The China Debacle – Will the US Election Outcome Change Anything?

How have we arrived at the current juncture and what does the outcome of the US election mean for the future relationship between the two great nations?

The strained relationship between the US and China is multifaceted. There is a mutual dependency between the two countries that in ordinary circumstances should preclude rash and counterproductive behavior and promote a certain level-headedness on contentious issues. On a country level, they are both each other’s greatest trading partner. However, both are also vying for influence and power worldwide, and Chinese growth has challenged the supremacy of the US not only on trade, but also militarily and technologically.

It is undeniable that China has reduced the gap between itself and the US in an extremely short period of time. In less than 20 years, China’s GDP has gone from being less than 13% of US’s GDP to becoming almost 70%. The life quality of the average Chinese has improved vastly over these years. Poverty rates have plummeted: according to the World Bank, the percentage of the Chinese population living in extreme poverty has fallen from 40% in 1999 to below 1% in 2018. The country now has the world’s largest group of middle-income earners and is the single most important contributor to world growth.

In the same era, China has also expanded its military might considerably. It now boasts the world’s greatest navy and one of the world’s greatest air defense systems. Its sphere of influence is expanding in other areas as well. China is the predominant trading partner for most of the countries in Asia, the Americas and Africa. It has invested heavily in Latin American and African countries, particularly those with an abundance of natural resources, and with a strong emphasis on infrastructure. This is line with China’s Belt and Road Initiative, which aims to connect trade networks and increase trade. Trade linkages have helped other countries, especially the Southeast Asian ones, grow much faster than they otherwise would.

Chinese efforts have expanded its economic and political influence in the surrounding countries. While the US has asserted its dominance over world affairs ever since World War II, its influence has been waning recently, and especially under President Trump. It has struggled to offer a decent alternative to the Chinese efforts, and recent endeavors have been more detrimental than supportive. An example is the Trans-Pacific Partnership (TPP), an Obama-brokered deal that would have been the largest free trade deal in the world (and cover about 40% of the global economy). The partnership would have expanded trading and investments in the region whilst also advancing the geopolitical interests of the US. However, the Trump administration decided to withdraw from the agreement, as the President (but also other prominent American politicians) claimed it was not in the best interest of US manufacturing and hence not compatible with his America First policy.

So, while the US has been challenging the relationship with its allies, China has sought to improve theirs. Granted, the latter’s recent aggressive behavior on the borders and its increasing (and insistent) dominance on the world scene has hardly won it any friends (in fact, it has caused many leaders to shift their feet nervously). However, the lack of geopolitical engagement from the US as well as its inwardly focus is compelling more and more of world’s emerging economies to align themselves with the Chinese. If the US desires to reduce its trade deficit, which seems to be one of Trump’s ultimate goals, pushing countries towards trading with China is hardly productive. The lack of leadership does not give the US any goodwill amongst its allies, neither from developed nor from emerging nations. Rather, it further increases China’s potential – and actual – influence.

But in a nation divided on economic, social and political issues, there is a theme that seems to find bipartisanship in the US: a tough stance towards China. Concerns on China have long troubled political circles. From intellectual property theft, to human rights violations, espionage, military provocations, economic policies (such as state subsidies), and finally to the global pandemic… There are plenty of reasons for both Democrats and Republicans to distrust and dislike China.

The public, however, has not been especially swayed nor have they particularly cared – until now. Public opinion of China has dropped considerably under President Trump, and the coronavirus pandemic (which originated in China) has not helped. According to an annual survey conducted by Pew Research Center, roughly 2/3^rds of Americans now say they have an unfavorable view of China. This is not only an all-time high, but also close to 20 percentage points higher than at the beginning the Trump’s term. This shift helps explain why Trump and Biden both have hardened their rhetoric about China.

Source: PEW Research Centre

Particularly Trump has upped the ante in both tone and actions over the last months. He has repeatedly blamed China for the pandemic, shut down a Chinese consulate, moved to expel Chinese technology students from American schools, as well as threatened and prohibited Chinese (technology) companies from operating in the country. He has also raised the prospect of “decoupling” – a term referring to a permanent drop in trade between the two countries. Whether it all remains a diversion for his much-criticized handling of the pandemic or if it is purely a strategy to broker a trade-deal more favorable to the US remains very difficult to assess. It is nevertheless unlikely that he will become softer as the election approaches. One should rather expect the opposite: an even stauncher opposition.

Will the hard stance towards China change under a new president? Not likely. As public opinion has shifted against the Chinese, Biden has no choice but to also speak and act tough. A Biden presidency is unlikely to significantly improve US-China relations – for this, they have already soured too much. Besides, the Republican party is now too firmly in the hands of Trump. It is likely to continue to pursue his policies, which will put pressure on Democrats on its handling of China and other foreign relation issues. Leniency will be ridiculed; softness will be berated. Nonetheless, a Biden-led US might return to the rules-based international order and seek to influence through leadership and inclusion rather than threats and division. It might also return to less open hostility towards its newfound nemesis, and a more active diplomacy in the Asian region.

A better relationship between the two countries is not only better for both parties, it is also better for the rest of the world. Instability and uncertainty are not growth-inducing – they reduce incentives to invest. Can the US and China find a middle ground in their common joust for global influence and power, or will a “decoupling” commence? Only time will tell.

Regardless, we have some very interesting months ahead of us. Months that will not only shape America for the next years, but also world stability, trade and growth.

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