The two largest economies in the world are negotiating an economic dispute. A permanent solution is unlikely, because it's about much more than tariffs.
The Americans and the Chinese may agree on some issues in their economic dispute this week, or they may not. Whatever the outcome of the meeting between the delegations — headed by Liu He, the top economic adviser to Chinese leader Xi Jinping, and Donald Trump’s trade representative, Robert Lighthizer, the conflict between the world’s two largest economies certainly won’t be resolved.
The points of contention, such as tariffs, investment opportunities and copyright protection, which are justified not only from an American point of view but from that of Europe, are only economic on the surface. Behind all of this, for a long time now, there has been a test of strength extending far beyond economics: Which country leads in important technologies such as artificial intelligence or genetics? Who can exert political (and military) influence in other regions of the world?
The recent decision by the Federal Communications Commission to ban the Chinese telecommunications company China Mobile from entering the American market is just the latest aspect of the technological dispute. The Trump administration has long exerted pressure on countries around the world to abandon products made by Huawei — including traditional allies such as Germany or Great Britain. In each case, the administration has expressed concerns over national security.
Of course, in the authoritarian Chinese Communist Party, businesses are more intertwined with the government than in Western market economies. And China’s Silk Road Initiative is not only a major economic project, but also an indirect vehicle for exerting influence. It’s also clear that if the country, with its 1.3 billion residents (compared to 330 million Americans), continues to increase its economic output at the current rate, then it’s only a matter of time before China becomes the largest economy in the world, according to some accounts, a title which, by the way, China has held for quite some time.
Security experts in Washington regard the increasing rivalry with China with concern; the president himself has frequently raised the issue publicly. At this point, there are two opposing arguments, each rational in its own right: the bid for markets that are as free as possible, which ultimately promises greater prosperity for everyone, and, on the other hand, the demand for individual economic opportunities, which are in turn also dependent on the power held by others.
There is very little to suggest that both sides can find a long-term resolution; how would they do it anyway? Will America accept the possibility of being outdone? Will China forego further economic development? Exactly.
This doesn’t rule out Trump and Xi finding a way to temporarily understand each other and declaring an economic treaty. That could be beneficial for them in the short term. But it would still just be a matter of time until the next dispute breaks out.