As US-China clash endangers our fragile economic recovery, we must do more than just gawk

The worst-case scenario is an arms race that diverts money urgently needed for pandemic recovery and climate change
We can all do more to force the two biggest economies in the world to behave, especially the US

Anthony Rowley

Published: 10:30pm, 28 Mar, 2021

Why you can trust SCMP

A former executive of a multilateral development bank once recounted to me how he achieved a minor diplomatic coup in dealing with high-level Chinese officials. Courtesy and subtlety were part of his game plan, and certain members of the US Biden administration would do well to take note.

At a meeting in Beijing, he began by voicing respect for China’s ancient culture and traditions, only then introducing the thorny issue of certain financial outstandings by China to the bank. He was sure, he added, that this must be an oversight in a nation of China’s standing and achievements.

His hosts smiled politely and the debts were cleared. Contrast this with the all-guns-blazing entry of US Secretary of State Antony Blinken and national security adviser Jake Sullivan into the Alaska meeting with Chinese Foreign Minister Wang Yi and Central Foreign Affairs Commission Office director Yang Jiechi.

This was not just a faux pas (or plain bad manners) on the part of the United States; it was egregiously shortsighted diplomacy and the economic or strategic fallout could be profound and long-lasting. China’s response was admittedly rather tart but it was the US side that kicked off the slanging match.

What we can conclude from this unfortunate exchange is that the new US administration, which appeared to be a model of realism and restraint at the outset, has quickly assumed the mantle of high-minded self-righteousness and triumphalism that has characterised some former US administrations.

04:07

Alaska summit: China tells US not to underestimate Beijing’s will to safeguard national dignity

The Biden administration seems to believe that by forming an alliance with Japan, Australia and India, it has created a united front (the Quad) that is capable of confronting China with impunity. But it is absurd to think that any winner could emerge from physical or economic confrontation.

The four powers would do well to remember that an army marches on its stomach and that they are all vulnerable in this regard. By confronting China, they are biting the hand that helps to feed them and support their economies.

China is the second largest importer in the world after the US, and among the Quad, the US itself, as well as Japan and Australia, depend heavily on exports to China. India is less dependent on China but bilateral trade is projected to grow strongly. China is also a major investor in the US and Japan.

Forget China, America is the biggest warmonger by far

But it is not simply trade and investment issues that ought to have deterred Blinken and Sullivan from embarking upon such a brash and rash opening gambit with their Chinese counterparts. It is more a matter of people living in glass houses needing to avoid throwing stones.

This is true of the US, which as the Chinese officials observed with unusual candour, has often embarked upon overseas invasions, regime changes and other intrusive adventures. But the analogy applies also to the need to avoid actions that can shatter the delicate balance of global economic relations.

03:36

Beijing hits back at Western sanctions against China’s alleged treatment of Uygur Muslims

The world is emerging slowly from the Covid-19 pandemic but it is still in delicate shape economically and financially. Output has not yet regained pre-pandemic levels in most countries (China is an exception), unemployment is high still, investment stagnant and consumption is restrained.

Financial markets are nervous, global debt levels are mountainous, inflation fears are re-emerging, fiscal deficits are causing concern (whether justified or not), stock markets are at or above previous peaks, bond markets are jittery, as are currency markets, and confidence is weak.

A confident China reminds the US it is a force to reckon with

What a time to court friction, as Blinken and Sullivan chose to do, in a way that makes the bludgeoning Donald Trump look like a conciliator by comparison, or the former, sometimes pugnacious, vice-president Mike Pence and secretary of state Mike Pompeo look like models of restraint.

If a slight breeze can sometimes touch off a devastating snow avalanche, it could take little more at a time like this to set in train events that could topple the delicate edifice of global economic recovery from the Covid-19-induced mega-recession.

In a worst-case scenario, the ganging up of the Quad nations against China could increase geopolitical tensions and set off an arms race between China, the US, Japan and other major powers that would divert fiscal resources from urgently needed spending on recovery and climate change.

01:12

US Secretary of State Blinken meets Japanese prime minister Suga to ‘reaffirm US-Japan alliance’

It is difficult to see how President Joe Biden thinks he can finance urgently needed domestic infrastructure spending of reportedly up to US$3-4 trillion, plus other huge social spending, while also running the risk of having to ramp up military outlays.

As argued here before, it may be that Biden believes that by provoking China itself into a “Star Wars” scale of spending on arms (by means of sabre-rattling), he can push America’s purported rival hegemon to the brink of bankruptcy. That would be a dangerous war of brinkmanship indeed.

Japan naturally bridled when Chinese officials referred to it as a “ vassal” of the US ahead of the encounter in Alaska. The choice of word was unfortunate but Japan undoubtedly has a great deal to lose by adhering unquestioningly first to the Trump line and now to the Biden posturing.

It is not enough for non-Quad powers to stand on the sidelines wringing their hands in dismay over the increasingly acerbic exchanges between the Biden-constructed alliance of nations and China. The time has come to cry “a plague on all your houses” and push them both (the US especially) to behave more maturely.

Anthony Rowley is a veteran journalist specialising in