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Macroscope | US-China relations will ultimately be decided by hard economics
- The US economy seems to be heading towards recession, while China’s economy appears to be recovering quite well
- Washington’s recently altered tone in official exchanges with Beijing may reflect this changing reality
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Brittle to the point of breaking is the best way to describe the state of US-China relations, but which will break first, the relationship between the world’s two largest economies or the resolve on the part of either to continue their fight? It will all come down to hard economics in the end.
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The US economy seems to be heading towards recession, while China’s economy appears to be recovering quite well from the travails of Covid-19 lockdowns and supply-chain disruptions. Washington’s recently altered tone in official exchanges with Beijing may reflect this changing reality.
Illustrative of this are US Treasury Secretary Janet Yellen’s mollifying comments to the effect that the Biden administration does not seek to suppress China’s economic and technological advance as such but, rather, its ability to achieve military superiority.
Contrast this with the confrontational approach adopted by US Secretary of State Antony Blinken in 2021 when he met China’s foreign minister Wang Yi in Anchorage, Alaska. At that time, Blinken showed all the diplomatic finesse of a complete novice.
True, Yellen is hoping to visit Beijing herself before long and needs to avoid a repeat of Blinken’s dismal performance, but the economic implications of the shifting US approach should not be missed.
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The divergent economic performance of the two nations implies a continuing reduction (in China’s favour) in the gap between the sizes of their two economies. But what is more important is how this is perceived to affect their ability to project power globally.
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