Waiting for Mr. Biden?
“You can say this is totally impossible, but if it is, we will slide into a situation similar to World War I,” Henry Kissinger said recently on U.S.-China tensions. In the years leading up to the war to end all wars, the conventional wisdom was that a major conflict between the great powers was not possible. It was certainly not conceivable to anyone. Yet it happened.
In this atmosphere of tension, it is a relief to see that Washington is coming back. Unlike most countries, however, the United States has to contend with a lame-duck period for a few months. More than ever before, this period has become an important time in great power politics. The question observers of this sphere should ask is, are Brussels and Beijing waiting for Mr. Biden? What are they trying to do with the lame-duck period?
Let me start with Beijing. Clearly, U.S.-China tension is the megatrend that will set the direction and pace to everything that happens there. In the middle of last month, China was discussing its plans for the post-pandemic recovery period in 2021. There is too much talk about regarding a dual circulation model and demand reform in this year’s Central Economic Work Conference (CEWC), which was organized together with the Central Committee of the Communist Party of China (CPC) and the State Council. Why?
The dual circulation model stresses the importance of internal circulation, a.k.a. domestic demand, together with external circulation, a.k.a. export demand. Demand reform, on the other hand, highlights the importance of enlarging the middle class and strengthening the social safety net to guarantee a sustainable basis for domestic demand in China, unlike what was done in 2008 to deal with the negative impact of the American financial crisis on export demand. In designing a sustainable post-pandemic growth and job-creation agenda, we need to focus on domestic demand against the possibility of weaker external demand for Chinese products and services.
It’s not only about asymmetric global recovery, hence the possibility of slower recovery in external demand when all countries and sectors are taken into account. I think that all this talk about demand reform is also about China being cautious about the economic consequences of U.S.-China relations in the months to come, probably due to the negative impact of U.S. demand on Chinese products.
The Chinese know that the outgoing Donald Trump is not the only factor derailing U.S.-China relations.
On both sides of Asia, both Turkey and China started to transform their economies about four decades ago. Turkey began to transform itself in close connection with the European Union, while China did the same in close cooperation with the United States. China coupled current account deficits in the United States with its own surpluses to lead to phenomenal growth and job creation at home.
Economic transformation was more organized and controlled in China, but less so in Turkey. Still, both were successful in their own way. The United States led China’s transformation, turning it into an industrial powerhouse. Turkey became an industrial country with European transformation. Just as EU demand is important for Turkey, so is U.S. demand for China.
Thus started the age of China-bashing in the United States, which was very similar to the Japan-bashing of the 1980s. Take for example, the U.S. ban on collaborating with China on space exploration. NASA isn’t even allowed to let Chinese scientists examine stones it collected from the face of the moon five decades ago as a result of a law that Frank Wolf, a Republican Congressman from Virginia, negotiated to punish China for its human rights violations and to protect American aerospace technology. The law went into force in 2011, five years before the Trump presidency.
China, by the way, sent two probes (Chang’e Project) to the moon in 2020 and brought back its own collection of moon stones. After the Americans and Russians, the Chinese have become the third stakeholder in the space race, with the technology to put a probe on the moon and bring it back.
It should be noted that the Chinese achieved this milestone in close collaboration with the European Space Agency.
The European Union, too, just signed its long-awaited investment treaty with China last week.
All of this is happening without waiting for Biden. The great powers are rushing to create “facts on the ground” just before the Biden presidency. What does that tell you?
