The Secretary of State Antony Blinken will visit to
China where he will talk with his Chinese hosts about the many issues between United
States and China. In particular the talks happens in a particular year for both
countries and also for the whole world, in a context of low economic growth.
In this article the most important issues between China
and United States will be considered and also the implications for the future
of their relation and for the whole world.
First, the visit
will follow the meeting in person that President Xi Jinping and Joe Biden held
in Indonesia during the G20 summit last November. It was their first meeting as
leaders of their countries. At this meeting it was announced that Secretary of State
Blinken will visit China during the first months of 2023.
The visit will happen in a moment when the world economy
is in a difficult situation. According to the IMF, there is a probability that in
this year 2023, of the three engines of world economy, two will experiment zero
or negative growth. In Europe economic growth could be negative because, among other
things, the war in Ukraine increased price of energy and food, and inflation is
putting a pressure in the economy. Also, in United States the fight against inflations
has increased interest rates and this is also putting a drag in economic growth
with some projections pointing to a zero growth in its economy. The only engine
that could move the world economy is China, but this country is also facing some
challenges, among them, the normalization after the dismantling of its zero
covid-19 policy.
Second, of the
several issues among both countries one of the most difficult to resolve is the
trade war that began during Trump Presidency in 2018, when U.S. imposed several
rounds of tariffs in Chinese goods. China reciprocated in kind, and the
increase in tariffs in both sides are still there. In January 2020 an agreement
between both parts was reached to try to address some of the complaints of
United States against the big trade deficit that it has with China, but then
the COVID-19 pandemics occurred, and that agreement and its compliance was put
on hold. There are no expectations that during Blinken visit to Beijing an agreement
could be reached in this issue. One reason for this is that with the campaign for
Presidential election in United States coming very soon, there is no mood for a
compromise in the White House because if it does it will be accused by the Republican
party of showing weakness against China. Besides this, in the political establishment
of United States, where there are many differences between Republican and Democrats,
the mood against China is quite strong, and both parties agree on that.
Third, the trade
war that United States began against China has been transformed in a technological
war. The fact is that, as United States has put it, there is a competition in
course between China and United States. For United States, China in the only country
that can challenge its economic, technological, and military supremacy, and it has
indicated that will not allow that to happen.
In October last year United States took more measures
to avoid China access to high technology in semiconductors. The aim is to exclude
China from the global supply chains producing semiconductors. For this United States
is also enlisting the support of South Korea, Japan, the Netherlands, and
Taiwan. And in this regard the technological war/competition will continue.
Fourth, regarding the
issue of Taiwan, where the visit by high-ranking officers of the United States
government prompted China response and raised alarms about even a possible
military confrontations between both superpowers, the stances of both countries
will be reaffirmed. China regards Taiwan as one of its core issues and is
against foreign intervention in its internal affairs but United States will
reaffirm its “one China policy”.
Fifth, another
issue is what the United States see as the growing presence of China in the
South China Sea, and the possibility of dangerous encounters of their navy and
warplanes in that area. As United States execute what it calls “freedom of
navigations operation” in islands or atolls that China regards as its
territory, the possibility of an unintended military clash can happen. Both
countries will surely establish mechanisms to try to avoid that, but the
situation could/will remain tense.
Sixth, another
issue that United States will raise to China is the war in Ukraine. China and Russia
have what they called last February “no limits partnership”, and surely Russia
was expecting China’s support in its invasion of Ukraine. China have not done
that and surely will not do. It should not be in China interest to give
support, either military or economic to Russia, among other reasons, because economic
sanctions will befall on China.
United States will look for more assurances on the
part of China in that position but also will ask China to exert its influence in
Russia to find a prompt solution to the war in Ukraine. At least China and
United States both agreed in the G20 summit that the use or threat of use of
nuclear weapons in Ukraine (as Putin mentioned) is unacceptable.
Seventh, the issue
of North Korea and its growing sophistication regarding the launching of its
ballistic missiles is also a concern for the United States. Probably China is
the only country that can exert some influence in North Korea, as it is the
only country with which can trade and most imported goods available in North Korea
come through China.
United States will pressure China to exerts its
influence on North Korea. United States will present the case as something in China
own interests, as the growing sophistication of North Korea menace is forcing
countries like South Korea and Japan to increase their military budgets and
modernize its military. A growing military race is happening in East Asia, and
more sophisticated weapons will be introduced, and North Korea attitude is one
of the reasons. Also United States is increasing its military presence there
for that reason. And surely none of this is in China interest.
Another issue related to this is what it is seen a
growing military cooperation between China and Russia in East Asia. Surely this
issue will also be raised by United States during Blinken visit.
Eight, other
issues where both United States and China could collaborate or should collaborate
as the rest of the world sees it, is in themes like global climate change, financial,
health, and debt relief issues. These are global issues and in particular developing
countries in particular expect that the two biggest economies in the world could
agree on some of those issues. Without United States and China working together,
no meaningful solutions could be found for those issues.
Anyway, perhaps there is some room to be optimist that,
even if United States and China have, as we have seen, several differences,
some agreement will be reached during Blinken visit. There are two or three
reasons for this. First, this year is complicated for United States because of
the Presidential campaign that will be in course. Biden would like to have some
agreements with China to allow him to show some results (even if the trade war
and technological competition/war will continue). Also for China, 2023 is a
complicated year and will look for its economy to move forward and recover, especially
from its low growth of 2022. Both countries probably have no interest in
increasing its rivalry, at least not in the short time, not this year (for the
reasons given).
Second, something that perhaps could make easier
negotiations between United States and China is that the Foreign Minister of
China is now Qin Gang, who was until recently China Ambassador in the United States.
Besides that, he is known as a trusted adviser of President Xi Jinping. So, he
probably developed some contacts in United States and, also have the ear of Xi.
Third, it is said that because 2023 is the year where
the APEC summit meeting will be celebrated in United States, both superpowers
would like to have a good working relationship. Probably another bilateral summit
between Xi and Biden will happen at that time.
In conclusion, Blinken visit to China could see some
progress in relations between China and United States. Differences are there
and will not go, the competition will go on, but they will look for to
stabilize the relationship, and to manage competition.
Lastly, there is the
question of the United States ever increasing government debt. As of October
2022, the national debt of the United States is 31 trillion dollars, that
represent around 124% of its GDP. The United States national debt is the largest
in the world but considering its GDP size is not as big as Japan, in which is
debt is around 250% of its GDP, or Greece with around 205%, or even Italy worth
159% of its GDP.
Most of United States national debt is owned to its nationals
so its debt owed to foreigners is around 22% of the total[1].
Japan is the biggest holder of United States public debt with around 1.2 trillion
dollars, second is China with a little less than 1 trillion dollars.
The largest debt of the United Sates is a problem, but
the country is in a different position that many others indebted countries. For
other countries trying to finance public debt just printing money is a big
problem because this will generate inflation. In the case of United States, as
the dollar is a global currency and is demanded by countries, companies, and individuals
all over the world, always there will be a demand for its currency. Also, some foreign
governments will be willing to buy United States debt, for example Japan and China,
because this keep the value of the dollar high, relative to their own
currencies, so they can sell their goods at competitive prices.
If the dollar continues as (the unique) global
currency, demand for dollar denominated debt of United States will not lose
attraction. In this sense, United States government debt is not as problematic
as other countries. Besides this, as the United States economy keeps growing,
the government will have capacity to pay the debt (and to incur in more debt)
is expected. China will continue keeping United States treasuries (it is
estimated that one third of China foreign reserves are held that way) but is trying
to find ways to diversifies its reserves.
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