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April 29, 2024 - 7:00am
Last week, US Secretary of State Antony Blinken travelled to Beijing to meet senior Chinese government representatives. His reception was somewhat frosty, as officials told him that the United States must choose between a policy of “confrontation or cooperation” with the Chinese. Beijing’s diplomatic well is now pretty dry, and its representatives are signalling clearly that the Americans need to make a decision on their Chinese strategy.
When Blinken met with Xi Jinping, the message was reinforced in as clear terms as possible. “China is pleased to see a confident, open, prosperous United States,” Xi said. “We hope that the US side can also view China’s development in a positive and proactive light.” He then went on to warn Blinken against engaging in what he called “vicious competition” with Beijing.
It is not only Chinese officials who are tiring of Washington’s ill-defined stance towards its fellow power. Earlier this month a Donald Trump megadonor, hedge fund titan John Paulson, warned against trying to economically decouple from China. Paulson, who is tipped to be a potential nominee for a Trump administration Treasury secretary, strongly pushed back on the Biden administration’s stance. “We don’t want to decouple from China,” he told the Financial Times, “We need to have a good economic and political relationship with them.”
In Europe, however, chaos continues to reign on the China question. While European leaders signal that they do not wish to sour trade relationships with China, actions are starting to speak louder than words. Last week Germany arrested Chinese nationals on charges of espionage. Meanwhile, the European Commission opened an investigation against Chinese social media platform TikTok. This was strange timing, given that the United States House of Representatives recently passed a similar bill, raising questions about the independence of the Commission on diplomatic and economic policy.
Yet if Europe did push the Chinese out of the continent, its economy would collapse. Europe — including the United Kingdom — is the region most reliant on external trade in the world. In 2022, imports made up less than 10% of GDP in North America. In Europe, however, imports made up nearly 47% of GDP. The old continent is almost five times more dependent on imports than North America.
Many in America do not want to see the country decouple from trade with China, seeing such a move as deleterious for the economy. It would result in even more inflation and a serious deterioration in American living standards as cheap Chinese imports dried up. But, provided that the US could weather the social unrest sparked by crashing living standards, the country could at least theoretically adjust.
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SubscribeThere are worse things than the economy collapsing, such as living with the massive behaviour-modification programme the Chinese call Tik Tok. Congress is 100% correct to push Bytedance out of their economy. If that causes the collapse of the economy, so be it.
Remember, the Chinese Communist Party is a party of evil communists. Coupling yourselves to evil commies is a terrible idea, and if you find yourself being an evil commie you should stop.
Short of war, the economy collapsing is just about the worst thing that can happen.
So you agree, there are worse things that can happen. It is bad, not god, bad, for economies to collapse and I do not wish it, but we have got ourselves in such a civilisational mess that it is not as bad an outcome as, say, a chunk of the population having their attention monopolised by an algorithm run by a foreign power that thinks Mao Tse Tung thought is good.
Yes, economic collapse is infinitely worse than kids hooked on Tik Tok. Mass starvation, financial ruin, political and social upheaval are the result of economic collapse.
No. I believe that we have never seen anything like the kind of societal collapse that is being caused by sensitive information being delivered by algorithm to individuals in societies with ethnic and cultural fault lines. Societies (thinking Germany, South Korea) can recover from financial ruin, although with certain pathologies. But just look at the social upheaval being unleashed when people get their news about the Hamas-Israel conflict on Tok Tok. These are algorithmic feeds, driven by machine learning on large amounts of consumer data, including location and personal data. The potential for a hostile power to cause massive damage to our society is a bigger threat than an economic depression caused by not being able to buy cheap junk.
Think hard about the term economic collapse and its implications.
‘not being able to buy cheap junk’
You will find that it is not just ‘cheap junk’ that the us imports from China, much of what you import is actually tech:
‘China is best known for its electronics and technology-focused products─with electronics products accounting for two-thirds of the top 10 Chinese imports. In 2017, China also dominated all electronics imports into the U.S., claiming over 60% of the market’
https://www.visualcapitalist.com/visualized-ranking-the-goods-most-traded-between-the-us-and-china/
Unless the us is going to go analogue again, you might want to consider that you cannot replace all those tech imports very easily and if you want to remain competitive in technology it’s probably best not cut off the people that make it for you.
Other exports to the us include things like Machinery, nuclear reactors, boilers value – $88.98 Billion 2023
Complete list, not all of it ‘cheap junk’ of us imports from China, total of over $500 billion:
https://tradingeconomics.com/china/exports/united-states
That’s alot of trade to replace.
Tik Tok has the same content as Facebook Reels and Instagram Story and will continue to do so. It takes no effort to upload the same content to Tik Tok, Instagram and Facebook, and frequently it is. If Tik Tok is a behaviour modification programme, then so are Facebook and Instagram.
Of course, Tik Tok is a behaviour modification programme but not in the way you think. It is an app concocted to addict users no matter the consequences, exactly like every other tech company strives to achieve. The difference is Meta and the rest are US investments and Bytedance is not.
Congress has voted to defend its technology sector. It hasn’t voted to protect its citizens and children. The content and addiction that so alarms you will continue to be monetised on other platforms. The behaviour modification will continue, but only on US technology platforms and with the lucrative earnings in dollars and not yuan.
No, Tik Tok is a level above Facebook and Instagram. For a start, Meta can tell the government to take a hike if the government wants to take a look at the data, nobody in China gets to tell the CCP to do one. Secondly, the data collection of the Tik Tok app is significantly more intrusive than any other app, and this data is of use to espionage and other state level activities.
Most fundamentally, nations are quite entitled, even wise, to treat foreign entities differently to national ones. It is extremely dangerous for the peace of a society – as we see in the rancid demonstrations in London – for its citizens to be using an algorithm controlled by a foreign power. China needs to be pushed out of our information space, and if that means less cheap stuff then too bad.
A stupid post. Fortunately people like you have no input into important decisions
The West having a “good economic and political relationship” with China is fine, but what does it do if China invades Taiwan?
What did the West do when NATO launched its brutal and unprovoked war on Serbia? What did the West do when the US and the UK launched their brutal and unprovoked war on Iraq? What did the West do when NATO exceeded the authority granted by the Security Council and took sides in the Libyan civil war, wrecking the country? What did the West do when the West supported the most rabid and vicious of Islamist terrorists in hopes of achieving violent regime change in a fellow member state of the United Nations? What is the West doing about one of its own plausibly accused of genocide?
Could it be outrage fatigue?
If your argument is that China should have protested the West’s bad behaviour more strongly, then I agree with you. If you are suggesting that everyone should just carry on starting wars, I think you have taken a wrong turn.
Genocide was both the provocation and the justification for the use of military force against Serbia. The only pity is that we Nuremberg the entire Serbian leadership afterwards.
The allegation of genocide, death camps etc. were lies – outright lies. Joschka Fischer must have known he was lying, the German officers and police on the ground certainly gave him the facts, but he ignored them. For other than ideologically committed German Greens, it’s when the Greens when from Green to Olive (the German term for army camo.)
Rather, my point was to query whether Martin’s concern was principled or opportunistic (quite apart from the fact that China can’t invade Taiwan since both the governments in Beijing and Taipei – as well as Washington – agree that mainland China and Taiwan are one China).
I really mourn the missed opportunity of the US’ unipolar moment. Instead of using that power to forge a standard of conduct in strict adherence to international law which would have retained moral authority and the support of the international community past the cusp of the US’ power, the US chose to abuse its opportunity on illegal, immensely destructive, mind-bogglingly expensive, and ultimately futile wars and regime-changes.
It’s a real tragedy. Now there will be a new world order. The US will have to choose a path of humility but an opportunity to contribute to the shaping of this new world order, or the US will (sooner or later) have to adjust to it.
The USA will probably become isolationist but only after having caused much chaos and destruction throughout the world.
The timescale is uncertain but probably thirty to forty years. Todd is right.
“….agree that mainland China and Taiwan are one China“.
In a de facto sense, Taiwan has been an independent country for some while now. In a de jure sense they might be one country, but the government in Taipei is the rightful government of the whole country (being the last legitimate government of China before it was taken over by the Communists).
Am I missing something here? The US, the UK and NATO are “the West”. Are you saying the West should have imposed sanctions on itself?
Maybe we should stop p*sing them off and resolve Taiwan diplomatically?
Maybe the UN could do it’s job for a change and diplomatically solve a conflict. Before the Chinese get that pi*ssed they mount an actual invasion?
Maybe “we” by which I mean the UK should stay well clear of this particular dispute. The UK has no national interests at stake in the matter, and should certainly not have a Royal Navy vessel there.
If the USA wishes to get involved that is entirely a matter for it.
I agree. I think we should leave the US to it on that one, we should learn important lessons from the whole Ukraine debacle. We really have no national interest in disrupting our trade with China. The middle east and eastern europe are in enough of a pickle without adding fuel to the fire over Taiwan.
Apparently any conflict with Taiwan would cause one of biggest business disruptions we have ever encountered. I think we could do without that right now.
Maybe China could dump Communism (an abhorrent political philosophy if ever I saw one), and he people of Taiwan might voluntarily reunite with it.
It already has…
Oh, so China is no longer a One Party State ruled over by the Chinese Communist Party? I must have missed that news.
Why is it our job to tell the Chinese how to run their government?
The Chinese government is the business of the Chinese people, what are we supposed to do, install a democratic government in China? How do you propose we do that? Don’t you think our own governments are shambolic enough? Without interfering with other people’s?
I’m don’t suggest we should “install a democratic government in China”, even if that were possible. However, we should not pretend that Communism is as good as democracy, and we should help democratic countries (in this case Taiwan) in their disputes with Communist ones.
There’s helping with disputes, diplomatically, which is fine, but that is quite different to pistols at dawn. I’m not sure sorting this particular dispute out with a big battle ship war is quite the way to go. I think we might loose that particular dispute quite quickly.
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So what does Mr Pilkington think that the US and EU should do when they find Chinese espionage and market abuse ? He is clearly implying that the Germans should simply ignore it ! Note: he nowhere makes the claim that these things do not happen (and we all know very well that they do). Apparently, defending your national interests and laws is in some bizarre way “trying to destroy the current system”, rather than trying to maintain it !
He also claimes that enforcing the law would lead to some sort of total economic decoupling from China.
Nonsense on both counts.
Beyond that, he never stops to consider the fact that China is far more dependent on its exports than the US and EU are on Chinese imports and that they have far more to lose than we do.
I would also dispute the assertion that the EU is a champion of free trade. The CAP says otherwise.
Of course the USA and other Western countries don’t engage in espionage and market abuse against fellow Western countries.
Who was it tapped Merkel’s phone calls?
Quite irrelevant to my point which is that countries defend their own interests.
What do you think the Germans should do about Chinese espionage ? Blame the Yanks ?
Countries should expect espionage, counter it and act like grown ups when it is discovered rather than crybaby shouting “it’s not fair” trying to pretend it isn’t what they themselves are doing…
Which is exactly what the Germans are doing !!!
So your point is what exactly ?
‘So what does Mr Pilkington think that the US and EU should do when they find Chinese espionage and market abuse ? He is clearly implying that the Germans should simply ignore it ! ‘
I don’t think so. I think the point of the article is that we cannot survive without trade with other nations and since China owns a significant proportion of the mines that supply our natural resources and an enormous manufacturing base that would be hard to replicate in Europe at this stage, it is probably wise not to send Europe and the UK into a massive depression just because we can’t trade nicely with the Chinese. We have had trade links with China for hundreds of years now. What is the problem now.
It is only a problem now because America is bankrupt and it is hoping that by cutting off China it can reshore and then the EU and the UK will be forced to buy from them instead.
So the us is willing to crash both its own and every other western economy just so it can save itself from long period of economic irresponsibility.
No thank you.
Lift all the sanctions. FREE TRADE.
‘Beyond that, he never stops to consider the fact that China is far more dependent on its exports than the US and EU are on Chinese imports and that they have far more to lose than we do.’ – both parties loose if we cut off china.
The difference is china has resources and manufacturing capacity. We do not. Who is going to loose more? China has the entire BRICS+ to trade with. We would be left reliant on an America that has proven itself quite unreliable. With no manufacturing capacity to match china and lacking the resources to manufacture anything with.
China is broke tomorrow if it can’t export. The vast majority of their exports are to Western countries. BRICS countries aren’t rich enough to fill the gap.
China can stop trading with us any time they want to if they think it’s in their own interest. They haven’t. Which tells you all you need to know. And if they did, we’d adapt. Napoleon tried to pull off something similar with his Continental System. Which didn’t work.
We’ve been close allies with the US since WWII and I’m struggling to see in what way they are “unreliable”. More unreliable than who exactly ?
You seem to think we should throw over our relationship with the “unreliable” US (who happen to share our language and much of our legal system and culture and world view) because we think that China’s a better option ? Are you for real ?
Yes I am for real.
I have no problem continuing our relationship with the us. I just think we should continue our relationship with China too. I’m not saying it is better, I’m saying that it is ridiculous to cut off trade with a country that provides cheap goods to us and has done for some time, when we already have inflation in the west and do not have the capacity to replace those goods.
The US is propped up on an enormous pile of debt. It’s governments approach to war is shambolic to say the least. It’s politics are polarised and very confused, the export of these American ideas is now polarising our society here, all this culture war cr*p is from America. So it is unreliable financially, politically and militarily.
‘China can stop trading with us any time they want to if they think it’s in their own interest. They haven’t. Which tells you all you need to know.’
It tells me it’s the Americans are imposing sanctions not the Chinese. It tells me china is open to free trade and the US is not.
Please tell me how we cut off china when:
‘ Her comments come amid skyrocketing demand for minerals and raw materials vital to the energy transition. The end use of metals such as nickel, copper, lithium and cobalt are wide-ranging and include electric vehicles, wind turbines and solar panels.
China is the undisputed leader in the critical minerals supply chain, accounting for roughly 60% of the world’s production of rare earth minerals and materials. U.S. officials have previously warned that this poses a strategic challenge amid a pivot to low-carbon energy sources.’
https://www.cnbc.com/2024/02/14/us-energy-chief-concerned-about-chinas-critical-minerals-dominance.html
Where are your metals coming from then? 60% of global supply is quite a lot to make up for.
Sanctions on Russian nickel, copper and aluminium are playing havoc with the LME and the price of copper is now only expected to increase for some time, from $10,000 to $12,500 k/t in two years. Really helpful for inflation. We are back in a situation where our cable prices are only valid for a week.
https://oilprice.com/Metals/Commodities/How-Copper-Is-Defying-Weakness-in-China-to-Make-A-Serious-Bull-Run.html
Also, in regard to: ‘China is broke tomorrow if it can’t export. The vast majority of their exports are to Western countries. BRICS countries aren’t rich enough to fill the gap’
Please see here: https://www.visualcapitalist.com/the-worlds-largest-consumer-markets-in-2030/
‘Ranked first, China is expected to have slightly more than 1 billion consumers by 2030, a 15% increase from 2024. Just across the Himalayas, at second place, India will have 773 million consumers, up from 529 million today, a staggering 46% increase.’
You will notice that the countries that make up the BRICS actually have quite large consumer markets that are increasing at rates very much higher than in the west.
FREE TRADE works only if it moves both ways. China has been quietly decoupling from Western products and services . eg It does so in IT simply by stealing software .
Only in retaliation against US tariffs and sanctions:
‘The U.S. has by far the most tariffs, partly driven by the China/U.S. trade war that began in 2018. Some Chinese products were subject to a 25% tariff, including auto parts, furniture, and semiconductors. As of August 2022, U.S. imports from China of these heavily taxed products were 22% below pre-trade war levels. On the other hand, U.S. imports of Chinese products not subject to a tariff were 50% higher.
Meanwhile, China retaliated with its own tariffs against U.S. products. However, China still has one-sixth of the harmful tariffs that the U.S. has in force’
https://www.visualcapitalist.com/sp/ranked-harmful-tariffs-by-economy/
You will notice the US has nearly 5000 different tariffs compared to china’s 777, bear in mind china is the world’s largest trading nation.
So it seems to me, the US started the trade decoupling process. If you have evidence to the contrary please post it.
It’s OK moaning about tech theft, what did the US expect by off shoring in the first place? Us tech companies have made enormous profits off the back of Chinese produced goods. Now these same companies cry intellectual property theft? What a crock of sh*t.
“…So what does Mr Pilkington think that the US and EU should do when they find Chinese espionage and market abuse…”
Mr Pilkington expects everyone to kow-tow to the Great and Good CCP. The CCP never doin’ nothin’ wrong. All bow.
Marvellous understatement. And makes nonsense of the next statement:
Europe does need to decouple diplomatically and politically (and militarily), but China is not the primary problem.
But the decoupling you mean will never be initiated by Europe. Of course it is more likely to happen the other way round but very slowly.
Exporting covid, however it originated in China, did wonders for economies in the West, and beyond. Decoupling might lead to a less prosperous but perhaps a more resilient outcome, pending sane choices by our elites. Goodness, they may have to start some serious thinking for a change. What a novelty!
Probably it’s good to diversify trade in terms of imports and exports. It may be painful in the short run but critical. Tik Tok, like Instagram just seem like online platforms, driving a short attention span for teens. Doubt it is a Chinese platform though. X
Mr Pilkington is out of date. China is no longer the source of the world’s cheap labour. This mantle has passed to Vietnam and other South East Asian countries, which have significantly cheaper labour costs than China. Several industries are already looking to Taiwan and South Korea for high tech products from countries which are not hostile powers intent on cyber warfare and industrial espionage against their customers,
Europe can’t afford not to decouple from China.
And, yet decoupling is EXACTLY what Europe needs to do. Be energy independent, rebuild manufacturing industries to restore human pride and give all those immigrants a job, increase tax breaks for entrepreneurs, and put tarriffs of 70% upwards on Chinese made EVs. Time for Europe to stand on its own two feet, fly the red nest and get on with it!
Can you name an economist who thinks that course of action is sensible?
The next conflict will not be between China and the West, but rather much closer to home—it will be between Western governments and Western businessmen. Governments must support their citizens, or they will face alternatives such as unrest, civil resistance, and potentially revolution or civil war. Capitalists, seeing a lucrative market in China, are driven by the prospects of a billion-plus consumer base and will continue to push for globalization, unable to resist its allure. Meanwhile, China has issued a stark warning: cooperate, or it will flood the market with supply. Western governments, historically accustomed to controlling global affairs, are facing the reality that their influence is waning.
In this changing world, there is a strong likelihood that Trump will isolate the US, initially being blamed for the fallout. However, over time, people might start to adapt, surviving and even thriving under a new way of thinking and living. Alternatively, Trump could revert to old tactics influenced by the usual suspects of big corporations, possibly instigating a conflict with Iran—a scenario in which China would likely remain on the sidelines, observing as we potentially devastate ourselves, while still profiting one market, losing the public to starvation and unrest…and China just as they did in the past 25yrs (since the day they signed into global trade Dec. 2001), will bite their time and prosper.
“Comparing the United States and China as two people stranded in a rowboat on a turbulent sea, former U.S. Treasury Secretary Lawrence Summers said the world’s two largest economies have to find a way to cooperate to get to shore.
“It doesn’t really matter how they feel about each other and what history got them into the rowboat. If they are both going to survive, they have to find a modus vivendi for cooperation,” said Summers during a recent visit to China.
U.S. controls on the exports of certain technologies to China are important and should be maintained, but these restrictions should focus on sensitive fields like national security and should not turn into efforts to “hold down the Chinese economy,” former U.S. Treasury Secretary Lawrence Summers told Caixin in an interview.
The interview took place last month as Summers was wrapping up a three-day visit to China, during which he met with senior officials and attended symposiums with students and business leaders.
https://www.caixinglobal.com/2024-02-19/qa-summers-draws-line-on-use-of-us-export-controls-against-china-102166673.html