China-US: Economics of Deterrence

During his visit to Beijing, one that was postponed for four months under the pretext of a suspicious episode involving an alleged Chinese “spy” balloon’s flight over U.S. territory, Secretary of State Antony Blinken was harshly reproached by host Foreign Minister Qin Gang. Qin asserted that the bilateral relationship is currently at its worst since it began in 1979.

Qin disparaged Washington’s interference in the China-Taiwan dispute, expressing regret over the current state of a relationship that is failing to both serve the interests of the people and meet the expectations of the international community. In addition, the Asian diplomat asked for “calm, professionalism and rationality” from the U.S. in its perception of China.

We should expect no less after the White House’s growing hostility toward China. Indeed, the Biden administration has intensified its ominous military presence in the Asian giant’s territory; imposed unwarranted diplomatic and military sanctions under various pretexts, from technological and trade disputes to the “spy” balloon story, and has pressured Beijing to align itself with the West against Russia over the war in Ukraine.

Moreover, the U.S. and its strongest allies have sought to reduce their commercial ties with China, a policy destined to fail. It goes without saying that China is still the world’s principal manufacturing center, the world’s largest consumer goods market and the main destination for U.S., European and Japanese investments. Thus, the White House is well aware that a disruption of industrial, commercial and technological relations with the Asian giant would be catastrophic for the U.S. and other Western economies.

In contrast to the negativity at the official level, some of the most successful businessmen in the U.S. have recently visited the Chinese capital. When the constraints imposed by the COVID-19 pandemic ended, tycoons Elon Musk (owner of Tesla and Space X), Tim Cook (head of Apple) and Bill Gates (founder of Microsoft) traveled to the Asian country. President Xi Jinping warmly welcomed Gates at a reception. All of them sought to increase their business opportunities, both in terms of production and markets. Musk referred to the interests of the two countries as “conjoined twins” with inseparable interests, and Cook spoke of the “symbiotic relationship” between Apple and China, where the company manufactures most of its products.

For these and other captains of major corporations, there is cause for alarm in this paradox: Although China-U.S. trade reached a record $690 billion last year, U.S. exports to China fell as a result of White House policies to block exports of advanced semiconductors to China. In economic and trade terms, such measures, if they are to continue and spread, could result in a kind of hara-kiri.

Thus, despite government-level hostility, U.S.-China trade remains extensive and constitutes an essential counterweight and deterrent to political sectors in Washington that would like to drive the bilateral relationship into a full-fledged confrontation — a rupture and even war, however insane that may seem.

Finally, it should be noted that its economic connection to Beijing leaves the White House without any moral authority to reproach other nations — especially those in Latin America — for seeking to increase their exchanges with the Asian giant.