China and the US: A fraught relationship

On February 1, a very large balloon spotted over the U.S. state of Montana was determined to have originated in China. Why exactly China would resort to flying a balloon over U.S. airspace remains a mystery. The U.S. allowed the balloon to fly across the country, then shot it down.

The wreckage was recovered by the U.S. authorities, who announced that the balloon was designed to gather intelligence as it flew across. China has continued to assert that it was a weather balloon that strayed off its intended course.

This incident comes at a time when U.S.-China relations are already extremely tense. The U.S. feels China’s growth and assertive posture in many parts of the world is a threat to U.S. security and commercial interests. China, for its part, appears in no mood to apologize for its economic and technological progress.

This superpower rivalry is of a nature the world has not seen in living memory. We may be moving towards a destructive second Cold War. However, there are elements in this conflict that are truly unique. The U.S. and China are the world’s two largest economies. At the height of the U.S.-Soviet Cold War trade between the two countries was about $2 billion a year. Trade between the U.S. and China stands at about $2 billion a day! This economic relationship has been to the benefit of both sides.

China has become the world’s manufacturing hub, lifting hundreds of millions of its people out of poverty. Western consumers have benefited from a seemingly unending supply of low-priced Chinese-made goods.

So, what has started to upend this relationship? Successive U.S. administrations have supported China’s accession to the World Trade Organization in hopes that an economically successful China will also lead to the opening of its political system. Instead, the rise of Xi Jinping has further consolidated all political power into a single hand.

While China has allowed western investment in its economy, many sectors of China have remained closed to western companies. There is also a strong feeling in the U.S. that China has engaged in “intellectual property theft,” that is, created conditions whereby U.S. companies investing in China are forced to reveal their technological and commercial secrets, thereby enabling Chinese competitors to emerge.

And then there’s the matter of Taiwan. In 1979 when the U.S. first recognized mainland China, it agreed to the “One China policy”: that Taiwan, Hong Kong, and Macau are all part of one Chinese nation and will ultimately be united under one flag. China in return agreed not to take over Taiwan by force.

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Since then, the people of Taiwan have increasingly drifted towards wanting to be an independent nation – arguably, encouraged by the U.S. While giving up on Taiwan crosses a red line for China, President Biden has repeatedly asserted that the U.S. would protect Taiwan if it is attacked by China. It doesn’t take much imagination to see where this could lead.

In order to contain the Chinese threat as it perceives it, the U.S. has imposed severe sanctions. The goal is to impede China’s technical advancement, especially in fields such as artificial intelligence. This is forcing China to try to become self-sufficient in these technologies. The U.S. has moved to convince Dutch and Japanese suppliers of advanced microchip-making equipment to cut off supplies to China.

There is a dire need to bring maturity and calm to the U.S.-China disputes if the world is to avoid severe economic consequences, including splitting into western and Chinese spheres. But like so much else in the U.S., the conflict with China has become highly politicized. Many in the Republican Party have even criticized the Biden administration for its handling of the Chinese balloon matter. They ask why the government waited a full week before shooting down the balloon.

The waters between the U.S. and China have been so poisoned that it is hard to see how the real underlying issues may be resolved. There had been a ray of hope after the Biden-Xi meeting on the sidelines of the recent G20 summit in Bali. This is all but gone. The appearance of the Chinese spy balloon did not help.

Qaisar Shareef is the author of When Tribesmen Came Calling: Building an Enduring American Business in Pakistan, published by Blue Ear Books. His columns in the Pakistani national English-language newspaper The News, explaining American politics and society to readers in Pakistan, are archived here.