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CWA # 312, 24 July 2020

The New Cold War
A Zero-Sum Game: At the core of the US-China rivalry, is an Isolate-China policy

  Harini Madhusudan

The isolate-China policy is aimed at reducing the inherent gaps in the growth rate between the two countries, with a combination of ideology. The US has made its move against China in almost all the strategic fronts- trade, technology, maritime, neighbourhood, and ideology, and the Chinese are only seen defending every move. 


On 15 July 2020, the UK stepped away from using Chinese investments in its 5G development; on the other side, the Trump Administration removed preferential trade benefits with Hong Kong and signed the Hong Kong Autonomy Act imposing sanctions on Chinese banks that work with the officials that were behind the new Security Law, the latest move by the US in its series of legal and economic measures against China. The embers of the confrontation between the US and China began in 2017 with accusations of unfair trade practices, and in two and a half years, it has moved beyond a trade dispute. 

Presently, the rivalry has expanded to include technological, territorial issues along with economy and ideology. At the core of this confrontation is the isolate- China policy of the US. With the global health emergency at hand and the upcoming elections in the US, What are the multiple layers at which the US and China are at loggerheads? Is the US-China rivalry a zero-sum game? 

Trade, Technology and Sanctions
The first set of sanctions was placed on China in July 2018. Since then, the US has imposed tariffs on $500 billion worth of Chinese goods. Beijing, in turn, has placed tariffs on $185 billion worth US goods. Simultaneously, the two sides have been engaged in countless negotiations back and forth and fought several WTO cases. Technology restrictions have been the highlight of 2019, which included export controls, blacklisting of companies, investment controls, and restrictions on selling parts/technology to Chinese entities. 

The US discouraged Chinese 5G investments amongst its allies. The US firms have been facing trouble with accessing data due to cross-border restrictions on the transfer of data. At any given day, the Chinese government could compel the companies to turn in data that have been obtained through their investments in various countries, and this possibility has been aggrandized. However, neither side has complete access to data to apply for security purposes. Freedom of reporting and media manipulation have also been an active tool in their dispute engagement. In one case, China was seen asking a few journalists to show-cause, and the US did the same with Chinese officials. A few cases of cyberattacks and complaints of hacking have been recorded. The stark imbalance in the technological growth between the two countries amplifies the intensity of the confrontation in these areas. 

Territorial disputes of China provides a space for the US entry
Territorial and internal disputes surround China. Hong Kong, Xinjiang, Taiwan, and the South China Sea remain China's weaknesses in the region. Recently, the US has rejected Chinese claims in the South China Sea. The US has never missed the opportunity to rake up the issues of China. The US called the Chinese activities in the South China Sea unlawful and stated that it would not allow China to make the region its maritime empire. Mike Pompeo said that the US would use all available tools to support countries whose sovereignty is violated in the South China Sea. A bold but hollow claim.  

Taiwan has received significant support from the US, in terms of arms sales and joint military activities; the latest is the US support to include Taiwan in the WHO meeting. The US has vocally announced 'unconditional support' to Taiwan and has passed a couple of resolutions that support its role in the region. 

In return, China placed sanctions on Lockheed Martin over the arms sales to Taiwan. The US presence in the Taiwan waters has irked the Chinese in the past couple of months. 

The US supports Hong Kong's bid for democracy and believes that the autonomy Hong Kong enjoys, should remain. The US became one of the first countries to remove the preferential economic treatment given to Hong Kong when the National Security Law was passed, stating that it would treat Hong Kong like it treats mainland China.  In the case of Xinjiang, the US imposed travel and visa restrictions on top politicians and officials in the region and has time and again highlighted the human rights violations of Uyghurs.  All of these allegations, support, or claims have been made in the past months. 

The Zero-Sum Game 
All evidence point to the one fact that the rivalry between the US and China has expanded to include many important domains to the point that even the coronavirus and response to the pandemic have become a part of the competition.  Experts believe that the economic decoupling between the two nations had already begun since late 2018 when companies began to move their manufacturing from China. 

The instabilities caused by the trade dispute in the two years led many companies to significantly divert their investments or source of products. The failure to negotiate a concrete deal has led to losses which, coupled with the economic impact of COVID-19, will damage the global economy. A zero-sum game, where neither the US nor China will emerge as a winner. Their competition would, however, impact the supply and demand chains globally. 

The isolate-China policy is aimed at reducing the inherent gaps in the growth rate between the two countries, with a combination of ideology. The US has made its move against China in almost all the strategic fronts- trade, technology, maritime, neighbourhood, and ideology, and the Chinese are only seen defending every move. 

Is the unnatural Chinese defensive reaction a strategy? Or are they out of cards to play against the US?      

Harini Madhusudan is a PhD scholar at the Science Diplomacy Programme, School of Conflict and Security Studies, NIAS.       

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