Global superpowers' rivalry (China versus USA)

The basis for understanding the rivalry between USA and China is

"...From the US government's perspective, China has long sidestepped international norms regarding the protection of intellectual property and transfer of technology. It subsidises its domestic firms, and its rapidly growing and extending tech companies are too closely integrated with the government. Add to that view that China is increasingly aggressive in its relationships with third countries (including via its Belt and Road initiative for trade infrastructure and lending). The result is to fuel US national security concerns, as well unite domestic political alliances in the US, across party lines and involving both public and private sectors. The result is a more aggressive.......less accommodating - approach towards China, accompanied by a timing issue: the "if not then when" hypothesis. With China embarking on a rapid expansion and increase of  the self-reinforcing development process that has also given it more systematic importance in the global economic and financial systems......the opportunities to level the playing field are viewed as few and fleeting.

The concern in China is that the US is out to "contain" China, which presents the government there with a delicate trade-off in how to react to what is labelled US bullying and provocation. This may also explain why the central bank's aggressive verbal response - saying the US decision "seriously harms international rules" - is not accompanied by immediate aggressive actions..."

Mohamed El-Erian (chief economic adviser, Allianz SE) 2019

The diagram below shows the timeline of the trade war between USA and China from start of 2018 to August 2019.

 

playingtough.jpg

(source: Patpicha Tanakasempipat 2019)

Some of China's strengths

- population size

- growing middle class with disposable income

- younger generation that has grown up completely savvy with the use of smart phones (includes trusting them for financial transactions)

- widespread availability of cheap smart phones

- widespread connectivity

- paucity of investment and retail banking offerings for young Chinese (the major banks have tended to neglect them)

- a benign regulatory environment

- limited international competition with large tech companies like Google, Amazon and Facebook severely restricted in China

"...the United States has its FAANG (Facebook, Amazon, Apple, Netflix and Google. China has the BAT (Baidu, Alibaba and Tencent)..."

Chris Wright 2018a

NB Many people regard China as possessing a single culture. However, China is like 20 countries; each province is like its own country with its own separate culture, etc

 

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