China seeks to redefine ties with the US

An important outcome of the Alaska ministerial meeting with the US (March 18-19) was China’s assertion that it now considered itself as an equal of the US and would not be guided by its values or judgements. China’s President Xi Jinping told the delegates to China’s National People’s Congress in March that China’s time has come and it can now look at the world as an equal of the US.

Therefore, the Sino-US rivalry, which had gained momentum after Joe Biden’s appointment as the US President, has intensified further. Recently, the US, Canada, UK and the European Union (EU) announced simultaneous sanctions on China for its alleged human rights violations of the Uighur Muslims in Xinjiang. China was surprised as it had started believing that the EU would follow an approach independent of the US, after both had signed the Comprehensive Agreement on Investment in December 2020. These countries have also taken a common position towards China’s imposition of its security law on Hong Kong which takes away most of latter’s earlier autonomy. The tariffs on China’s exports and sanctions on the Chinese companies, Huawei and others, imposed by the then President Trump have continued.

The US and Japan took a strong stand against China when they announced after a bilateral visit by Japan’s PM Yoshihide Suga to the US (April 16-17) that they would counter “China’s intimidation” and work together on its challenges in the East and South China Seas to ensure a free and open Indo-Pacific (IP). They underscored the importance of “peace and stability across the Taiwan Strait”, but upon return, Suga has downplayed Japan’s involvement in any military conflict over Taiwan.

France joined the US, India, Australia and Japan in conducting three-day naval exercises in the Bay of Bengal from April 5 to “develop closer links, sharpen skills and promote maritime cooperation in a free and open IP”. The UK and Germany have also announced plans to despatch their warships to the IP in the near future. Indonesia and the Philippines have spoken out against China’s aggressive activities in the South China Sea with the US promising to stand by with its ally the Philippines in its confrontation with China. The Australian government has cancelled two Belt and Road Initiative (BRI) deals signed by China with the Victoria state government.

Japan is also seeking support from Germany and India against China’s aggressive behaviour (visit of Japanese PM to India towards end-April was cancelled due to the second wave of Covid) besides the US. India’s External Affairs Minister S. Jaishankar recently rebutted

China’s claim of likening the Quad to NATO saying it was in fact, doing the opposite and “others can’t have a veto about what he would discuss with whom”.

China has signalled to the US’s allies and foreign companies to pay attention to its interests as well or be prepared for its retribution. It has imposed reciprocal sanctions against the US, Canadian, British and the EU countries’ entities and individuals and foreign companies who have opposed its interests.

China’s Foreign and Defence Ministers have been touring the EU, Middle East and ASEAN countries in search of new allies; Russia and Iran, both estranged from the US, have conveyed their support to China; others such as Germany, France and South Korea have taken a more independent stand refusing to side fully with the US. China believes that the visits of the European countries’ warships to the South China Sea are at best symbolic and they would not join the US in a military confrontation with her. Similarly, Japan is far away from taking any offensive posture against Beijing, constrained by its Constitution. India will also maintain its distance from the US and not like to make neighbouring China its enemy.

Angered by the persistent US opposition, China turned cool to promise any new targets to President Biden on April 22 to reduce its long-term emissions saying it can’t be part of a “US centred climate cooperation circle”. To secure a leadership role with the developing countries, China has asked the US to shoulder more responsibility (in accordance with the differentiated responsibility principle) to tackle climate change questioning the commitment of the future US presidents to any ambitious targets if someone like Trump or even George Bush is back.

China is deriving comfort from its 18.3% GDP growth in the first quarter of 2021 (over quarter 1, 2020) though it loses considerable lustre when compared with -6.8% growth in that quarter and a mere 0.6% increase over Q4, 2020. Other bright spots were rise in industrial output in March 2021 by 14.1% and retail sales by 34.2%. FDI in China in the first quarter of 2021 surged by 43.8% over Q1, 2020 mainly from the EU, ASEAN and BRI states. However, many economists believe that China’s pre-pandemic target of 6% annual growth is yet to stabilise.

President Biden has had some success in uniting his European and Asian allies on human rights and technological issues like banning the Chinese Huawei from 5G networks. But China believes that the US’s allies would be loathe to support her in diverting the supply chains away from China or take other concrete actions to damage their economic interests with Beijing given their huge dependence on her for trade and other reasons as their Covid-hit economies recover from the recession.

Being a formidable competitor, President Xi Jinping has taken pre-emptive steps to deepen China’s economic ties with the US allies and others such as Germany, France, East European countries, Japan, South Korea and ASEAN, BRI states, the American and other foreign companies. He remains confident that China would be able to carry on its high economic growth for many years and to transform its economic power into technological and military power with the support of US’s allies and its own innovative capabilities. There are no signs on the horizon yet to suggest that the US would be able to constrain China’s economic power (its global manufacturing competitiveness) in any significant way.