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Are the U.S. and China in a 'Cold War' or not?

Raj Bhala
Monday, June 1, 2020

On May 20, 2020, the White House issued what history may record as one of the most important foreign policy and defence reports since 9/11: The United States Strategic Approach to the People’s Republic of China. Nowhere across its 16 pages is the term ‘Cold War’ mentioned. Rather, “strategic competition” is the buzz phrase repeated four times. There are two oblique references to India. The Chinese Communist Party is mentioned 36 times.

The Recent Watershed Nevertheless, four days later, eschewing “strategic competition,” Chinese Foreign Minister Wang Yi admonished American leaders for provoking a “new Cold War” and prodding countries to choose sides. Presumably, he included India in his general reference to this polarising choice. What the Minister didn’t emphasise was the most worrisome announcement, from the CCP on May 21 about Hong Kong since the British handover on July 1, 1997: China’s National People’s Congress would impose on Hong Kong a National Security Law akin to one Hong Kong’s Legislative Council shelved after mass protests in 2003. Seven days after its Report, the U.S. all but decided to end the special trade status it’s granted Hong Kong since 1992, formally announcing the termination on May 29.

Throughout this momentous period, the U.S. Congress proceeded with legislation that could sanction individual CCP officials responsible for human rights repressions. President Donald J. Trump has pledged to sign the bill. That would be akin to targeted measures America imposes against Iranian officials, and to mandate foreign (read: Chinese) companies listed on U.S. exchanges to provide more transparent, reliable accounting and financial data. That follows the scandal involving Luckin Coffee (China’s Starbucks), which allegedly falsified its 2019 earning reports, prompting NASDAQ to delist the company.

So, to the point, following these May 20-29 events ... Are America and China in a ‘Cold War’?

The easy answer – ‘no, because during the 20th-century Soviet-American Cold War, those two countries had sparse trade, financial, and investment relations’ – is wrong. The criteria for a Cold War, as discussed below, don’t hinge on robust economic ties. Besides, ever since the March 2018 launch of the Sino-American Trade War, the two economies have been decoupling. That process will continue indefinitely with the Trade War and accelerate with a Cold War.

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Raj Bhala