Geopolitical Changes are Afoot These developments coincide with a series of major speeches on US-China relations by key members of President Trump’s administration.
The essence of these pronouncements is that US-China relations are nearing an irreconcilable impasse, arising from the two nations’ vastly different systems of governance and economic management.
US assumptions around the eventual convergence of these two systems have radically shifted, hence Trump officials believe a re-orientation of long-standing economic and political arrangements that have brought these nations closer together is now required.
China’s position is that the normalisation of diplomatic relations has always been premised on an understanding that there are stark differences in each country’s social systems, but even greater shared interests.
US elections looming in November mean that one major source of uncertainty is whether the Trump administration will have time to enact such a reorientation.
Another key question – under a Trump re-election – would be how these policies would be implemented. Economic Linkages vs Political Brinkmanship.
We believe tensions will persist regardless of the outcome of the US elections, as reflected in sharply changing American attitudes towards China in independent polls.
At the same time, China’s vast global supply-chain linkages and extensive US business interests in China are likely to serve as a moderating force.
The extent of these linkages include:
i) USD1.2 trillion in combined assets and USD625 billion in annual sales from US and Chinese multinationals operating in each nation’s respective territories,
ii) a bilateral trading relationship worth over USD600 billion, and
iii) significant value-added content from both Chinese and American suppliers in each respective domestic economy.
Rapid growth in China post-COVID makes it ripe for investment
Being “first in and first out” of COVID-19, China is the only country among the G20 that is thought by the Organisation for Economic Co-operation and Development (OECD) to have increased GDP in 2020.
In January 2020 as the world began to learn of COVID-19, many market observers predicted a challenging year for Asia. While there continue to be headwinds from the health and economic crisis, Asia, and China in particular, has demonstrated comparatively advantageous resilience.
Mainland China is in no position to take Taiwan by force
Unlike his predecessors, Chinese President Xi Jinping has demonstrated greater intensity in the desire for reunification.
The situation across the Taiwan Strait has seemed to be on the brink of crisis since 2018. Beijing has sent numerous sorties of military aircraft to conduct exercises near Taiwan and frequently crossed the median line of the Taiwan Strait.
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