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.



(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

-Belt and Road Initiative (One Belt, One Road)
"...It is a huge infrastructure investment that comes with a promise of commerce, without any of the US-style strings and democracy and human rights attached. For a domestic audience, it is an expression of new-found pride in the nation's power and wealth. Here is China remaking the famous Silk Road that connected it to Central Asia and Europe, and the maritime Silk Road, that linked south-east Asia and the Indian Ocean to Arabia, Africa and beyond..."
Philip Bowring, 2017

- 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

"...The return of inflationary pressures......goes some way to explaining why China, the world's second largest economy and most populous, is stepping up its drive to secure food and energy sources across the globe, with its much-touted 'One Belt, One Road' infrastructure push......the Chinese view is that the West is going to default on the debt owed to it, because don't forget that it financed our overspending......much of China's modern expansion......Beijing's concerns about rising food and energy costs, and its determination to secure new export and import markets. Surging wage and costs mean that the country has already priced itself out of many of the manufacturing industries it dominated in the 1980s and 1990s..."
Pippa Malmgren as quoted by Mark Mulligan, 2017

"...When America was growing at its fastest, living standards were doubling every 30 years. China has doubled its living standards three times in the past 30 years. The growth of China threatens to break the monopoly that the democracies have enjoyed over capitalist prosperity..."

Larry Summers as quoted by Philip Collins, 2017

Furthermore, for the past two decades, real wages have stagnated in Western democracies like USA and Britain.


Search For Answers

designed by: bluetinweb

We use cookies to provide you with a better service.
By continuing to use our site, you are agreeing to the use of cookies as set in our policy. I understand