China vs. US: The Race for Global Dominance
China and the United States are locked in a race to shape the world economy in the coming years. The United States seems confident, but is lagging behind China in several ways. China, has undoubtedly given Washington reasons to worry as it draws US allies and friends into its circle of influence. Some analysts blame US President Donald Trump’s mixed messages towards America’s allies for causing this newfound turn to China. Take the United Kingdom, for example. In January of this year, British Prime Minister Boris Johnson announced the United Kingdom would allow Huawei, China's largest telecom company, to provide equipment's for Britain's next-generation 5G network. That goes directly against Washington’s desires to shut Huawei out of new 5G markets. Even household American brands such as NBA or GAP are eager to work with China in order to tap into its vast lucrative market. The Indian film industry has started launching films in China – the Aamir Khan produced movie Dangal had a massive success there. Thus, industries from all over the world are tapping into China’s lucrative market. As the race for the White House heats up and Democrats compete to replace Donald Trump in 2020, China will emerge as a significant topic in American politics. Here are some key issues to watch out for in the US-China relationship.
The South China Sea
In 2018, a US navy aircraft was flying over four artificial Islands, where China has been building a fortification. During the flight, the cabin crew received six separate warnings telling them to divert back. "Leave immediately and keep out to avoid any misunderstanding". Each time US navy heard this voice, the crew’s response was the same: “ I am a sovereign immune United States naval aircraft conducting lawful activities”. Lt. Lauren Callen, who was leading the crew told CNN, that “it was surprising to see airports in the middle of the ocean”.
In 1947 the Chinese navy took control of islands that had previously been occupied by Japan, during the Second World War. Over the years, China has claimed ownership over almost all of the South China Sea, building military bases on human-made islands that didn’t exist before 2015. The South China Sea is rich in oil and gas resources, and involves 30 per cent of world shipping trade. Countries such as Vietnam and the Philippines have ongoing border disputes with China over the control of the South China Sea, citing their entitlement as coastal states to a 200-nautical-mile Exclusive Economic Zone (EEZ), as supported by the UN. Now every country in the region follows EEZ, except China.
For years, America had strategic advantage in the South China Sea through its naval might. It was able to patrol its waters and monitor movements. But that role is diminishing as it becomes increasingly difficult for the White House to push back against China’s growing military presence there. Currently, China has twenty outposts on the Paracel Islands and seven on Spratlys, which gives them a strategic advantage in the region. According to the US Naval War College, the People’s Liberation Army will have more than 430 ships and 100 submarines by 2030, double that of the US Navy. China has the military capacity to flex its muscles in areas it considers to be of strategic importance. While the US Navy is currently still able to operate freely within the South China Sea, Beijing views that as a violation of its sovereignty it has made clear it will not tolerate.
China’s nine-dash line image by Forbes
The nine-dash line, which circles as much as 90 per cent of the contested waters, runs as far as 2,000 km from mainland China to a few kilometres away from Philippines, Malaysia and Vietnam. For China, the line signifies "historical rights" to the region, though Beijing has never given a legal explanation of it. Currently, there is little chance that international courts will restrict China’s activities in the region. Beijing has repeatedly stated that it will ignore any rulings. For example in 2016, China rejected the judgement made by an international tribunal in The Hague and described the decision a “piece of paper that is destined to come to naught”.
The Belt and Road Initiative
The BRI is inspired by the concept of the Silk Road established during the Han Dynasty 2,000 years ago. In 2013, during a visit to Kazakhstan, Chinese President Xi Jinping unveiled plans for building an "ancient Silk Road” stating "We should take an innovative approach and jointly build an economic belt.” Since this early announcement, China has partnered with approximately 60 countries to work on the BRI. Many of these countries are not in a position to pay back the amount of money that has been provided by China. In Sri Lanka, China loaned about 1.5 billion dollars for a deep water port, however by 2017, it was clear that Sri Lanka could not pay China back, so instead Sri Lanka gave China control of the port (an essential part of the Maritime Silk Road) as a part of a 99-year lease. China has made similar loans in Pakistan, Myanmar and Djibouti. This has led some to dub the BRI as a “sinister string of pearls.”
Pakistan is becoming a strategic point of conflict between China and the US as the BRI develops. The White House fears Chinese economic control over Pakistan, which is heavily indebted to China. At present, Pakistan is not in a position to pay back to China, though it can still ask the International Monetary Fund (IMF) help to bail them out of this situation by providing loans. As the most significant contributor of the IMF, the US may use this lever to try to frustrate China's push for power.
Washington views the BRI with unease. Many of the countries China has partnered with have authoritarian governments (Azerbaijan or Belarus), and some rank as some of the most corrupt countries in the world. The BRI challenges the status of the US as the leading superpower and China is feeling emboldened by the Trump administration’s “America First” policy and seeming withdrawal from support of a liberal world order.
The Lure of China’s Vast Market
In 2018, around 500 million Chinese tuned into watch NBA basketball. That is larger than the entire population of the United States. Over the years, the NBA and several other American brands have built a strong reputation in China's market. It all started in 2003 when the Huston Rockets signed the first-ever Chinese basketball player to play in the NBA, Yao Ming. The NBA's success in the Chinese market represented what American envisaged believed when they first opened up trade with China back in 2000. NBA players are now celebrities helping attract a massive following to an American brand. It all looked like a great success. But it took just one tweet to nearly destroy all of it.
On October 4, 2019, the general manager of the Houston Rockets, Daryl Morey, posted a tweet in favour of pro-democracy protesters in Hong Kong. The Chinese government was outraged and stopped the broadcast of pre-season NBA games in China. Shortly, after this, several Chinese companies suspended their business with the NBA. Celebrities like Lebron James and NBA Commissioner Adam Silver struggled to support Morey's tweet and give their views, as it could destroy their reputation in China. China’s 500 million basketball fans are important for the growth of NBA assists, not long ago both Tencent and the NBA announced a five-year partnership expansion. Nevertheless, the situation was defused when the NBA issued an apology stating it was “extremely disappointed” by the comments.
The COVID-19 Pandemic
The future of US-China relations will play out against the backdrop of the medical and financial pandemic brought about by the spread of COVID-19. China, once the epicentre of the 2019 coronavirus pandemic, appears to be succeeding in flattening the curve of infections and bringing back a sense of normalcy to daily life in the worst hit regions. The US, on the other hand, is on a different trajectory. As of now more than half of the population is under lockdown, and economic activities have shut down. On Friday, Chinese President Xi Jinping and US President Trump spoke about the coronavirus on the phone focusing on the economic impact of the pandemic. Trump tweeted after the phone call and his tone was in stark contrast to his recent rhetoric on China specifically as it relates to the coronavirus. For days he had labelled COVID-19 as a "Chinese Virus" feeding into anti-Chinese sentiments that might have fuelled recent attacks on Asian American communities.
The question now is whether this pandemic will have any effect on the current trade war between the US and China. For now, Trump maintains the current situation will not impact his trade talks with China. However, it is clear the pandemic and its fallout has already impacted relations. In recent weeks, the United States has tightened rules on Chinese state media over "propaganda" concerns. That in turn brought about a strong Chinese reaction with Beijing expelling thirteen American journalists working for outlets such as The New York Times, Washington Post and the Wall Street Journal. Despite these tit for tat moves, President Trump and President Xi will have to find a way of working together and coming together if they wish to achieve their goal of getting their economies open and back on track.
Kabir Kalia is a graduate student at UCD's Clinton Institute