COVID-19 Is Accelerating Trends in the U.S.-China Relationship

William Potter/Shutterstock.com

Economic analysts see a closing window for U.S. policymakers to engage with Chinese counterparts on areas of mutual interest and benefit.

Some are expecting the COVID-19 pandemic to hasten an more tense era of geopolitical and military competition between Washington and Beijing, akin to the Cold War. But economic experts say that the United States and China are more like a pair of divorced, resentful parents who share custody of a child. There will be opportunities for collaboration and partnership, but fewer each day as the couple drifts apart. Policy makers, they say, would do better to spend their limited time in search of opportunities to work together on shared interests, not quickening a final split with fiery rhetoric.

Instead, much of Washington appears drunk on China-bashing, with Secretary of State Mike Pompeo and others, like Sen. Tom Cotton, R-Tenn, suggesting (and then walking back) that China may have engineered COVID-19 in a lab. Some hawks in Washington have pushed for greater economic penalties on China for its role in underplaying the dangers of COVID-19. A GOP strategy memo leaked last month to Politico helps explain why: focusing on China gives Republicans something to talk about that isn’t Trump’s handling of the coronavirus pandemic. On Thursday, House Minority Leader Kevin McCarthy, R-Calif, announced the creation of a new China Task Force, composed of 14 House Republicans. McCarthy’s recieved criticism for refering to COVID-19 as the “Chinese coronavirus.” He’s said that the task force may spend some time investigating the origins of the virus, even though the U.S. Intelligence Community and the World Health Organization have both said it occurred naturally. 

Trump himself launched a “trade war” with China, citing unfair trade practices. He placed tariffs on Chinese goods, which make American consumers pay more for them, drawing Chinese retaliation against soy and agricultural goods. A trade deal that both countries signed in January offered some relief but the positive effects have since waned.

The pandemic, which brought severe shortages of drugs, masks and other things made in China, underscores the growing concern at the Pentagon about the U.S. military’s own dependence on Chinese supply chains. 

“The COVID pandemic is likely to accelerate the trend towards partial disengagement, in part because it has made companies (and many Western governments) more aware of the risks of relying too heavily on China for drugs, personal protective equipment, ventilator parts and other items,” said Aaron L. Friedberg, a professor of politics and international affairs at Princeton. “As the crisis abates, there will be a shift in the distribution of production away from China as companies seek to redistribute portions of their supply chains to other countries.” 

The fraying U.S-China relationship is likely to make American consumers pay more for a wider range of goods, said Simon Lester, the associate director of the Herbert A. Stiefel Center for Trade Policy Studies at the liberatarian leaning Cato Institute. 

“Stopping trade with China will mean that producers who wish to sell to the U.S. need to reconfigure production, which will involve short-term dislocation costs as well as long-term additional costs if the new location is higher cost. Those costs will be passed along to U.S. consumers to some extent,” Lester said. “In addition, U.S. producers will lose access to a large market if they can no longer sell in China.”

There will also be costs to U.S. tech and innovation. The United States and China could diverge on everything from Internet governance to the development of AI, Oklahoma State University professor Kimberly Houser argued in an October paper.

But other aspects of those trade fights have been helpful for the United States, particularly in terms of bringing manufacturing activity back. “By confronting US companies with costly disruptions that were largely beyond their control, the trade war triggered at least a partial awakening to the intrinsic vulnerabilities of modern global supply chains,” management consultancy Kearny wrote in an April 7 report

The Kearny report found that U.S. imports from China dropped roughly $90 billion last year. “This contraction is almost exclusively driven by a collapse in imports from China, which declined by 17 percent, likely as a direct consequence of the trade war.” More importantly, China was losing ground to other countries as an exporter to the United States. “U.S. manufacturing imports from other Asian… countries increased by $31 billion in 2019. Similarly, manufacturing imports from Mexico rose $13 billion.” Early data from April suggests that Chinese exports have recovered somewhat.

Friedberg says a complete decoupling is unlikely.

“Over the last four decades the U.S. and Chinese economies have become deeply intertwined, with an increasing volume of goods and capital flowing in each direction. If those ties were totally cut there would be significant costs to both sides.  However, on balance, the U.S. is still much more important to China (which is heavily reliant on U.S. markets, capital, and technology) than China is to the U.S.,” he said.

Still, Kearny says, more companies are re-evaluating whether China is actually a “cheap” supplier after all. The pandemic will “compel companies to fundamentally rethink their sourcing strategies. At minimum, we expect they will be increasingly inclined to spread their risks rather than put all their eggs in the lowest cost basket, as many long did in China,” they write. 

What does this mean for Washington and national security watchers? Basically: chill. While a new task force may make political sense for conservative lawmakers, it’s unlikely to change the economic and demographic realities that are pushing the countries apart anyway, even if that drift is occurring far slower than some in Washington would like. 

“The intensifying U.S.-China rivalry is driven by deeply rooted forces, primarily the narrowing gap in the material power of the two countries and the vast divergence between the ideological foundations of their domestic political systems,” said Friedberg. “What is happening is not simply a result of the policies of any individual leader and things are therefore unlikely to change in the near term. [Chinese President Xi Jinping] could remain in power for many years to come and, regardless of who is elected president in 2020, the U.S. is going to continue to ramp up its efforts to compete with China.”

Friedberg and Lester say U.S. policymakers should tone down the rhetoric and work with China where they can.

“It’s hard for policymakers to do much while the Trump administration is setting the tone. But they can make reasonable proposals such as cutting tariffs on medical supplies to help with the pandemic fight,” said Lester.

Friedberg said, “the two sides might also discuss how to be better prepared for the next global health emergency and they could coordinate efforts to help restart the global economy and to deal with the devastating consequences of the pandemic, especially in the developing world.” 

He added: “I would not attach high probability to any of these possibilities and, even if they occur, I do not expect them to change the fundamentals of what is going to be an increasingly contentious relationship.”

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.