The Real Engagement Needed for US-China Relations

The Story

Once upon a time, a young American businessman went to China to explore opportunities for his startup. He had high hopes for the business potential of the world's most populous country. After a few months of hard work and dedication, he was able to secure a partnership with a Chinese company. However, he soon realized that the partnership was not going as smoothly as he had expected. There were cultural differences, language barriers and regulatory hurdles that made it difficult for both sides to work together effectively.

Fast forward a few years later, the young businessman had become the CEO of a major American bank, with operations in both the US and China. He had seen firsthand the potential of the US-China relationship, but also the challenges that came with it. He believed that sustainable engagement was the key to resolving the issues and building a strong bilateral relationship.

Key Issues

The US-China relationship has been fraught with tension in recent years, with disagreements over trade, intellectual property, human rights, and security. The COVID-19 pandemic has further strained the relationship, with both sides blaming each other for the outbreak and its handling.

Trade has been a particularly thorny issue, with the US accusing China of unfair trade practices and intellectual property theft. The US has imposed tariffs on Chinese goods, leading to retaliatory measures from China. This has led to a decrease in trade and investment, hurting both economies.

Human rights violations in China, particularly against the Uighur Muslim minority and pro-democracy protesters in Hong Kong, have also been a concern for the US and other western countries. The US has imposed sanctions on Chinese officials and companies linked to these issues, leading to further tensions.

Meanwhile, security issues such as the South China Sea dispute and cyber espionage have also been a source of tensions between the two nations.

The US-China trade war has had a significant impact on both economies. In 2019, the US imposed tariffs on over $550 billion worth of Chinese goods, while China retaliated with tariffs on $185 billion worth of US goods. This led to a decrease in trade between the two countries, with US exports to China falling by 18% in 2019, and Chinese exports to the US falling by 13%.

Chinese investment in the US has also decreased significantly in recent years, from a peak of $45 billion in 2016 to just $5 billion in 2020. This is partly due to increased scrutiny from the US government on Chinese investment, but also due to the worsening political and economic environment.

On the other hand, the US and China have also cooperated on certain issues, such as climate change and North Korea. The two countries signed the Paris Climate Agreement in 2015, and have worked together on reducing greenhouse gas emissions. They also collaborated on the denuclearization of the Korean peninsula, with China playing a key role in negotiations with North Korea.

Recommendations

1. Real engagement: The US and China need to engage in sustained and genuine dialogue to address the key issues affecting their relationship. This should involve high-level talks between leaders, as well as working groups and technical discussions on specific areas of concern such as trade, investment and security.
2. Trade deal: Both sides should work towards a comprehensive trade deal that addresses the underlying issues of fair trade and intellectual property protection. This could involve a phased reduction of tariffs and the removal of non-tariff barriers, as well as increased cooperation on trade-related issues such as environmental standards and supply chain resilience.
3. Mutual respect: The US and China should seek to understand each other's perspectives and respect each other's sovereignty and territorial integrity. This would involve respecting China's political system and governance, while also promoting human rights and democratic values.