Pentagon and Treasury Department objections to proposed export controls indicate that the balance of power in the global chip industry has shifted towards China. Image: iStock

Game of Thrones crowned a stunning final season by winning the Emmy Award for the Best Drama on Sunday in Los Angeles.

Forty-eight hours later on the east coast in New York, it was more like a Game of Groans at the United Nations General Assembly as Beijing responded to US President Donald Trump’s stinging attack on China.

In another gripping episode of the trade war, Foreign Minister Wang Yi donned his armor and wadded into battle.

“Seeking hegemony is not in our DNA,” he said on the sidelines of the UN summit. “China has no intention of playing Game of Thrones on the world stage. For now and for the foreseeable future, the United States is and will still be the strongest country in the world.”

Speaking at an evening organized by National Committee on US-China Relations and the US-China Business Council, Wang also cast a shadow over next month’s trade talks in Washington.

“Negotiation cannot take place under threat or at the expense of China’s legitimate right to development,” he pointed out, before adding that he hoped the discussions would “produce a positive outcome.”

He then fired a salvo at US hawks spoiling for a showdown, warning them against repeating the mistakes that saw the two countries embroiled in the Korean War back in the 1950s.

“Seventy years on, it is important for the United States to avoid picking another misguided fight with the wrong country,” Wang told his audience.

Trade practices

His comments came just hours after Trump delivered a damning assessment of China’s trade practices in an all-encompassing keynote address at the UN.

Underlining his “America First” approach, he dialed up the rhetoric in what is rapidly becoming a new economic Cold War with President Xi Jinping’s administration.

“Not only has China declined to adopt promised reforms, it has embraced an economic model dependent on massive market barriers, heavy state subsidies, currency manipulation, product dumping, forced technology transfers and the theft of intellectual property, and also trade secrets on a grand scale,” Trump said.

“As far as America is concerned, those days are over. The American people are absolutely committed to restoring balance to our relationship with China … [And] I will not accept a bad deal for the American people,” he added in a rerun of earlier speeches.

But what made this one different was the venue and the setting, as well as the somber tone.

Moreover, tensions between the big two had eased after Trump decided to delay tariff hikes on Chinese imports worth US$250 billion until October 15. They were due to kick in on October 1, the 70th anniversary of the founding of the People’s Republic of China.

“We have agreed, as a gesture of goodwill, to move the increased Tariffs on 250 Billion Dollars worth of goods [25% to 30%], from October 1 to October 15,” Trump tweeted on September 11.

Since then, Beijing has offered to buy more farming produce, such as soybeans and pork, while China’s Vice-Premier Liu He was reported days later by official news agency Xinhua to have said that the “trade balance, market entry and investor protection” would be part of a relatively narrow agenda.

Still, core issues remain as both sides dig in with the fallout having a serious impact on global growth, the International Monetary Fund warned.

‘Global economy’

“Trade tensions …. are not only a threat but are actually beginning to weigh down the dynamism in the global economy,” Gerry Rice, the IMF spokesman, said earlier this month. “[US-China tariffs] could potentially reduce the level of global GDP [gross domestic product] by 0.8% in 2020, with additional losses in future years.”

China’s economy has also taken a hit with GDP growth slowing to a 30-year low at 6.2% in the second quarter as the trade dispute with Washington escalated.

“Trump’s speech at the United Nations lacked any semblance of endearment towards China, but instead, he used this opportunity to reignite US-China tensions,” Stephen Innes, the Asia-Pacific market strategist at AxiTrader, told AFP after international markets wobbled.

Yet it is looking increasingly unlikely that Beijing will radically change its state-run economic model.

Jia Qingguo, an influential academic at the School of International Studies at Peking University, made that crystal clear during the Singapore Summit last weekend when he accused the US of trying to “demonize” the world’s second-largest economy.

“A lot of people in Washington are … trying to demonize China and develop policies on that basis. I think the world should get over that,” Jia said, adding that it was up the ruling Communist Party government to plot the country’s “development.”

“People would say: ‘This is China trying to set up another alternative model of development for developing countries’. This is wrong. China is saying that every country should form their path … in consideration of their own national situation,” he added.

Like Game of Thrones, this chilling trade drama looks set to run and run.

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