Do Not Awaken the Sleeping Dragon

Why a trade dispute between the Trump administration and China could escalate into a new Cold War 

Recent diplomatic conflict between the US and China has reached new levels of tensions, reminding us of a significant past dispute lasting from the end of the Second World War to, some may argue, our current days. Under the Trump administration, the US has further deteriorated the Sino-American relationship, already brought at a stray following the persistent friction that characterized much of the Obama presidency.

With the American market fully recovered, the US now seems to have regained the financial confidence needed to open up the possibility of a commercial war front against the Chinese regime, with the objective of counteracting the perception of an increasingly threatened US leadership in Asia-Pacific. At this point, it seems evident that the prospects for a G-2 partnership, envisioned during the early days of the first Obama administration, now lie in tatters.

Considering the anti-China rhetoric that characterized much of Mr Trump’s electoral campaign, it was difficult to misinterpret the president’s willingness to strengthen at any cost the US’s not-so-questioned global hegemony. However, the North Korean peace talks had opened up a marginal possibility for reconciliation between the Trump administration and Mr Xinping. Possibility which was entirely shattered when the US Secretary of State’s visit to Beijing nearly turned into a declaration of an all-out trade war against the Chinese regime.

Coercing Allies and Furthering Isolation

Washington’s foreign policy in this regard has already been witnessed during the renegotiation of NAFTA, where the US administration pursued an unprecedented line of coercion against its traditional allies, forcing Canada and Mexico to accept drastically less favorable trading conditions. Clearly, possible future targets of this approach also include the EU, the UK and Japan.

While coercive diplomacy might work with relatively smaller economic partners, the transatlantic fraction which would result from a trade dispute between the EU and the US could have disastrous geopolitical consequences. The outcome would be an increasingly polarized international system, where on one side we would have an entirely isolated US, and on the other the prospects for greater cooperation between Russia and China. The EU would then be forced to reinvent its geopolitical role by forging itself into a hard power, with the coordinated military capability required to provide a democratic alternative to the American vision of global leadership.

A Sleeping Dragon?

Similarly, China, as a major global actor, will not be bullied past a certain threshold. Until now, Mr Jinping’s counteroffensive on the issue has been mild, but it should come to no surprise if, in the following months, the Chinese government will begin to meet the US’s hardness of action with an equally aggressive approach. Not recurring to more drastic measures could lead to the renegotiation of a possibly disadvantageous trade deal for China, representing a massive hit to the regime’s slowing GDP growth.

Amongst certain policy-circles, there is the perceived impression that China is not the main threat to the American hegemonic rule and that the first lacks the relative power to directly challenge the US military powerhouse. While the latter may be true, if this polarization is set to continue there is no reason for why China should not begin to bolster its financial and political support to what remains of the so-called ‘Axis of Evil’.

If this trend is not reverted, Taiwan could hence become for China what Cuba was for the US. Geographical proximity would mean that a freefall in commercial relations between Beijing and Washington could easily transmute into a mad spiral of diminishing security, not only for both countries, but for the entire world. The recent crossing of US destroyer Decatur and a Chinese warship is an example of the reality of the possibility of military skirmishes in the South China Sea.

The negative repercussions that such a confrontation would have on the stability of the economic and geopolitical power structure of the world are a daunting perspective. They bring back to life the ghosts of the Cold War, a time of fear and political instability that has only very recently been hardly overcome. The question we should ask ourselves at this point is if the American administration will continue its isolating, aggressive and unsustainable foreign policy. If so, China will begin to hit back, and an increase in the already harsh tensions between the two superpowers could lead to a fracture which we might not forget, at least as quickly as we seem to have forgotten, the lessons from the Cold War.