Decoupling

They are still counting votes in the US. But whatever the result of this crucial presidential contest, no one expects US foreign policy to change too drastically too quickly.

Should Joe Biden win the presidential contest, he promised to return the US to the Paris Climate Accord and the World Health Organization. He has also promised to treat America’s allies better that Trump did over the past four years. That should be reassuring for the rest of the world.

The most important aspect of American foreign policy today, however, has to do with its relationship with China. On this aspect, the change will probably come more slowly.

Over the last four years, the US-China bilateral relationship has been, to put it lightly, turbulent. With Trump’s penchant for ad hoc policy pronouncements, his obsessive unilateralism and his propensity for trying to score populist points by bashing the Asian superpower, he has kept this vital relationship in constant turmoil.

Trump imperiously imposed tariffs on imports from China – the costs of which were borne by American consumers. Studies have shown that the trade war with China cost US manufacturing disproportionally. A large group of American manufacturers have sued the Trump administration for losses they incurred because of the trade war.

Trump discouraged American technology companies from cooperating with their Chinese counterparts. This produced supply chain problems for Chinese firms, particularly the tech giant Huawei.

The hostile policy threatens to produce a decoupling between American and Chinese technological development. This is particularly true for cutting edge technologies such as 5G – where China enjoys a considerable advantage. That decoupling could produce a technology gap between China and the US in the longer run.

The Trump administration has also been more restrictive on Chinese students coming to the US. Many valuable colleges and universities are under financial stress because of this. Diminution in the flow of students will have long-term effects on cultural exchange.

During a recent webinar, influential Chinese international politics professor Zhang Wei Wei warned against US efforts to stoke a “New Cold War.” The effort to isolate China and stymie its rapid economic progress will run against several factors US foreign policymakers might tend to underestimate.

Zhang claims that, in terms of purchasing power parity, China has now become the world’s largest consumer market. It is currently the major trading partner of 130 economies. The emerging Asian superpower has the world’s largest middle class, now estimated at 400 million.

All these factors are coming into sharper relief as China emerged early from the economic distress produced by the pandemic while the US faces a crippling second wave of infections.

Noted economist Jeffery Sachs forecasts a declining US share in the world economy. This is a decline evident in all spheres of global economics – from finance, geopolitics and technological leadership. He says we are now in an era “in which no country can lead and no country should lead.” He describes the idea of fomenting a new cold war that divides the world into two blocs of nations as “a kind of insanity.”

Graham Allison, in an article last month published by the conservative The National Interest, concedes that China has now emerged as the world’s largest economy. He cites an IMF report that says China’s economy is now one-sixth larger than the US economy. China now has a $24.2-trillion economy against the US’s $20.8-trillion economy.

There is a theory in international politics called the Thucydades’ Trap. Named after a classical Greek thinker, it proposes that dominant countries and emerging rival ones inevitably go to war. While there are numerous historical examples to support this theory, it is never inevitable.

To be sure, tensions will remain high between the US and China for the foreseeable future. The US has formed an alliance with India, Australia and Japan to help deter the expansion of Chinese influence in the region. Washington has sold advanced weapons to Taiwan and used competing claims in the South China Sea to convince other claimant countries of Beijing’s expansionist designs.

But the other countries are likely to resist American efforts to advance its efforts to isolate China. Economic pragmatism has its way of impeding superpower designs. The lure of China’s growing consumer market is strongest among neighboring economies. They would not want escalating tensions to get in the way of improving trade access.

Should Joe Biden win the presidency, he will definitely have a more sophisticated approach to the China question. Biden understands that while China is a trading rival, the US will also need more cooperation with the Asian superpower to achieve large goals such as reversing global warming and reducing poverty in the developing economies.

Biden will bring to the office a better grasp of the complexities of a multipolar world. He understands that more trade with China will create better conditions for US manufacturing. Therefore he will be less disposed towards inhibiting trade as the Trump administration has been, obsessed as it was solely with the balance of trade numbers.

The Trump administration has put pressure on the East Asian economies to conform to its somos o no somos attitude towards the complicated situation in the world’s most economically dynamic region. That means that countries like the Philippines will have more space to negotiate their path to progress. In our case as in others, we seek not only more trade but also more investment flows from China.

Economic and geopolitical decoupling between a US-led bloc and a pro-China bloc will certainly not be healthy for our progress.