(Global Times Comprehensive Report) “The continued stability of U.S.-China relations not only benefits citizens of both countries but also contributes to world peace. However, the stability of those relations requires America to develop alongside China,” said Chinese Foreign Ministry spokesperson Zhao Lijian, responding to U.S. President Donald Trump’s threat of “cutting off the entire U.S.-China relationship.” The weekly German newspaper FOCUS claimed this “completely forgoes diplomatic principles.” Although many people don’t believe these “doomsday scenarios” will happen, Trump’s remarks immediately sparked debate in American discourse about U.S.-China decoupling. The Trump administration has been encouraging supply chains all over the world to “decouple from China.” On May 15, the U.S. Department of Commerce announced that it is expanding sanctions on Huawei in an attempt to cut it off from global chip manufacturers. This latest attempt to “strangle” Huawei hints at the U.S.’s desire to “decouple” itself from China’s high-tech sector. A source close to the Chinese government told The Global Times that should the United States implement the aforementioned plan, China will forcefully counterattack to safeguard its legitimate rights and interests. U.S. stocks opened low on May 15. China’s countermeasures may cause a collective decline in technology stocks, with Qualcomm falling more than 6%, Apple falling 2%, Cisco falling more than 1.7% and Boeing falling more than 2%.
China’s Counterattacks Will Severely Affect U.S. Companies
On May 15, Reuters reported that the Trump administration took measures that threatened to spark a new round of tensions between the U.S. and China. The Commerce Department issued a statement saying that it is revising an export rule “aimed at strangling Huawei and hitting the chip foundries it relies on,” cutting off Huawei’s efforts to undermine U.S. export controls. According to The Wall Street Journal, this measure prohibits foreign semiconductor manufacturers that use U.S. technology from exporting products to Huawei without permission from American officials. This may give the Commerce Department the ability to stop the Taiwan Semiconductor Manufacturing Company from supplying Huawei with hardware.
Agence France-Presse quoted U.S. officials saying that the new regulations will have a grace period of 120 days. After that, any chips exported to Huawei or Huawei’s affiliates will require a U.S. license. A senior U.S. State Department official said that these measures do not necessarily prevent Huawei from obtaining hardware, but mean that Huawei’s purchase of chips is contingent on Washington’s ability to track the use of this technology.
On the May 15, a source close to the Chinese government disclosed to the Global Times that if America eventually decides to implement the above plan, China will forcefully fight back. China’s specific strategies for a counterattack include listing the U.S. and U.S.-affiliated companies on their “Unreliable Entities List,” carrying out restrictions or investigations, suspending the purchase of Boeing aircraft and more. On Friday morning, CNBC reported on a a tweet from Editor-in-Chief Hu Xijin of China’s Global Times, regarding China’s potential retaliation.
In an interview with the Global Times, several industry experts agreed that such countermeasures are very feasible and will severely impact relevant U.S. companies. For instance, Chinese markets account for at least a quarter to one-third of Boeing’s sales; if China were to stop buying from Boeing, both Boeing and the U.S. civil aircraft manufacturing industry would suffer. Mei Xinyu, a researcher at the Institute of International Trade and Economic Cooperation of the Ministry of Commerce, stated that U.S. lawmakers, politicians with strong influence on their constituencies, and politicians’ family businesses and the institutions which they control, could all be included in China’s list of “Unreliable Entities.”
After Trump issued his alarming threat of “cutting off U.S.-China relations,” multiple media sources had their own interpretation of what the U.S.government precisely intends to do. The Nihon Keizei Shimbun (Japan Economic News) believes that because it is so rare for a U.S. president to threaten China with such strong language, this may be a sign that complete severance of economic relations, the complete cessation of bilateral trade and strong retaliatory measures, is being considered. However, according to Scott Kennedy, a China expert at the Center for Strategic and International Studies think tank in the U.S., this is no more than a “dangerous bluff.” Valery Garbuzov, director of the Institute of U.S. and Canadian Studies think tank in Russia, told the Moscow Communist Youth League newspaper Moskovsky Komsomolets, “We know that Trump is unreliable; he does not think things through. He has always issued various threats to China as a reaction to the rise of China.”
The British Financial Times reported that Trump never explained what he meant by severing ties with China, but some U.S. officials hoped that he would exclude Chinese companies from the American supply chain. In an interview with Fox News’ Business Channel Thursday, Trump threatened to impose new taxes on U.S. companies producing goods outside of America. On May 15, TSMC, the world’s largest chip foundry, announced its plan to build a $12 billion chip factory in Arizona. The Voice of America reported that this could be interpreted as a concrete measure taken by the Trump administration to fundamentally reroute global supply chains in the midst of current U.S.-China tension. At this stage, TSMC is critical for both the U.S. and China because it is the only company that can produce the world’s most advanced chips, vital to both nations as one attempts to beat the other.
According to Reuters, Trump’s threat to sever U.S.-China relations is his toughest, most intimidating statement about China since the outbreak of the COVID-19 coronavirus. Hong Kong’s South China Morning Post reported on May 15 that China should be prepared for more of Trump’s inflammatory comments, and quoted Lu Xiang, a researcher at the Chinese Academy of Social Science, as saying, “We can only try to find sensible clues in his nonsense. We would be better not to play up expectations for the outcome.”
US-China ‘Decoupling’: How Far Can It Go?
“Anti-China sentiments continue to build, hovering over Washington like a dark cloud,” The Washington Post commented before the outbreak of the pandemic, reporting that many experts warned of fault lines forming in the U.S.-China relationship. After the outbreak, the sense that the two world powers are headed for a 21st century collision only intensified. Bloomberg reported that Trump, alongside his senior aides, verbally attacked China daily, and that the coronavirus “resurrected” the worst-case scenario for U.S.-China relations. From supply chains to the visa office, from cyberspace to Taiwan, tensions between the two largest economic powerhouses in the world are continuously escalating. Each new battle will only erode their trust in one another.
How far can the “decoupling” between Washington and Beijing go? The Voice of America reported that some believe the U.S. is not only attempting to cut China off from global supply chains, it is also attempting to completely decouple from China. However, Garbuzov, an expert at the Russian Academy of Sciences, believes that the U.S. cannot cut off relations with China for several reasons. First, China is one of the United States’ major creditors. Second, the two economies have been intertwined through finance and trade for decades, a reality Trump cannot undo. Third, China and the United States are both such large economic powerhouses that they need to connect to the world through free trade.
“Historical lessons are unfolding before humanity,” commented America’s Foreign Policy magazine, noting that World War I brought humanity’s first global era to a close.* The Great Depression that occurred a mere decade later, and countries rushing to set up trade barriers in an act of economic nationalism both contributed to the outbreak of World War II. As the World Trade Organization pointed out, the main lesson learned from the interwar years is that political cooperation and lasting peace are both fundamentally dependent on international economic cooperation.
According to the German magazine Der Spiegel, the Trump administration’s criticism of the pandemic in China and current U.S.-China relations is a strategy based on opportunism. For weeks, Trump has been looking for a scapegoat to distract people from the disastrous outbreak in America. Sergey Sudakov, a professor at the Russian Academy of Military Sciences, stated in RIA Novosti that all of Trump’s threats regarding China stem from the U.S. losing its economic advantage over China. However, worsening relations with China will cause significant damage to the U.S. economy.
Bloomberg stated that since the reestablishment of U.S.-China diplomatic relations in 1979, tensions between the two countries have never been so high. Trump believes that China has destroyed his chances of being reelected, and thus, before the U.S. presidential election in November. the discord between the two countries may increase. According to CNN, Director of the Center on U.S.-China Relations of the Asia Society of America Xia Wei said the most worrying issue is that there appears to be no clear plan to ease U.S.-China tensions even after the election and the pandemic subside. “We seem to be in free fall,” she said.
On May 14, after being interviewed by Fox News Business Channel, Trump visited a medical equipment distribution agency in Allentown, Pennsylvania. As a swing state, Republicans and Democrats have always fought over Pennsylvania in the general election. Although the visit was arranged by the White House, Reuters reported that it was tied to his campaign. He went on to deliver a speech boasting that U.S. testing capacity for the COVID-19 is unparalleled; the best in the world.
According to Johns Hopkins University’s real-time statistics as of midnight May 15, there were 1,420,299 confirmed cases of coronavirus in the U.S. and 85,992 deaths due to the disease. CNN reports show that in the last 24 hours, there were 27,367 new confirmed cases and 1,779 new deaths in the U.S.
The pandemic in the United States has shown no substantial signs of improvement, and the Trump administration has ignored experts’ recommendations, pushing for an economic restart. CNN reported a change May 14. Many of America’s top health officials disappeared from the country’s TV screens; it has been a full week since the medical experts in the White House Coronavirus Task Force appeared on television, because the White House strictly controls its public relations strategy.
As for the Trump administration’s continuous attempts to shift blame, Russian Foreign Minister Sergei Lavrov told the Ros Business Consulting Daily on May 15 that justice means you cannot blame others without any ground to do so. America should not be exhausting its current efforts shouting, “Catch the thief!” or pointing fingers. The emergence of the novel coronavirus is no reason to sanction China.
*Editor’s note: Although accurately translated, the quoted remark could not be independently verified.
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