Amid growing talk of a trade war between China and the US, the two countries seem to have had a bit of a verbal spat. After the US announced a new nuclear policy to create smaller nuclear warheads, China has accused it of returning to the cold-war era. America’s nuclear hypocrisy has been one of the key features of the last 80 years of international diplomacy. But China’s criticism of the US is now a well-established feature of what is possible in an emerging new global order. Under Trump, the American influence is waning. But the real change is in the global political economy. China’s growing trade surplus with the US is one of the key concerns of the Trump administration, which is promising new import tariffs on goods made primarily in China. At Davos, Trump promised that the US would ‘no longer turn a blind eye to unfair economic practices’ of other nations. His main concerns were state planning, industrial subsidies and intellectual property theft. Although he did not name it, Trump’s target was clearly China. Trade has been one of the fundamental pillars of the international political economy. It has also been the driver behind both war and peace. This is why any trade war between China and the US is harrowing.
What could start as a US attempt to create a protectionist economy could end up stirring serious trouble elsewhere. China has remained committed to a non-interventionist economic expansionist model. Through the One Belt, One Road initiative, the country is spreading its influence across the region to open trade routes and create new investment opportunities. The US simply cannot compete, one of the reasons for which is its over-commitment to defence expenditures and its involvement in the wars that it has started and does not want to pull out of. It will be interesting to watch what one of the world’s most consistent pushers of free trade does if there is a serious attempt to create a protectionist economy. As China has noted, this is out of touch with the times. Taking on China is likely to leave the US isolated and weakened. This is not the time of the cold war when countries could be bullied into supporting the US or the Soviet bloc. China is spreading its influence across the globe and going toe to toe with the US by standing with countries that receive US criticism. America’s anxiety became apparent when its secretary of state referred to China as an ‘imperialist power’. Such statements are amusing coming from the US. It will have to get rid of its post-cold war anxiety over being the hegemon in a unipolar world to avoid becoming a cause for a larger global crisis.