December 30th that the website of the Wall Street Journal published an article entitled “Biden is not so easy to take a tougher stance on China” on December 29, written by Gerald Seib. The full text is excerpted as follows:
As Biden’s team prepares to enter the White House, there is a widely circulated statement in American politics that the United States will take a tougher stand on China and start the process of economic decoupling between the two countries.
But as gossip usually faces: the reality is much more complicated. It will be difficult for the United States to take a tougher position on the economy.
Despite the pressure on China in the Trump administration for four years, China’s economy is now actually stronger than that of Western countries in some ways. International capital is flowing into China, not outflowing. Within Asia, China’s trade position has actually improved significantly.
Josh Lipsky, an expert at the Atlantic Council, said that China is in a strong negotiating position. He also pointed out that China’s attraction is stronger than in 2017.
In fact, the IMF expects China’s economy to expand by 1.9% in 2020, which means that China is expected to become the only major economy in the world to achieve growth in the year of the coronavirus epidemic. In contrast, the U.S. economy is expected to contract by 4.3%, while the euro zone economy is expected to contract by 8.3%.
Biden has spoken about building a stronger front with allies to reduce China’s economic influence and encourage U.S. businesses to shift critical supply chains from China to domestic.
He has not yet announced how to deal with Trump’s tariffs on imports from China, nor has he explained what the future will be like in the phased trade agreement negotiated between the Trump administration and Beijing.
At a time when these decisions need to be made, Biden is faced with China, in many ways, unexpectedly withstood the test of a trade war with the Trump administration.
In other ways, China’s economic influence has actually increased. China has joined 14 other countries to form a new regional trading bloc, while the United States has been excluded.
At the same time, European countries are finalizing an investment agreement with China. Overall, Western financial capital is still flowing into China.
A recent report by the Atlantic Council shows that foreign investment in China’s national debt market has increased significantly in the past four years. The report concluded: “Overall, China’s opening-up measures to further integrate domestic financial markets with global markets are in sharp contrast to Washington’s decoupling remarks.”
Du Dawei, a former official of the U.S. Treasury Department, pointed out that compared with the United States, America’s allies are generally less interested in economic decoupling with China.
“If our allies remain in touch with China, then the decoupling we are doing will isolate us and strengthen China’s relative position,” he said.
He also believes that even if the United States can “expel China” China from the world economy and international institutions, “China may create alternative institutions, and many developing countries will find it in their own interests to cooperate with China”.
More broadly, economic decoupling may actually exacerbate geopolitical and military tensions that have threatened Sino-US relations. One of the forces that can prevent this fight against getting out of control is economic interdependence.
During the Cold War, the United States and the Soviet Union had little financially intricate relations and little economic dependence on the Soviet Union. But now, China and the United States have deep economic relations, at least so far, almost forced the two countries to find a way to coexist.
There is a broad consensus between the two parties in the United States on taking a tougher stance on China. But what this changing relationship will look like is still uncertain. At the same time, a reality is that China has some powerful economic cards in its hands as it enters this period of reassessment of relations.