HAROLD JAMES
While most people regard the Sino-American rivalry as a new cold war between two world-bestriding giants, the truth is that both countries are tightly constrained. Presidents Donald Trump and Xi Jinping each sense the other side's vulnerabilities, which means they cannot hide their own.
PRINCETON – The world has awaited this week’s meeting between US President Donald Trump and Chinese President Xi Jinping with bated breath. Can a face-to-face encounter – this time at the Asia-Pacific Economic Cooperation Summit in South Korea – resolve a conflict that has generated increasingly alarming headlines this year?
Financial Investors Can’t Profit From Complacency Forever
ŞEBNEM KALEMLI-ÖZCAN argues that bond-market participants and others are consciously choosing to ignore obvious policy risks.
While most people regard the Sino-American rivalry as a new cold war – a struggle for global preeminence, with each side seeking to extend its financial, trade, and military influence to every corner of the world – the truth is that both countries are tightly constrained.
True, their leaders’ rhetoric supports the Financial Times columnist Martin Wolf’s contention that we are witnessing a clash between two predatory superpowers in a new age of polarization and simmering conflict. Xi regularly speaks of “great changes unseen in a century,” by which he means that the United States is declining and China is rising, whereas US Treasury Secretary Scott Bessent views China’s recent export controls as “a sign of how weak their economy is.”
Both sides are right. China knows that America is highly dependent on Chinese critical minerals and rare earths – from gallium and germanium to dysprosium and samarium. Any disruption to the supply of these materials could halt US production of advanced semiconductors and other technologies. While mining and processing capacity could eventually be developed elsewhere, including in the US, that will not happen quickly or cheaply. For the time being, the US is locked in its dependency, with little choice but to compromise.
But China also has vulnerabilities. It still needs exports to drive its economy’s growth, and thus cannot afford a collapse in world trade. This fact alone undercuts the argument that we are in a new cold war: the original Cold War involved almost no economic dependence between the US and the Soviet Union. They might not like it, but today’s cold warriors are being pushed toward some sort of truce, on the way to some sort of longer-term commitment.
Sign up for our weekly newsletter, PS Politics
Go beyond the headlines to understand the issues, forces, and trends shaping the US presidential election – and the likely implications of its outcome.
No comments:
Post a Comment