(C) Daily Kos This story was originally published by Daily Kos and is unaltered. . . . . . . . . . . What will a postwar US-China competition look like [1] ['This Content Is Not Subject To Review Daily Kos Staff Prior To Publication.', 'Backgroundurl Avatar_Large', 'Nickname', 'Joined', 'Created_At', 'Story Count', 'N_Stories', 'Comment Count', 'N_Comments', 'Popular Tags'] Date: 2023-04-30 China offers cheap goods and strategic investments US offers high quality goods and security guarantees Matthew Yeung Associate Professor at Lee Shau Kee School of Business and Administration, Hong Kong Metropolitan University While the Trump administration took on China on its own, his successor chose to rally other countries to join the crusade against China. The re-emergence of the Quad (US, Australia, India and Japan) and the establishment of AUKUS (Australia, UK and US) are good examples of such alliances. China’s increasing influence around the world, on the one hand, can be traced back to President Xi’s flagship project, the Belt Road Initiative, and on the other, China’s ambition to dominate in several key industries as outlined in the Made in China 2025 document. The Impact of the China-US Geopolitical Tensions Huang et al. (2018) studied the impact of the trade war on the stock market responses of firms and found that financial market losses were experienced by not only by those dependent on the China-US trade, but also a host of other firms that are indirectly linked through the global value chains (GVCs). Tam (2020) in fact claimed that the move by the US to re-direct investments away from China would actually hurt the US and worsen its trade imbalances. Thus, economic reasons seem insufficient to explain these geo-political tensions. However, as far as FDI, (foreign direct investment), is concerned, the stock of US FDI is much greater than China, simply because the investment relationship goes back to the 1970s. Chinese FDI is more recent, particularly in the infrastructure and energy sectors (Ferchen, 2022). On the economic front, both the US and China have been lobbying the Asia Pacific countries to choose sides. A good example is in regional economic cooperation. China spearheads the Regional Economic Cooperation and Partnership (RCEP) while the US once led the Trans Pacific Partnership (TPP) and now the Indo-Pacific Framework for Prosperity (IPEF) Choosing Between China and the US Figure 1. Membership in Key Regional Agreements. A few countries in the region, (Asia Pacific), have outwardly shown their support for either party. Although these two initiatives can be complementary, but since they are led by one superpower without the other, a tacit competition emerges. Figure 1 below shows the members of the three groupings. Most of the countries in the Asia Pacific region are in all or two of the groupings. It is not surprising that countries may prefer to be non-aligned as China and the US are significant trading partners as described earlier. Forced to make a choice China or the US- two main factors would have to be considered. One, is the importance of the superpower in the trading regime of the bystander country (i.e. the external pressure). Two, is the extent to which the bystander country’s exports has a comparative advantage compared to other countries (i.e. the internal capability). (There is a lenthy discussion of this matrix with more illustrations here) Non Aligned Movement 2.0 The Asia-Pacific countries are right in the middle of the crossfire between China and the US. The US tries to lure the bystander countries by guaranteeing military assistance if their sovereignty is compromised, while China offers tangible economic sweeteners like infrastructure investments and a growing market for exports. Both types of assistance are attractive and necessary, particularly for developing economies. Economic growth depends on political stability and security, and vice-versa. For either superpower, offering both economic and international security assistance can tilt the balance. On the other hand, creating an alliance among bystander countries to preserve their neutrality seems to be a necessity. Perhaps it is time for a Non Aligned Movement (NAM) type of organization in the Asia Pacific. The original story is a slow read, It’s academic and heavily cited but well worth the time if you want to understand the economic aspect of the US China competition in the Asia Pacific region, China’s backyard. The excerpt I posted here is the only one that mentioned security in the US China competitive evaluation. That makes their projections of possible outcomes suspect for me. The economic issue itself is about security. China portrays itself as a peace loving nation and projects a war like personality on the US. The reality is, China is waging a hybrid war on the US and all other countries or alliance that it feels can challenge it for world dominance. China’s aggressive trade policies constitutes an economic war, Its painting of the US as a warmonger and a bully is a propaganda war, and it is heavily committed to destabilizing the US dollar to weaken the US’ world influence and leverage. China is risk-adverse to a shooting war because there is no way it can avoid tremendous loses of civilian lives and infrastructure. Such a loss would also jeopardize its manufacturing base, the very source of its economic powers. Advantage US. China’s efforts to drive a wage between the US and Europe is also a part of its hybrid war on the US, but is not as clear-cut as the economic competition. Ukraine may be pivotal to what happens in Europe. China’s original plan, pre February 2022, was to access Europe through Russia. Other than raw energy, Russia had little else to offer the rest of Europe. China could ship and store or ship and assemble goods in Russia for the European market. That is highly unlikely now. China will need another plan, and Ukraine looks like an excellent candidate for that link. However, Ukraine also has the potential to be a major supply of goods and services to the rest of Europe itself. I cannot imagine a scenario where Ukraine will not be joining both NATO and the EU. US weakest rating were under GOP administrations China is well poised to blow by the US in GDP in a relatively short period of time, but the only plausible way for them to surpass the US in influence is for conservatives to regain the White House. I predict the Asia Pacific will choose the US. [END] --- [1] Url: https://www.dailykos.com/stories/2023/4/30/2166656/-What-will-a-postwar-US-China-competition-look-like Published and (C) by Daily Kos Content appears here under this condition or license: Site content may be used for any purpose without permission unless otherwise specified. via Magical.Fish Gopher News Feeds: gopher://magical.fish/1/feeds/news/dailykos/