Opinion | Washington’s ‘Yellow Peril’ is pushing the US into a cold war with China

Last year, I spoke about the gathering storm clouds of a possible civilisational conflict between an ageing Pax Americana challenged by a rising Pax Sinica. Today, we can be relieved that the proverbial thunderstorm has not yet burst forth.

However, the prospect we face instead is the grey, chilling and unceasing drizzle of a protracted cold war. This second “cold war” may persist well into the next decade, even after today’s human protagonists have departed the scene. Fundamental civilisational tensions may go deeper than whoever is currently or will be the occupant of the White House or Zhongnanhai.

There is no playbook for managing this conflict should it worsen. The last cold war was largely a security issue and other historical parallels going further back have not ended well for all sides. If anything, the recent resurgence of ultranationalist, right-wing politics in virtually all the major nations of the last world war, signals only greater frictions ahead.

De-globalisation, particularly in the diminishment of international trade, investment, cross-border people movements, and the role of multilateral institutions and agreements, will only fuel this dangerous trend.

Business confidence is fading fast, even as global manufacturing has contracted and the services sector is expected to follow suit. Interest rates have little room for further cuts and the infamous bond yield curve has turned negative – historically a precursor of recession. The erosion of global economic sentiment since last year has been quite dramatic, and no one can possibly forecast today where we will be the same time next year.

Previous advocates of the so-called Washington consensus on convergence – that as China gets richer and more powerful, it will become more “like us” – are busily repudiating their past positions. Anti-China is not only the single issue on which Democrats and Republicans agree, it is also the only issue