11 April 2019

Economic interdependence vs. war with China

Dr Christina Lin

On Saturday at Peking University’s Yenching Global Symposium in Beijing, former US deputy assistant secretary of state Susan Shirk warned that Washington’s current policy of decoupling the US and Chinese economies could be “apocalyptic,” and exaggeration of the China threat “could turn into a McCarthyite1 Red Scare” that damages American interests. Shirk said, “Right now there is a herding instinct in the US that is taking us off the cliff with various forms of overreaction to China as a security threat, an intelligence threat, a spy threat, a technological threat, an influence threat” that could lead to de-globalization. Instead of decoupling the two economies, she recommended that the US should engage in “smart competition”2 to maintain a robust innovation ecosystem and maintain a technological competitive edge over China. 

Indeed, the present US posture toward China is one of hostility and blanket opposition to all Chinese-led initiatives, even when allies see benefits in participation. As observed by former US ambassador to China Chas Freeman,3 while the Belt and Road Initiative (BRI) is seen by the US as a military-strategic challenge, the European Union is “treating it as an economic issue that they need to be cautious about.” Washington is on a risky path, and the cold-war mentality toward the second-largest economy in the world and largest trading partner for many countries may indeed become a self-fulfilling prophesy of a cold war turning hot.  

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