Chinese President Xi Jinping has an ambitious master plan for transforming his country into a rich, technology-driven global economic powerhouse.
That is why the current commercial rumbling between the United States and China, where the Trump administration threatens [1965-19003] to impose tariffs on $ 34 billion dollars. Chinese imports and Beijing promises to meet in kind. far more than just a debate about market restrictions, intellectual property rights and the epic American deficit.
Photographer: Fred Dufour-Pool / Getty Images
On a deeper level, stalemate reflects an economic and military escalation rivalry between a status quo power and one of the miracles most remarkable growth in history. It is a conflict between two divergent systems (one led by the state, the other by the market) with worldviews and very divergent national aspirations. This strategic tension seems to have to intensify, whatever the way the current tariff policy is played out.
It is also a battle for global influence. While the United States has long sought to extend democracy and free markets to other nations, the ruling Chinese Communist Party is just beginning to present its muscular growth model as an alternative for developing countries. And Xi supports it with hundreds of billions of dollars in loans for infrastructure projects from Asia to Europe and beyond.
In the United States, a bipartisan consensus has begun to emerge. China, although many opposed the tactics of President Donald Trump. Senate Democratic leader Chuck Schumer has attacked Trump for not being harder on China, saying that not changing Beijing's behavior could hurt the US economy "for future generations" .
and the expansion of wealth, China is now one-on-one with the United States in advanced manufacturing and digital technologies. It also has the means to make rapid technological advances in defense, particularly with the air-to-air missile systems which pose a strategic challenge in Asia for the United States and its allies.
Xi plays a long game, pursuing To achieve this, he set targets to double the per capita gross domestic product of his country (from 2010 levels) to $ 10,000. here 2021 and reshape China into advanced, competitive technology in robotics, new energy vehicles, chips, software and other advanced industries as part of its Made in China 2025 program. Separate development plans that China will rule artificial intelligence by 2030.
The goal is to produce world champions – not just national – and the Xi government is ready to use the heights from his party to lead the grants. use preferential policies and ambitious local content rules that encourage Chinese companies to do so. According to an analysis of the US Chamber of Commerce, the industries that make up about 40% of China's value-added industrial manufacturing sector, citing data from the Rhodium Group, a research firm.
19659016] China's push for more autonomy could reverse the trend towards deeper economic integration with the United States after China's accession to the World Trade Organization in 2001. China is the largest foreign buyer of manufactured goods in the United States. , chemical, computer and electronics – outside of North America, according to the National Association of Manufacturers. Chinese goods have also flooded US shores, driving up the US trade deficit with China more than four times to $ 375 billion last year
Photographer: Tomohiro Ohsumi / Bloomberg
L & # 39; Trump administration sees these deficits as alarming and alarming. Chinese business practices are ruthless mercantilism, even a threat to national security. In early January, US Secretary of Defense Jim Mattis called China a "strategic rival using the predatory economy" by unveiling the Pentagon's national defense strategy.
Xi sees his economic development as a crucial step in his development. With rising labor costs, a rapidly aging population and high levels of corporate debt – but also as a fulfillment of China's destiny. This process is well underway: China is expected to exceed the entire euro area this year, according to data compiled by Bloomberg.
The talks to avoid a trade war are partly blocked by the United States. high technology industries. While China has demonstrated its willingness to buy more US products to balance the deficit, it has refused to trade what it saw as an essential part of its economic future.
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Technology companies are on the front line of this global supremacy contest. Back in 2013, Chinese investigators began to make life difficult for American "guardian warriors" like Google, Intel Corp., Apple Inc. and Microsoft Corp. after a magazine with links to the Communist Party sounded the alarm about their dominant role in Chinese networks
The US was equally inhospitable vis-à-vis Chinese technologies, telecom manufacturers like Huawei Technologies Co., ZTE Corp. and China Mobile Ltd. being considered as risks to national security. The Trump administration has also weighed restrictions on Chinese companies and start-ups in sectors ranging from aerospace to robotics.
This week's rates, however, can show which side has the strongest hand. The first batch will take strength Friday, unless a last minute deal. Trump threatened to pay $ 200 billion worth of additional Chinese products if Beijing imposed countermeasures.
million. Xi gambled that Trump would retreat as prices rise in politically sensitive states. to job security for life, thanks to the repeal of the terms of the Chinese presidential term in February
Donald Trump at a rally in South Carolina on June 25.
Photographer: Mandel Ngan / AFP via Getty Images
The current slowdown in Chinese stock markets due to rising trade tensions is hardly a threat to his government. Its party-led government has a say in strategy and investment plans in the large state-owned companies that control 40 percent of China's industrial assets and some of the world's largest banks
. , and if anything the former New York real estate developer doubled down on the use of tariffs in gaiters with both enemies and allies. Although polls suggest that Trump faces tough mid-term elections in November, a battle to replace a US Supreme Court judge could prompt his political base to neglect slightly higher monthly bills.
-The Chinese Economic and Security Review Commission, created by Congress to monitor the implications of bilateral trade with China on national security, believes that tariffs may inflict damage both economies and depress global trade. China will also reciprocate – Beijing has announced its intention to target the US automotive, aerospace, plastic and chemical sectors – and "the imposition of tariffs will not solve the underlying Chinese distortion behavior," warned Linda Menghetti Dempsey, Vice President International Economic Affairs at the National Association of Manufacturers
Instead of using tariffs, the United States could seek to join the European Union and the United States. Japan to lodge a complaint against China at the World Trade Organization. But this is unlikely after Trump has imposed tariffs on EU countries and Japan, while undermining the WTO. Its withdrawal from the 11-nation Trans-Pacific Partnership trade agreement removed another key feature to change China's behavior.
Some prominent academics call for more drastic measures to undermine Chinese practice of technology transfer trade
Just Beginning
Willy C. Shih, a professor at Harvard Business School, advocates use of tax incentives and even the establishment of import processing areas in the United States to repatriate offshore suppliers of Intel, Apple and Microsoft. "This would strengthen our ability to support the most advanced semiconductor factories in the United States," said Shih.
In the end, American and Chinese economic rivalry will probably not be decided by administrative judges or trade negotiators. on the world market. At present, the United States maintains an edge in many technology and manufacturing sectors, particularly aerospace and biotechnology.
Yet the days when China could be considered a low-wage assembly center. It's a country on what it sees as a historic mission to become an economic powerhouse of the 21st century, and the contest is just beginning.
