SINGAPORE – The United States and China may be exchanging tariff threats that are roiling stock markets, but when it comes to the larger US-China relationship, a noted expert believes that cooler heads will prevail.
“This is the good news: a serious Sino-US trade war is highly unlikely,” Professor Wu Xinbo, who heads Fudan University’s Institute of International Studies, said on Thursday (March 29).
“If you want to bet on the market, trust me, this will not happen because I believe what (President Donald) Trump has been doing over the last one week is a bargaining tactic – which should not surprise people familiar with his so-called ‘art of the deal’.”
While Washington and Beijing may have traded harsh words over trade and security issues, both countries realise that China’s rise means that the bilateral relationship has changed, and that power-sharing in the Asia-Pacific is the best outcome, said Prof Wu. He was speaking at the S. Rajaratnam School of International Studies (RSIS) Distinguished Public Lecture.
The numbers bear this out: China’s gross domestic product last year was about 60 per cent that of the US. It was only about 6 per cent in 1992.
Their economic relationship has also become more entwined, Prof Wu said, with US exports to China growing at 11 per cent a year, faster than to any other export market.
“Politically, Washington will adjust – reluctantly and slowly – to the changing power balance in the region and learn to share influence with Beijing,” he said.
While the end of World War II saw the US replacing Britain as a global hegemon, China’s rise will not see Beijing replacing Washington because it will still lag behind the US in terms of comprehensive national capability, said Prof Wu.
Even under Mr Trump, the US and China have found many areas of cooperation, he said, such as working together to impose unprecedented sanctions on North Korea for its nuclear and missile tests.
But just as the US needs to adjust to a changing reality that the world is no longer uni-polar, China also has to exercise self-restraint in order for a peaceful future to materialise, said Prof Wu. He admitted that Beijing has adopted a more proactive stance in recent years, raising concerns among countries in Asia of a more assertive, even aggressive, China.
Prof Wu said multilateralism and regional institutions have a key part to play in getting countries of all sizes to get along.
And the lesson China’s leaders can learn from history is that a country’s rise to power is not born out of a grand strategy but out of a crisis, such as World War II or the 2008 financial crisis that thrust China into the global spotlight.
“The risk (of a backlash) for the rising power is always how you behave,” he said. “Behave in a measured way, don’t be too eager and too impatient, and push for your interests in a reasonable way. I think that’s what history teaches China.”