Commentary: A mismanaged US-China relationship could force countries to pick a side
What started as a trade war now threatens to escalate into a permanent state of mutual animosity, says New York University’s Nouriel Roubini.
(Updated: )
Lam Chian Leong
In this balkanised world, China and the US will both expect all other countries to pick a side, while most governments will try to thread the needle of maintaining good economic ties with both. After all, many US allies now do more business (in terms of trade and investment) with China than they do with America.
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(1) Many US allies now do more business (in terms of trade and investment) with China than they do with America --- so it is very obvious that Trump-led trade war will backfire ---- as Trump hurt many US allies in the process through tariff and disruption of the Global Supply Chain.
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A full-scale cold war thus could trigger a new stage of de-globalisation, or at least a division of the global economy into two incompatible economic blocs.
In either scenario, trade in goods, services, capital, labour, technology, and data would be severely restricted, and the digital realm would become a “splinternet,” wherein Western and Chinese nodes would not connect to one another.
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(2) It is very obvious that Trump by cutting Huawei off - is creating a "splinternet" - whereby Huawei is force to create its own OS, its own apps eco-system that cannot connect to US.
(3) While doing so, business, trade and investment will be the deciding factors - which determine how Countries will want to associate with ---- where in this case China will have the upper hand over US as China trade, business and investment with the World is more than US.
(4) In addition, China have 5 times the population - 1.4 billion more than US with 329 million people ---- this mean China will have an aggregate purchasing power much more than US.
(5) Thus Trump is doing US a dis-favor by accelerating China's rise with his rash and reckless head-on competition ---- and Trump is not giving any business, trade and investment to the World but instead punishing his trade partners ---- by doing so the World will slowly discard US --- and move to do more business with China.
--
(1) Many US allies now do more business (in terms of trade and investment) with China than they do with America --- so it is very obvious that Trump-led trade war will backfire ---- as Trump hurt many US allies in the process through tariff and disruption of the Global Supply Chain.
===
A full-scale cold war thus could trigger a new stage of de-globalisation, or at least a division of the global economy into two incompatible economic blocs.
In either scenario, trade in goods, services, capital, labour, technology, and data would be severely restricted, and the digital realm would become a “splinternet,” wherein Western and Chinese nodes would not connect to one another.
---
(2) It is very obvious that Trump by cutting Huawei off - is creating a "splinternet" - whereby Huawei is force to create its own OS, its own apps eco-system that cannot connect to US.
(3) While doing so, business, trade and investment will be the deciding factors - which determine how Countries will want to associate with ---- where in this case China will have the upper hand over US as China trade, business and investment with the World is more than US.
(4) In addition, China have 5 times the population - 1.4 billion more than US with 329 million people ---- this mean China will have an aggregate purchasing power much more than US.
(5) Thus Trump is doing US a dis-favor by accelerating China's rise with his rash and reckless head-on competition ---- and Trump is not giving any business, trade and investment to the World but instead punishing his trade partners ---- by doing so the World will slowly discard US --- and move to do more business with China.
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