Alibaba’s Jack Ma has warned that the ongoing US-China trade war could last at least 20 years. As we’ll see, it’s actually more like 30 – up to 2049, the 100th anniversary of the foundation of the People’s Republic of China (PRC).
Steve Bannon always boasted that President Trump was bound to conduct a “sophisticated form of economic warfare” to confront China.
The logic underpinning the warfare is that if you squeeze the Chinese economy hard enough Beijing will submit and “play by the rules.”
The Trump administration plan – which is, in fact, trade deficit hawk Peter Navarro’s plan – has three basic targets:
- Displace China from the heart of global supply chains.
- Force companies to source elsewhere in the Global South all the components necessary for manufacturing their products.
- Force multinational corporations to stop doing business in China.
The overarching concept is that unending confrontation with China is bound to scare companies/investors away.
There’s no evidence South Korean or German conglomerates, for instance, would withdraw from the vast Chinese market and/or production facilities.
And even if the Flight Away from China actually happened, arguably the American economy would suffer as much, if not more, than China’s.
The latest US tariff volley may lower China’s GDP by only 0.9 percentage points, according to Bloomberg Economics. But China may still grow a healthy 6.3% in 2019.
This is a decent overview, with numbers, of what the trade war might cost China.
What’s certain is that Beijing, as confirmed by a rash of editorials in Chinese state media, will not just play defense.
Beijing sees the trade war as “protracted.” A Commercial Cold War 2.0 atmosphere is now in effect but China is fighting the ideological war on two fronts. At home, Beijing is using strong language to define its position against the US but taking a significantly softer approach in the international arena.
It’s extremely helpful to understand how the current situation has arisen by examining the work of Wang Hui, a professor of Chinese language and literature at Tsinghua University, top essayist and the star player of China’s New Left.
Hui is the author of the significant The Rise of Modern Chinese Thought, published in 2005 and still without an English translation.
Some of Hui’s key conclusions still apply 13 years later, as he explains how Chinese society has not yet adapted to its newfound status in international relations; how it has not solved the “accumulated contradictions” during the breathtakingly fast process of marketization; and how it still has not mastered the inherent risks in the globalization drive.
Hui’s analysis is echoed in many a Chinese editorial including delicious throwback lines such as the “sharpening of internal contradictions” in international relations. After all “socialism with Chinese characteristics,” as codified by Deng Xiaoping and renewed by Xi Jinping, excels in exploiting and bypassing “internal contradictions.”
It’s all about BRI
Jack Ma, also hinted at a bigger picture, when he said that to counter the trade war, China should focus exports across the New Silk Roads/Belt and Road Initiative (BRI), specifically mentioning Africa, Southeast Asia and Eastern Europe.
Five years after President Xi launched BRI – then named One Belt One Road (OBOR) – in Astana and then Jakarta, it’s only natural that Ma concentrates on what I have emphasized to be the primary Chinese foreign policy strategy for the next three decades.
It’s never enough to stress that BRI’s six main connectivity corridors, spanning up to 65 nations, according to the original timetable, are still in the planning stage up to 2021. That’s when actual implementation starts, all the way to 2049.
Ma alluded to BRI expansion across strategically positioned nations of the Global South, including Central, South and Southeast Asia as well as Africa and Eastern Europe.
Quite a few of these nations have been extremely receptive to BRI, including 11 that the UN describes as Least Developed Countries (LDCs), such as Laos, Djibouti and Tanzania. BRI projects – and not World Bank projects with strings attached – represent the solution to their infrastructure woes.
Thus we see Beijing signing memorandums of understanding (MOUs) for BRI projects with no less than 37 African nations and the African Union (AU).
As BRI is closely interlinked with the Asian Infrastructure Investment Bank (AIIB), the bank will handle financing for BRI projects in Indonesia.
And the US-China trade war extrapolates to third countries such as Brazil profiting in terms of its commodities exports.
China is slowly but surely attempting to master the fine-tuning of financing complexities for projects in multiple connectivity corridors – including those in Bangladesh, Pakistan, Myanmar and Kazakhstan. At the same time, Chinese companies keep an eye on a political deal that will have to be brokered by the Shanghai Cooperation Organization (SCO) to unlock the BRI integration of Afghanistan.
In cases of nations excessively exposed to Chinese investment – such as Laos, Djibouti, Tajikistan and Kyrgyzstan – China is deploying a range of financing options from debt relief to clinching long-term contracts to buy natural resources. Whether China will leverage financing of strategic deep-water ports in Myanmar and Djibouti to build a “string of pearls” dotting the Indian Ocean supply chains is pure speculation.
A key vector to watch is how Germany and France approach BRI’s inroads in Central and Eastern Europe, for instance, via the Budapest-Belgrade high-speed rail linked, BRI-style, to Piraeus port in the Mediterranean. Italy is in – the Adriatic is connected to BRI. Germany is in with arguably BRI’s key European terminal in the Ruhr valley. France, however, dithers.
Russia is also in. Nearly 70 projects are being co-financed by BRI and the Eurasia Economic Union (EAEU). The Vladivostok forum once again proved the Russia-China strategic partnership, and its BRI/EAEU extension is in full effect.
A flimsy developed strategy by the Quad (US, India, Japan, Australia) has no potential to derail BRI’s reach, complexity, wealth of capital and human resources.
For all the financial/soft power challenges, BRI participant nations, especially across the Global South, are locked on their side of the Chinese infrastructure investment “win-win” bargain. The current, relentless BRI-bashing is not only myopic but irrelevant, as BRI, constantly fine-tuned, will keep expanding all the way to 2049. What it will certainly face is a 30-year trade war.
As a Viet you ought to worry about China.
Jo Kang Han Chinese are vely lacist.In particular Chinese ladies who prefer a larger gweilo
Ahson Aftab It is. Because it will have to be defended with blood and iron. But please tell me did mo’ really go to heaven on a winged pony ?
If you believe in that, it makes sense you believe the CCP are good people who will benefit Pakistain.
Rajeev Chawla Approval from his (new) masters in China ?
Ahson Aftab Mo se bund marwa marwa ke tere ko kuch aur bhi bolna aata hai soor ki aulaad? Chal Phut!
Also, Japan "stole" the technology from the Germans.
China did not "steal" anything. It bought the technology from Kawasaki Heavy Industries, maker of Japan’s bullet train. Even KHI is not suing China.
In the 1960s, the economies of the so-called developing countries were based on agriculture. There was not much of industries or manufacturing industries. The goal of these countries at that time was to create an environment conducive to the development of industries. The method that they used was to identify the manufacturing activities they wanted to promote, then imposed import tariff on the products of these activities in the hope that local investors and manufacturers will be sufficiently protected from cheap imports to enable them to flourish. This policy failed for all countries that tried it and had to be abandoned. Today, USA is using the same policy in an attempt to revive its manufacturing activities. It will fail again like it failed for all the countries that tried it in the 1960s.
Sheer economic momentum. That is true.
The rule is the US always wins and everyone has to suck it in and take it. 🙂 It used to work, but not anymore.
Ahson Aftab Complaining about ad hominen attacks then doing the same. I like the hypocrisy.
And no ‘you dont have to tow the party line’, because in the West (unlike China) there are many political parties. I mean they even told the Pakistains who to appoint as your Finance guru.
But Sad is abit odd, really.
You and him still haven’t answered my question ‘do you believe Mo’ the Pedo’ really flew to heaven on a winged pony, and split the moon ?’.
Yashad Rizvi chutiye, it might be newsflash time for you, but millions of Canadian s and Americans do not kow tow to the party line on demand. In case you didn’t know. Having an opinion contrary to the party line doesn’t mean you attack the person. Maybe in your jungle monkey background this sort of dalit behavior is acceptable.
For USA, the trade war with China is a matter of life and death. If USA loses the trade war, it will be death for USA. USA will disintegrate into several countries due to internal turmoil.
On the other hand, for China, the trade with USA is only a nuisance. China prefers not to have a trade war with USA or with any other country for that matter because it will slow down its economic development. But it will not cripple the Chinese economic machine like it will cripple the American economic machine. China’s Belt and Road Initiative is in full swing and trade with the countries of BRI will replace trade with USA.
The United States under the leadership of a LEADER—–(a shrew, cunning man) Donald John Trump has decided enough is enough——-the Chinese "BULLET" train must be slowed down. Talk about the amazing train system in China one should mention that the Chinese got there hands on Japanese train technology (considered the best in the world) by stealing the Japanese technology but that is water under the bridge –RIGHT!! The Chinese train will be slowed down by Trump and in the end Xi will yield to Trump because the fact is at present Trump has the leverage over Xi——-WHY——-the trade deficit of over $500 billion a year is the tiger in the room and the risk of losing jobs to other Southeast Asian countries is real——-take Vietnam,Thailand———BUT in the long run (take the next 25 years) both the United States and China will have to share the world stage ———-because the United States will not go away and the Middle Kingdom will continue to move forward. They say competition brings out the best in people——-I dare say in countries too——-so this little trade war will be great for both countries BUT even President Trump knowns deep down that the Middle Kingdom is not going away———-the big loser in this issue will be Japan———they can’t come to grips with the rise of China——–if they don’t accept reality they will pay for this blunder and become irrelevant by 2049——–the 100 year anniversary of the birth of a changed China!! FOR ALL THE UNITED STATES HATERS ON THIS BLOG———–keep on HATING because America is still the most dynamic country in the world———yes the MIDDLE KINGDOM is on the move BUT AMERICA is not going AWAY and I am just being real!!!! Some posters keep saying America will bankrupt itself are other foolish notions———get off the OPIUM PIPE——-the election of Donald John Trump means the decades of weak, foolish leaders as Clinton, Bush and Obama is over and a LEADER is now in charge of the United States of America!!!!!
Remember back in 2001, when the US started to plan bring peace to the Middle East? The years since have been pretty good for Asia.
The US pivot to Asia starting a few years back has started bringing trouble to the region, with increasing talk of human rights and US military exercises. The US is planning to do to Asia what it’s done to the Middle East. Except the target is much bigger – China.
For Jack Ma the trade will last for 20 years. For Pepe it will be more like 30. What is the basis for the projection into 2-3 decades?
The trade deficit happened because the US government allowed it to happen. Whatever the reason, why can’t the same come back after Trump and his coterie are out of the picture, assuming that they survive the trade war?
Ahson Aftab Of course Sad can have an opinion, after all he isn’t living in China.
But retired (how many camels did his imaginary wife cost him ?) and living in a place, surrounded by a people he appears to hate….. bizarre. Seems like he was forcibly retired !
I am sure his pension would be paid if he went back to Pakistain, and he’d be alot better off financially (as well as mental health).
Yashad Rizvi you as a dalit have so many other worries, besides BRI…….lol…..BRI should be at the bottom of your worries.
As Godfree Roberts rightly said this is the 3rd US trade war against China. There were 2 trade embargoes against China after 1949. Even the Soviet Union took part but this did not prevent China from growing under Mao up till Deng’s opening up and to acquire key nuclear technology. China had to pull itself up by its own bootstraps.
It is impossible now to stop China’s development. As it is, China has a very strong partnership with Russia in all spheres and their economies are complementary and China can help in the development of Siberia.
China is continuing its opening up to the world except the USA, rightly so. The US should be excluded.
China today, is very different from Mao’s China.
US is the most destructive force on the planet blinded by racism, hubris, arrogance, jealousy and an imperial ideology.
As the US accumulates more and more debt, it needs bigger and bigger pool of economies to suck blood from to sustain itself. Disengagement between the US and the Chinese economies entail a shrinking pool of savings/surpluses to support the US debt empire. The USD hegemon will need to suck a bigger share of blood per capita from the economies that remain inside the US bloc. The dreams of the goldbugs might finally becoming a probability (as opposed to possibility) when the USD collapses on its own weight!