The order of the Asian continent is being reshaped. China, once called the “factory of the world,” is slowly ending, and the era of South Asia, including Vietnam and India, is opening. It was the new cold war that shook Asia, which was not swayed by the sudden collapse of the Soviet Union in 1990, that shook the world again after 30 years. The epicenter of this war is China, or, to be more precise, Xi Jinping.
Xi Jinping cried out “Chinese dream” when he became president in 2013. To achieve the great revival of the Republic of China, he said he would build a country where the problem of livelihood has been solved in 2021, realize the construction of a socialist modernization country in 2035, and surpass the U.S. in all aspects, including economy, military, and diplomacy in 2049. Due to Xi’s provocation, the U.S. and other Western countries considered it an expression of confidence and achievement that China has become a big 2 on the global stage by enjoying rapid growth for more than 30 years since the reform and opening in 1978.
However, Xi Jinping made a real provocation shortly afterwards. It happened at the 19th National Congress of the Communist Party of China in October 2017. He challenged the U.S. directly, saying that he would build the world’s strongest and world’s first-class military by 2050. Trump, the “big boy” who was rebuilding the global order, could not afford to let this slide.
Trump first took out his tariff card. On July 8, 2018, he imposed 25 percent tariffs on 818 items imported from China. The target was high-tech products such as information technology, electric vehicles, and robots, which China is heavily investing in. The amount amounted to 34 billion U.S. dollars. Earlier, the U.S. immediately invoked Article 301 of the Commercial Act in response to Xi Jinping’s provocation to launch an investigation into China’s intellectual property infringement.
Xi Jinping did not back down. As soon as the U.S. announced the imposition of tariffs, the U.S. imposed the same amount on 545 items including agricultural products and automobiles from the U.S. As soon as the U.S. announced the imposition of tariffs, Xi Jinping, who declared to the Chinese people that he would “go beyond the U.S., had no choice but to jump at the game even though he knew it was against him.
When the U.S. imposed a 10% tariff on $200 billion worth of Chinese goods again in September, China also retaliated with tariffs of up to 10% on $60 billion worth of U.S. meat and other goods.
This is the beginning of the hegemonic war between the U.S. and China. Trump had driven Xi Jinping’s China roughly throughout his term in office. Besides tariff bombs, Trump has also launched direct and intense investigations into the facts that Xi Jinping is uncomfortable with, such as the sovereignty of Taiwan, the pro-democracy movement in Hong Kong and the oppression of human rights in Uighur. There was no exception in the international community. As he faced Trump, he showed tension and nervousness that he could hardly bear.
What’s more embarrassing about this was North Korea. Kim, who claims that he could make an intercontinental ballistic missile (ICBM) attack on the U.S. mainland beyond threatening South Korea and Japan, which are the front lines of U.S. security, was truly a headache. Kim Jong Un had made a high-level political move amid the U.S.-China conflict, but the problem is that he ignored even Xi Jinping. This further intensified the U.S.-China conflict and imprinted an image that China cannot control the Northeast Asia region, making Xi even more embarrassed.
But Biden, who emerged in January 2021 after Trump stepped down, is making it even harder for Xi Jinping.
Biden’s policy toward China is much scarier and more sophisticated than Trump’s. As soon as Biden took office, he divided the world into free and communist camps and blocked them under the name of TVC. They are QUAD, AUKUS, and IPEF.
The IPEF is a collection of Indo-Pacific countries, with the exception of China, Myanmar, Laos, and Cambodia, as economic communities centering on the United States. Although it advocates comprehensive economic cooperation within the region, it is actually a policy to pressure China.
The Quad is a four-way security dialogue that includes the U.S., key Indo-Pacific allies Japan and Australia, and India, which are not allies but can keep China in check. Oakus is a three-way security chain that includes the U.S. and the U.K. and Australia. All of them are aimed at keeping China’s hegemonic ambitions in check.
Warnings are sounding everywhere in China. Foreign investment is going down like low tide, and domestic demand is rapidly deteriorating. An increasing number of people are escaping from China. The furnace, which used to be cooled down with the term “factory of the world,” has been turned off and now cracks are occurring.
What is most worrisome is that a large number of foreign companies are leaving the country. IBM shut down the China Development Center and the China System Center, which are responsible for research and development and testing in China, at the end of last month. Some 1,000 employees who were responsible for key tasks in China also packed their bags. IBM is not the only company. Tesla, Amazon, Intel and Ericsson have either withdrawn from China or started shrinking their businesses this year alone. Reflecting this trend, China’s foreign direct investment (FDI) recorded a deficit of 14.8 billion U.S. dollars in the second quarter of this year. It was surprising when the company recorded a deficit of 12.1 billion dollars for the first time since statistics began to be compiled in 1998, but the Chinese authority is apparently nervous as it turned negative again this time.
The slowdown in consumption is also serious. COVID-19 has had the biggest impact. The nearly three years of the world’s strong shutdown policy have dealt a devastating blow to businesses and small business owners. It is leading to the collapse of the real estate market. The real estate industry accounts for well over 20% of the Chinese economy. As homes are not sold, real estate giants such as “Hunga” bankruptcy occurs, creating a vicious cycle in which people who started buying homes are tied up with money. According to the Chinese government, retail sales, a measure of consumption, fell from 5.5% in February to 3.1% in March, 2.3% in April, and 2.0% in June. The manufacturing PMI also fell to 49.4 in July from 49.2 in January, 50.8 in March, and 49.5 in May.
The problem is that China’s collapse could be accelerated in the future. This is because the position of the West, including the United States, will not change unless Xi Jinping comes down from power. Harris and Trump, the presidential candidates who will lead the U.S. after Biden, are also vowing to further strengthen China’s imprisonment.
TED PARK
US ASIA JOURNAL
