China, despite all its power, is forced to acknowledge this. Barely two days after the Yellen-He conversation, it’s been reported that due to American sanctions, certain Chinese ports — namely in Shandong Province — are imposing restrictions on the reception of the so-called «shadow tanker fleet» that delivers Russian oil to China’s shores. Admittedly, this news is being circulated by the Western media, and its accuracy has yet to be verified. Nevertheless, it remains quite possible. China’s Foreign Ministry, however, said it was unaware of any such restrictions.
Like Russia, China is burdened by numerous sanctions and restrictions imposed by the United States. The trade war between Washington and Beijing began long before the Special Military Operation (SMO) and continues to this day. The initiator of this conflict was Donald Trump, who at a certain stage of the election campaign threatened to tighten tariff restrictions on Chinese imports in order to «bring back industry to the U.S.» and deprive the Chinese of a large market.
More recently, Trump has shifted his vocal statements to closer allies — Canada and the European Union — as well as Greenland and Panama. In all of this, Trump’s businessman’s style is evident: announce a high asking price before negotiations begin, and then settle for terms acceptable to him once real talks begin.
Once Trump is back in the White House, the big negotiations are likely to begin. It is not out of the question that the statements of Yellen, who leaves office in a week, will sound like childish chatter compared to possible changes in U.S. policy. But whether this could actually stop China’s development is a big question.
Nevertheless, the rivalry between the two adversaries, the United States and China, is not going away. They are bound by numerous trade and economic ties, but the contradictions between them are massive, due to their power and different worldviews. China is not interested in severing those ties or ignoring the economic benefits, no matter what some might prefer. There will be tough negotiations; they may reach some agreements. Recently, China has shown that it is ready to respond immediately to U.S. sanctions with measures of its own.
But the global balance will not depend on this alone. While the U.S. has been busy forming military blocs to counter China, waging war against Russia in Ukraine, and racing around the world with sanctions and «rules-based» relationships, China has been building the most powerful industry in the world, producing up to a third of global industrial output. The Middle Kingdom has outpaced the rest of the world in energy development, including «clean» energy, and has achieved undeniable advantages in cutting-edge fields such as artificial intelligence, electric vehicles, supercomputers, quantum computing, and more. Massive infrastructure investment in the country will yield such returns in a few years that it will revolutionize development as we know it, transforming China’s backward regions into global growth engines.
For example, China recently announced that it is preparing to launch a new train capable of traveling at 450 mph. The futuristic design of the CR450 locomotive is truly striking. Trains with speeds of up to 1,000 km/h are on the horizon. Meanwhile, China’s high-speed rail network stretches 45,000 kilometers and carries 10 million passengers daily. No other country in the world can afford that, and it’s hard to imagine the benefits to economic development. Essentially, it’s a revolution in transportation. Another example: China is building the world’s most powerful hydroelectric dam. The hydroelectric plant on the Yarlung Tsangpo River in Tibet will produce three times more electricity than the Three Gorges Dam, currently the largest in the world. It will be able to provide cheap electricity to 300 million people! A true revolution in energy, and who knows how many more «revolutions» China is preparing for the world — and for the U.S.
Yes, for now, the dollar — backed by the power of America’s military bases — still dominates almost everywhere. The United States, which controls various regimes and countries, can still influence many processes and impose sanctions and restrictions. By using completely non-market approaches and brute force, Washington can prolong its hegemony a bit longer. China does not want a trade war with the U.S., but it does not fear it, because it is fighting its own internal battle. As stated in official Chinese documents, this is a struggle for the «rejuvenation of the Chinese nation», essentially for a great China, against which war would be pointless. True to the tenets of Chinese military art, China remains focused on itself, following its own path, as Eastern philosophy prescribes. External constraints only spur internal growth.
Against this backdrop, Yellen’s warnings or Trump’s threats may ultimately look like feeble protests. The current methods of containing China could become ineffective. What happens then is anyone’s guess. So far, the two countries have managed to keep their rivalry within the bounds of reasonable competition.