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AB 2000 studies

Alain Boublil Blog


The United States and China:They must talk together

The Joe Biden victory has been welcomed with relief by the international community: it was the certainty of an appeasement of the geopolitical tensions with the comeback of the presence of the U.S. in the major multilateral discussions. Several signals have been very quickly sent with notably the return in the Paris Agreement related to the fight against climate warming from which Donald Trump had left its country. But the issue of the relations with China still remains sensitive. The tone has changed with the abandon of the provocations but the analysis remains the same: China is a strategic rival.

On which point the American analysis as most of media ones which have taken the purpose are based? Essentially on the fact that the GDP difference between the two countries is narrowing and that it looks like unavoidable that one day China becomes the first economy in the world, so coming ahead of the U.S. The symbol is strong but the analysis is superficial. First, China is four and half more populated than the U.S. The day when its GDP will reach Americans one, the Chinese level of life will still be four and half times lower than these ones. Can it be considered as a threat the aspiration of a people to have a higher level of life? Definitely not. Especially, the world economy is not the soccer Premier League. Classifications have not the same sense.

What makes the U.S. the first power in the world is not only its economy, it is also its military power and its interventions outside of its borders, which ones are not always successful as we have just seen in Afghanistan, it is also its currency, its legal system and its extraterritoriality. Nothing of that seems to be threatened in the short or in a longer term by China economic development. The Yuan internationalization will take a lot of time and the Middle Empire history shows it has been much more the object of aggressions coming from foreign countries than it has itself proceeded to interventions outside of its borders. In the Western countries, it is not possible to denounce past colonialism and to criticize China attitude regarding Hong Kong which has been a British colony during a century and to challenge its will to reintegrate one day Taiwan which became a Japanese colony at the end of the 19th century. So everything will depend of the methods used by Beijing to reach its objectives, i.e. the return of these two territories inside a unique State.

What China wants? Definitely not to dominate the world thanks to an economic size which according to statistics would make it the first economy. The Chinese government seems to be imprinted by the Mandate of Heaven logic which Emperors received and which gave them, when they inscribed their action in that logic, all the powers. Today this mandate is to guarantee the political stability and to offer to the people economic and social progress. These two components are closely linked. The lessons of the past catastrophic economic mistakes, with the “Great Leap Forward” and the Cultural Revolution have been taken and since the reforms launched by Deng Xiao Ping more than forty years ago, the Chinese people largely emerged from poverty and expects to reach the same level of life than the one reached in the developed countries. Who can contest this project? As long as the action of the politician leaders will contribute to the realization of these objectives, these ones will remain in function.

So that leads to an astonishing paradox. The U.S., as an example of democracy for more than two centuries, is the country which is generating the highest wealth every year but where that wealth is lesser and lesser shared. The inequalities increase for several decades is spectacular as the poverty rise is accelerating after each of the recent crisis, the sub-primes one ten years ago and the current pandemic of the corona virus. To the opposite, China, which has a political regime more and more authoritarian, as seen by the Western countries, is building an economy which guarantees that the growth benefits will be more and more shared, with the fast and continuous increase of a middle class and a massive reduction of extreme poverty. The government is now making as a priority the achievement of these objectives.

This economic environment has favored the birth and the spectacular development of Chinese private companies whose founders have accumulated huge wealth. The government has reacted for a year through the toughening of the regulation of activities which were at the origin of these successes and have strongly incited, it is a euphemism, to the main shareholders and the executives of these companies to redistribute voluntarily, through foundations or direct contributions to local institutions tens of billions of dollars. The authoritarianism of the regime has been put to the service of the reduction of inequalities.

The American criticisms are not only about the nature of the Beijing regime. When China has by large taken advantage of the opening of the world trade since its admission to the WTO, the country wouldn’t have renounced to its protectionist practices through restrictive dispositions regarding foreign investments, public orders and more largely the respect of intellectual property rules. But the phenomenon is not new. The same trial was brought against Japan in the Sixties when its companies became to threaten the market positions of their American and European competitors. Long discussions have allowed to reducing the consequences of these practices. The innovation must not also lead to monopolies. Yet Western countries are not well founded to criticize the measures decided by Beijing regarding its Internet giants when they have a lot of difficulties to regulate their own “GAFAAs”.

As a second paradox, China, thanks to its surplus, is largely contributing to financing U.S. internal and foreign deficits. The country, according to the years, is the first or the second after Japan owner of American public debt and so is a major creditor of the State. But it has no interest, despite the frequently aggressive positions of the American administration, in using it as a pressure tool. Financial markets would heavily react, interest rates would increase and the dollar would fall, which would affect the value of the foreign currencies reserves of the Chinese central bank. That would also slow the process of the Yuan internationalization which it can only achieve its goals if it is progressively and quietly managed.

So the tensions, generated by the apparition of a powerful economic competitor are not surprising but until now they did not have taken a political character. Donald Trump practices in foreign policy have by large contributed to that when the U.S. are far from being irreproachable with their “Buy American Act”, their norms and their customs duties. But it is the difference between the natures of the political regimes of the two countries which explains that these tensions have not disappeared after Joe Biden election.

Like this it is necessary, to find solutions to the real and important economic disagreements which exist between the two countries, to start negotiations which put aside the political issue. During several decades, the world has been concerned by the “cold war”. Then discussions occurred which have lead to the “pacific coexistence”. The current stake is different since it is essentially about economic interests. But it is easier to manage, to the condition to accept that a “political coexistence” is possible and desirable.


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