No stopping China now

Source
China Daily
Editor
Huang Panyue
Time
2019-06-20 09:11:53

US-provoked trade frictions aimed at halting the rise of a challenger to its political, economic and technological supremacy will ultimately prove futile.

The Chinese military strategist Sun Tzu said: "Who wishes to fight must first count the cost", yet the United States has progressively escalated its trade attack with China along with the cost to itself.

In an article published in July 2018, I stated that the "trade war" that the US administration was going to start would put in peril not only the economies of both the US and China, but the economies of the entire world. At that time I labeled these frictions as a "trade war". But, right now, it is not that anymore, but something worse.

It is a desperate attempt by the US administration to halt China's unstoppable rise by any means - both fair and foul. It is really a battle for political, economic and also technological supremacy.

The US has been perceived for decades as the hegemon of the democratic and liberalized world, but a new alternative has risen: China. Unlike the US, China champions its principles of mutual respect for territorial sovereignty, noninterference and assisted development for poorer countries as a hallmark of its global leadership. It has proved to be quite attractive for many countries in both the African and Asian continents whose unhappy memories of the exploitation of their land by colonial rulers are still very fresh.

China's rise is undeniable and inevitable, thanks to its long-term strategic planning for national development. I could cite hundreds of different statistics to support this affirmation. Its most remarkable achievement is having lifted more than 800 million people out of abject poverty since initiating market reforms in 1978, according to the World Bank. Its poverty eradication strategy is now being eagerly copied by various developing countries.

Also, according to a report released by Standard Chartered Bank in January 2019, China is poised to overtake the US as the world's top economy as early as next year; its analysts arrived at this conclusion by surveying countries' purchasing power parity exchange rates and nominal GDP (using PPP alone, China is already considered the world's largest economy, but on a nominal basis the US retains the lead).

What's most impressive is the fact that China has experienced double-digit growth for most of its last three decades. It is now generally accepted as the most rapid economic development period in human history within such a short space of time. Little wonder many developing countries are adopting China's development model.

Another irrefutable indicator of China's rise pertains to its technology and innovation. A study by the World Intellectual Property Organization analyzed the addresses of inventors named in all 950,000 international patent applications published between 2011 and 2015 under the Patent Cooperation Treaty: inventors in the Tokyo cluster had 94,079 patent filings, well ahead of Shenzhen-Hong Kong with 41,218 and San Jos��-San Francisco (Silicon Valley) with 34,324.

Now with the Greater Bay Area project prioritizing innovative and technological successes, China will surely advance much faster under these two indicators of national modernity and economic might.

The trade conflict, manufactured by the current US administration, is both needless and futile, as well as being a significant threat to global economic growth. The economies of many countries tightly integrated into the global value chain will be adversely affected.

Also, fears about a further escalation have rattled investors and hit stock markets these past few weeks. In this sense, the International Monetary Fund had already predicted in October that a full-blown trade conflict between the US and China would put a significant dent in the global economic recovery.

Analysts from Morgan Stanley have recently said that the collapse of the US-China trade talks and hike in tariffs on Chinese goods will push the world economy toward recession and see the Federal Reserve cut US interest rates back to zero within a year. The bank's analysts said in a note last month that "if talks stall, no deal is agreed upon and the US imposes 25 percent tariffs on the remaining circa $300 billion of imports from China, we see the global economy heading toward recession".

The US nominally triggered these trade frictions to force China to stop its "unfair and abusive trade practices". The reality is that it is but a thinly disguised battle for political, economic and technological supremacy.

The Huawei ban will finally give us some indication of whether China can develop its own technology in general (operating systems, microprocessors, everything else), or if the whole China tech boom was built on stolen intellectual property with no significant innovation of its own, as the US alleges.

In my opinion, China will be able to develop its own advanced IT technology despite Washington banning some US tech companies from supplying Chinese companies with critical components because the latter have the potential capacity to rise to the challenge.

These trade frictions may slow down China's growth, but they will not stop it. The West (basically the US) should try to collaborate with China for win-win outcomes rather than fighting it.

The author is a fellow at the CERAO (East Asia Research and Studies Center, UAB). The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

 

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