What will the outcome of the China-US conflict be?
The United States and the People’s Republic of China are raising the level of their conflict everyday. Just in the last few weeks: Actions over Hong Kong escalated with a new national security law imposed by the PRC and the United States terminating its special trading relationship with Hong Kong.
Claims and counter-claims in the South China Sea; the US that does not recognize the law of the sea attacks China, which does recognize the law, for not accepting a court ruling on its claims in the South China Sea.
Each country has ordered the closing of a consulate of the other. Joint military exercises among Japan, Australia, India, and the US are scheduled in the near future. Talk of denying visas to the members of the Chinese Communist party and Chinese students, if implemented by the US, would cause serious disruption.
Growing efforts to block Huawei’s commercial activities in the West continue to distress the Chinese, notably the UK’s recent reversal requiring Huawei equipment to be removed. Trade relations are unsettled and have the potential of causing large economic losses to both countries.
Western protests about the internment and treatment of the Uighur, alleging that the Chines are attempting to reduce population growth and interfere in the practice of Muslim festivals. The United States secretary of state has given a speech outlining a tough anti-Chinese approach that is far-reaching in its implications. The conflict is serious and will continue to get worse until the end of the Trump presidency in January.
There is another view from the perspective of the great corporations of the world and the changes that are coming. What are the new key technologies? I note four and indicate the stakes.
Despite the efforts of the Trump administration to relieve pressure on the automobile manufacturers to improve fuel efficiency, the future is electrically-driven vehicles. The battery is the key component and perhaps rare earths are central to higher capacity low-cost storage.
There has been a lot of cooperation between Chinese, European, and American companies. Is this going to stop now?
This is the area of 5G. The West and China seem to be separating. This is bad for everyone. There are two sides to this story of the Huawei threat.
But slowing down the implementation of one of the main new technological breakthroughs is not the way forward. American and European companies are deeply involved with the Chinese. Separation is costly.
The third technology is the use of AI to improve the delivery of goods and services. Again, scientists from all over the world have been working on these problems.
The real issue is the mathematics that underpins the programs; the programs are easy but the mathematics on which they rest is complicated and best developed in an environment of sharing and working cooperatively. Mathematics is a universal effort, not a national one.
Rebuilding the energy economy
Humanity needs more and more electricity, but we need to find a way to generate it while reducing the use of hydrocarbons. This can only be achieved with cooperative actions by China and the United States. The technologies will emerge, but one has to set the correct economic price for carbon. Without such agreements on price there can be only limited progress.
These great potentials for a better future for mankind are being sacrificed on the hysteria of the threat from the United States or the threat from China. The potential from the great technology corporations and the scientists are submerged under the political posturing.
The costs of trade restrictions and tariffs; expropriation of intellectual property rights; unfair subsidies in competitive sectors -- these are issues that are unresolved between China and the US. All are subject to economic solutions. The use of WTO procedures has failed as it is too slow, and both sides have not really been forthcoming in seeking such methods of solving the trade problems.
One has to ask: Why? In the face of the tremendous mutual benefits that are available, why has the leadership on both sides been unable to resolve these issues?
As the tensions over China grow, the Trump presidency is coming to an end. Biden’s administration will be focussed on the domestic problems in the United States and see Chinese issues as a distraction.
Besides the turmoil of the Biden administration finding its feet in foreign affairs, there are conflicts at the highest levels of the Chinese government where many are skeptical of the aggressive stance of Xi. There are always disputes and differences based on genuine differences in interpretation and on individuals promoting their careers.
This is going on in the Chinese government as well as the American. The post-Trump era does not promise much resolution, although as a start, people may talk politely and limit demonizing the other side.
But for the next six months, one should worry about the outgoing Trump administration pushing hard through sanctions, and laws leading the Chinese to push back in the South China Sea and the Indian border. “Who is the tough guy here? Xi or Trump?”
National leaders take actions in international affairs supported by information from their intelligence organizations. Mismanagement of this relationship can lead to tragedy. There are many examples, but two are relevant and interesting; in both cases, a national leader wanted to take action. Did his intelligence organization provide information that would indicate the action would achieve its purposes?
The first example is Prime Minister Nehru’s action in September and October 1962. Nehru wanted to pursue a Forward Policy, pushing right up to the Chinese border, asserting India’s sovereignty. His forward troop commanders and the Intelligence Bureau (the Indian intelligence service in 1962) argued that this was dangerous; the Chinese forces in the area were numerically superior and that to challenge the Chinese would probably bring forth military action that India would lose against.
India’s army chief and senior officers ignored this analysis and told Nehru that the Indian army could handle his strategy. Nehru had determined what he wanted to do and his top military advisers, protecting him from the facts, facilitated his defiance of reality.
We all know the result: The Chinese struck back at the Indians, shattering their forces. The Indian army was seen as inadequate and unable to protect the nation. Nehru’s reputation foundered (granted that the Chinese may have attacked in the absence of the Forward Policy, but that is unknown. There is vast literature on these issues but my summary seems to me the most accurate).
The second example was the 2003 decision by the United States to invade Iraq. Smarting from the 9/11 attack on the United States and driven by demons that we never understand, Bush wanted to invade Iraq and do away with Saddam Hussein -- a man whom Bush correctly saw as deeply evil.
Apart from these metaphysical arguments, the issue was: “Did Saddam violate his agreements with the United Nations with respect to Weapons of Mass Destruction?” The CIA, bullied by Bush, Cheney, and Rumsfeld, struggled to produce a valid report based on evidence that Iraq was working on WMDs.
It was a disgraceful performance. General Powell, the secretary of state, could not bring himself to tell President Bush what a bad idea he thought this was. George Tennent, the director of the CIA, when faced with the most important problem he had faced, did not have the courage or the wit to allow his analysts to tell the truth.
Instead, a poor report, concealing important information that discredited the sources of the report, was produced. Powell presented this report to the United Nations. Bush concluded that the report justified war as Iraq was working on the production of WMDs (the latest effort at understanding these matters is a just published book by Robert Draper, To Start a War).
We all know the outcome: There were no WMDs. Hundreds of thousands of people died. More than a trillion dollars were spent. Saddam was ultimately caught and executed. 17 years later, Iraq remains a mess. Bush is going down as one of the worst presidents of the United States.
When the intelligence organization tells the leaders what they want to hear instead of the truth, it can lead to disaster. In both cases, there was a better appreciation of the truth at the working level, but this was distorted to tell the leader what he wanted to hear. In both instances, war followed.
Today, in the United States, we face a similar situation. The secretary of state knows he is in his job for only a few more weeks; he is an ambitious, brilliant man, but has achieved little during his period in office.
The collection of China hawks in the White House all know that their time is over. They want to push hard against China and scheme some kind of victory. Is the intelligence community giving the president objective advice or feeding him what he wants to hear?
On Xi’s side, if conflict comes, what will his advisers say? Back off, no need for conflict with the United States? Or will they believe this is the time that they can humiliate the United States as Trump backs down, convincing all of Asia that the United States cannot be relied upon? It is time to worry.
Forrest Cookson is an economist who has served as the first president of AmCham and has been a consultant for the Bangladesh Bureau of Statistics. A version of this article has originally appeared in the May-June issue of the AmCham Journal, published by the American Chamber of Commerce in Bangladesh.