Beijing-Washington: War and Peace

WHITE HOUSE DANCE
Chinese-American relations have had a hectic week. At first, the harsh tone of the American administration dominated.  Faced with its failure in the fight against Covid 19, the temptation is great to blame China, to put the spotlight on the lack of transparency of the Chinese government. Secretary of State Mike Pompeo cited significant evidence that the virus came from a laboratory in Wuhan. On the other hand, US intelligence said it had no such evidence and White House adviser Anthony Faucy, an epidemiologist, believed the virus was natural.

THE RISK
If the White House ventures down the path of confrontation by asking for financial compensation for the spread of the epidemic, it must weigh the consequences, it could lose all the benefits of trade agreements; Beijing had committed itself to increasing its purchases of American products by 200 billion over 2020 and 2021. A second phase of this agreement is planned. The Chinese government would logically forget the agreement and American companies would suffer the consequences.
In the midst of economic difficulties with unemployment exploding, the loss of Chinese orders would be another thorn in the side. The spectre of an electoral defeat at the end of the year would draw nearer.

BUSINESS FIRST
Very quickly, American pragmatism apparently regained the upper hand.  Voices from Washington were saying that if the trade agreements were respected, everyone could be satisfied.  The “Business First” clan seemed to be winning. On May 8, Beijing announced that the two sides, after a telephone conversation, expressed their readiness to strengthen their cooperation on macroeconomic and public health issues and to make every effort to create a favorable atmosphere for the implementation of their preliminary economic and trade agreement, with a view to achieving positive results.

Proverbe chinois

TACTICAL
The American attitude seems a priori rather disconcerting. But: both sides have an interest in getting along and all the outbursts of voices should not mask the strategy of each clan. The economic journalist Wang Jian, 王剑, describes the American tactics of the last few days using a Chinese proverb: “Until you see the rabbit, don’t let go of the hawk, 不见兔子,不撒鹰”. Until the objective is clear, no concrete action will be taken. In other words, the US administration was groping around, looking for guidance to determine the best direction to take. The unemployment rate, which has soared to 14.7%, has certainly also prompted the US President to return to more concrete considerations and to refocus on trade agreements.

This week seems to be a turning point towards a calmer sky. Trade interests should regain the upper hand. The way to the signing of phase 2 of the agreements is therefore open for the benefit of all.

12 May 2020

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