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What a difference a year makes, 12 controversial months. For China and the United States, 2019 will be remembered for intense rhetoric, rivalry and, at times, rage.

Next year could be even more challenging for the world’s two largest economies despite plans to sign off on a limited phase one trade deal. Already analysts and economists have warned that we are living in an era punctuated by an uneasy truce.

Last week, Gordon Orr, who established McKinsey’s operation in China nearly 20 years ago, graphically illustrated the risks hanging over Sino-American relations.

“Multiple areas of growing separation between the US and Chinese economies predicted in last year’s note were largely realized – investment flows, supply chain, data flows, people flows, technology procurement, standards. In all these areas, further separation will occur in 2020,” he said in an essay, entitled China in 2020: Trade, technology, and the path ahead for US-China relations, on the social media website, LinkedIn.

“Looking into 2020, if there is finally [an] agreement it seems likely to be narrow and not likely to be long-lasting,” Orr, who was chairman of the multinational consultancy company McKinsey in Asia and spent decades in Shanghai, added. “[Among] new areas of US-China separation that will come into focus, financial markets will be front and center.”

During the past two years, the trade war has morphed into a broader conflict since US President Donald Trump rolled out tariffs in 2018.

Initially, it was aimed at reducing the massive deficit with Beijing, which stood at US$419 billion last year. In the first nine months of 2019, that figure climbed to $500 billion.

But as the road to economic perdition beckoned beyond the horizon, the White House extended the parameters. Included in the new hit list was China’s state-backed model, which has increased under President Xi Jinping.

Read: US-China trade deal looks distinctly anorexic

Read: US trade war wreaks havoc on China’s economy

Intellectual property rights, cybertheft and the slow pace of reforming other sectors of the world’s second-largest economy were also added into the mix.

As the atmosphere between Washington and Beijing turned toxic, a second front emerged. A row about technology broke out with the Trump administration imposing sanctions on Chinese tech giants Huawei and ZTE, as well as other key players. Issues like these will be difficult to solve in a phase two accord.

“The two sides disagree too much on the objectives of the negotiations,” Zhou Xiaoming, China’s former top diplomat in Geneva to the United Nations mission, said in December. “It is almost impossible to reach a [lasting agreement].”

How phase one will work out is still unclear. The pared-down deal stretched to just 86 pages and looked rather anorexic.

In the end, the devil will be in the detail once the fine print is released for public scrutiny later in January. Derek Scissors, of the American Enterprise Institute, has reservations about what has been agreed upon.

“That the Trump administration’s version of the deal is exaggerated is seen most simply in the balance of the two sides’ actions. All the US has acknowledged it will do, at least, is cancel planned tariffs and halve the rate on one block of existing tariffs. In exchange the PRC [People’s Republic of China] is supposed to both make very sizable purchases and change fundamental technology practices,” he wrote in a blog last week for the Washington-based think tank.

“Unfortunately, neither looks entirely real. Take the American description of the pivotal matter of coerced technology transfer, ‘China has agreed to end its long-standing practice of forcing or pressuring foreign companies to transfer their technology to Chinese companies as a condition for obtaining market access,’” Scissors continued.

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“For obvious reasons, Beijing has never acknowledged this happens in the first place. Will [the] final text include a Chinese admission of predatory behavior and end a wide range of practices? Or will it turn out to be yet another claim that the PRC has always prohibited technology coercion and will continue to, while ‘perfecting’ its regulations? We’ve heard that one many times,” he added.

There is also a sense of anxiety filtering through the halls of power in Beijing.

Influential economist Lou Jiwei has been a liberalizing force in China and an advocate of market reform. But even he is skeptical about the future as dark clouds roll in from the West.

The former Minister of Finance used words such as “nationalism,” “populism” and “bullying” when describing the US and its policies toward his country.

Speaking at a Beijing forum last month, Lou, the chairman of the foreign affairs committee of the Chinese People’s Political Consultative Conference, said:

“The next step in friction between China and the United States is a financial war (jinrong zhan). The US has been hijacked by nationalism and populism, so it will do everything in its power to use bullying measures [and] long-arm jurisdiction. It is characterized by various excuses to block specific enterprises, such as the bans on ZTE and Huawei.”

His views were echoed by other heavyweights inside the ruling Communist Party.

Read: Rising rhetoric drowns out Sino-US trade talks

Read: Fact blurs with fiction in Huawei’s global rise

Chen Yuan, the former deputy governor of the People’s Bank of China, highlighted the conundrum facing policymakers. Since he has been credited with modernizing the central bank, his comments carry weight.

“The trade war is evolving into a financial war and a currency war,” Chen told the Chinese media, although challenging the dollar would be fraught with risks.

In September, the Brookings Institution released a report entitled Has the dollar lost ground as the dominant international currency? It concluded that “the euro [had] stumbled, the renminbi [had] stalled, and dollar supremacy [remained] unchallenged.”

But perhaps, Leland Miller, the CEO of data and research firm China Beige Book, captured the unpredictable mood perfectly when discussing China-US ties.

“The financial side is going to be the next battleground,” he said last week. “You’re going to have to constantly deal with the evolving landscape on cyber, and across the board.

“This isn’t something you can solve, and then take five years off and come back to the problem, and then reevaluate. This is a rolling stone,” Miller told Fox Business News.

The fear, of course, is that it will gather pace in 2020.

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