To most observers, US President Joe Biden’s recent approach to China seems to resemble nothing more than a seesaw at a children’s park, with dire threats at one moment and airy waves to the expressionless Xi Jinping at the other. While some US experts argue that both sides have vested interests in stability, others warn of Beijing’s hegemonic designs, leaving allies and friends confused as to US intentions. That includes India confronting China more closely than it cares to. To decipher all these mixed signals, let’s get some basic factors that affect decision-making in Washington clear and out in the open.
Some are known, others not so much.
The recent zig–zagging
At the Glasgow COP26 climate summit, President Biden lambasted China’s non-attendance as a “big mistake”. Beijing launched its own blistering attack two days later on 4 November. And by 10 November, the US and China reached a surprise Glasgow Declaration on climate change that was hailed rather doubtfully by America’s allies.
Meanwhile, even as the Pentagon launched its annual report on Chinese military power, which was even more alarming than the previous one, there was the virtual meeting between the two presidents. That meeting exuded bonhomie, at least on the US side, reiterating America’s commitment to the “One China” policy, even while it stated clear opposition to any change in status quo. As Beijing ups the pressure on Taiwan, that’s another confusing position, since the US doesn’t officially recognise Taiwan sovereignty, despite repeated references to the ‘Six Assurances’ or the Taiwan Relations Act, including the readout of the virtual meeting. Whether Washington would go to war in support of Taiwan or any other power (read India) has to be seen through the prism of several factors.
The trade issue plus plus
It is now a given that the almost-revolutionary shift in US-China relations is tied closely to China’s economic rise, especially after Beijing joined the World Trade Organization in 2001 on the back of President Bill Clinton’s cherished belief that this would open up economic freedoms, which incidentally was cheered by all business houses.
By 2015, China was America’s Number One trading partner, leading directly to President Donald Trump’s noisy trade war that cost the US economy 0.3 per cent of its real GDP. As matters unraveled, Trump promised to back off on Hong Kong protests and Xinjiang internment camps to secure a trade deal and win elections. That’s how important China is in US politics.
President Biden has inherited the same set of parameters, only worse. As the Covid pandemic broke out, China, not the US, was the largest destination for Foreign Direct Investment (FDI). Business followed the money, with the US FDI into China clocking a 9.4 per cent increase as Covid hit the US economy. And remember that hoary old chestnut that US firms would leave China as relations turned sour? A survey by the American Chamber of Commerce in Shanghai of 338 US companies operating in China found 59.5 per cent of them had actually increased their investments over the last year, while 82.2 per cent of companies predicted ‘revenue growth at a level unmatched since 2018’. These are the really big companies, so that’s that.
The jobs on the ground
Any presidency worth its salt must first and foremost consider the job market. In its newest report, the US Bureau of Labor Statistics states that unemployment has come down by 0.2 percentage points to 4.6 per cent. However, analysis points out that the actual rate could be as much as 22 per cent, hurting the poorest the most. Note a 2012 analytical report from the Rhodium Group that noted Chinese investment in just two years supported around 27,000 jobs in the US. Its future assessment was that that Chinese firms would employ 200,000 – 400,000 Americans by 2020. The reality was that just exports to China supported 1.2 million jobs in 2019. But since then, matters have reversed.
The US-China Business Council assessed that Trump’s trade war caused a peak loss of 245,000 US jobs, but that a scaling back of tariffs by both would boost growth and lead to an additional 145,000 jobs by 2025. Some tariff reduction is indicated, even as further reverses are apparent elsewhere. Chinese inbound investment has fallen steeply on the backs of tighter controls. Another figure. The US holds $1.2 trillion in Chinese securities against $2.1 trillion in Beijing’s hands. Though such a simple bean count doesn’t provide the entire picture, it does indicate not just strong interdependence, but a certain US vulnerability at this point of time, as the Covid Delta variant spikes again, and inflation rises on the back of rising fuel prices. This could change with government rescue plans and Biden’s expansive American jobs plan. But this is it, as of now.
Chinese military power and war with Taiwan
There is no doubt at all that China is arming itself at a fearsome rate. The Pentagon’s Annual Report on Chinese military power mentions a considerable rise in nuclear weapons, noting an “accelerating pace of the PRC’s nuclear expansion” that may enable China to have up to “700 deliverable nuclear warheads by 2027, and 1000 by 2030”. The report moves from earlier speculation to certainty of a nascent “nuclear triad”, and more dangerous still, that Beijing intends to increase the peacetime readiness of its nuclear forces by moving to a “launch-on-warning (LOW) posture with an expanded silo-based force”. All of this is alarming, combined with the reality of China now having (numerically) the largest navy in the world.
Despite all this, the US is still dominant in specific areas such as nuclear-powered submarines (63 to China’s 10) even if these have to be deployed in diverse theatres. In addition, the US can also draw upon powerful navies among NATO allies like France, the UK and Australia, all of whom would add on to a formidable force. But the point is, with all factors combined, any action against China would be no walkover. In fact, it’s almost unthinkable.
Come 2027 and the odds are worse
It will be even less of a walkover in 2027, which is when the Pentagon estimates that Beijing will hone its warfighting capabilities to the full, and thereby might decide that it’s time for a strike to ‘reunify’ Taiwan. This is not just a matter of US sensibilities of Taiwanese freedoms – arguably the freest country in the world – but also the implications of adding a $668 billion economy – now the 18th largest economy in the world – to China’s already formidable size.
That would be suicidal for the unity of major powers in threatening China. Money talks louder than guns. China is well aware of this, which is why it has applied to join the CPTPP (Comprehensive and Progressive Trans-Pacific Partnership), pitting economic integration against such stand-ups such as QUAD or AUKUS – one meant for politico-economic unity, while the other is meant to threaten Chinese naval ambitions.
The resultant reality is that the ‘India question’ is a sideshow for the US, not due to indifference, but simply because China can’t really add much territory without escalation into a full-fledged nuclear war. That’s unthinkable too, though ‘much’ is subjective.
So, the bottom line. Even as Chinese companies negotiate for liquefied natural gas (LNG) imports from the US, Biden is in talks with India, China and Japan to coordinate release of crude oil reserves to reduce high oil prices that are hurting everyone, including the US Presidency. So that’s how it’s going to be. Conflict and a testing of the waters by the People’s Liberation Army, further empowered by China’s new Land Border Law, and a President strengthened by the party to deliver the goods. There’s conflict coming as a growing power reaches out for energy, water and global dignity. Welcome to the not-so-brave new world of a bunch of less-than-super powers jostling for power, while the unfortunate others are pulled in one way or another.
The author is a Distinguished Fellow at the Institute of Peace and Conflict Studies, New Delhi. She tweets @kartha_tara. Views are personal.