It’s not simply the terms of trade, rather the rise of China and the possibility of it overtaking US as the world’s greatest power that is at stake. At the beginning of the Trump administration, some commentators suggested that before he left office, China would overtake the US in terms of size of its economy.
Since then US’ growth has accelerated, thanks to Trump’s Keynesian-style government-backed tax cuts for business, while China’s growth has remained at a stable level — at more than double that of the US.
In his election campaign, US President Donald Trump had asserted fairer trade for the US. However, the push has him fighting with some of America’s oldest trading partners, China in the lead. With China, particularly, the US is embroiled in a tit-for-tat tariff battle on several fronts over the past few months. Mr Trump has imposed taxes on imports from China, Mexico, Canada and the EU, to encourage consumers to buy American products. All of these countries have retaliated. The world is keenly watching, albeit, with much concern, the ramifications of world’s two largest economies that are wrangling for global influence. China has accused the US of launching the “largest trade war in economic history.”
New import tax regime unfolded by the US will take effect from September 24, starting at 10% and increasing to 25% from the start of next year unless the two countries agree on a deal. The US president said if China retaliates then Washington would impose fresh tariffs on $267 billion worth of Chinese products. If Trump goes ahead with that round of import taxes, it would mean virtually all of China’s exports to the US would be subject to duties.
Mr Trump asserts that he wants to stop the “unfair transfers of American technology and intellectual property to China” and protect jobs.
The dispute dates back to January, with the US slapping controversial tariffs on imported washing machines and solar panels. Earlier the US had pulled out of the TPP (Trans-Pacific Partnership) to renegotiate the North American Free Trade Agreement (NAFTA).
The issue of imbalance in the US-China trade is an important phenomenon no doubt. For example, the International Monetary Fund (IMF) says an escalation of the tit-for-tat tariffs could take 0.5% off the global growth by 2020. This notwithstanding, the reverberations of a trade war are much louder in the strategic conundrum as a corollary to the rising crescendo of Chinese economic power with its political fallout on a global level.
The crux of US-China spat is the fiercely growing rivalry between the two for domineering influence in the world. While the US is determined to pursue its perception of economic multi-polarity and benign nationalism as the ingredients of a free and fair world society, China has been stoutly pushing the economic colonialism as the modern mantra for the unipolar power structure. The US considers it a direct challenge to its status as the most powerful country in the world.
Surprisingly, a reputed and much-respected organization called the World Health Organization (WHO), an affiliate of the United Nations, with very clean and appreciable antecedents has become a subject of controversy in the background of the COVID-19 pandemic.
Traditionally, the US has been premier donor to the UN and its various bodies and affiliates with the wide-ranging agenda of serving humanity. Even President Trump had a good word for the WHO. Late in February, when he was still minimizing the impact he anticipated from the Coronavirus on the United States, he had only glowing remarks to make about the World Health Organization’s role in checking the new global threat. On February 24, he tweeted, “The Coronavirus is very much under control in the USA. We are in contact with everyone and all relevant countries. CDC & World Health have been working hard and very smart. Stock Market starting to look very good to me!”
Suddenly, on April 14, Trump announced from the Rose Garden that he was suspending US funding for the WHO – about $450 million annually, which computes to over 20% of its annual budget. Justifying his decision, the President charged the organization with causing “so much death” by its “mistakes.” He asserted that WHO had failed to warn the world of the seriousness of the new Coronavirus early enough when it could have made a difference.
The President went a step further. He charged WHO with abetting China in a disinformation campaign about the origins of the Coronavirus. He accused China of a subsequent cover-up of the outbreak, an action he said had worsened the impact of the Coronavirus outside China.
Trump’s dismissive attitude towards the world body (UN) is noticeable in the withdrawal of the US from the membership of UN Human Rights Council charging it with a tendency of politicizing human rights issues in their totality. Many insiders in the UN think that by its frugal funding of various important organs of the UN, China has created a clout which she is exploiting for domination of the institutions. Two examples speak loudly. China put its foot down in rejecting the agenda item of G-20 video summit meeting recommending an inquiry into the rise of COVID-19 in Wuhan proposed for March 27. The second example is of China thrice using its veto power to stonewall the Security Council from designating Jaish-e Muhammad and its founder Maluana Masood Azhar as international terrorists.
By and large, UN member states do not consider President Trump’s orders of withholding its donations to WHO that it will prove a setback to the humanitarian work that WHO is doing in different parts of the world. Health experts close to WHO say its officials, including Director-General Tedros Adhanom Ghebreyesus, are frustrated that many of the organization’s 194 member states have paid little heed to the global emergency declaration it issued on January 30 and subsequent guidance for addressing the pandemic. Mr Trump accuses WHO of being slow to inform the world of the gathering threat, but in fact, Director-General Tedros has held nearly daily briefings on the health emergency since late January, often issuing guidance and stark warnings on the consequences of not taking swift mitigating actions.
However, others argue that the world had to pay heavily for China not disclosing the spread of pandemic for at least six weeks from the time it started in Wuhan and had already consumed thousands of lives. They cite the example of former WHO Director-General Gro Harlem Brundtland, also the former Prime Minister of Norway, who took quick and effective steps in 2002 and limited the reach of the SARS epidemic. Not bothered whether she had the authority or not of censuring member states of WHO, Madam Brundtland had handled China on the merits of the case then. Not following in the footsteps of his former Director-General, Mr Tedros had given rise to a wild rumour that WHO was oriented towards Chins in an extremely serious matter that involved the lives of millions of people.
As the controversy over the role of the WHO Director-General rages hot, China has announced a grant of $300 million to WHO to fill the gap caused by the US’ suspension of the grant. Does not that reinforce China’s credibility with the WHO member countries? Debating this issue, Stephen Morrison, Director of the Global Health Policy Center at the Center for Strategic and International Studies in Washington concludes, “Paradoxically it may be that the Chinese become a bigger player. As pandemic is entering a “new phase in which we’re going to see the higher impact in low-income countries … in Africa and Asia where WHO remains a central player, China coming to WHO’s financial rescue now could further muffle any criticism of China’s role in the pandemic.”
Finally, as the world is fighting the pandemic, last week China flexed its naval muscle in the Chinese and the South East Asian Sea and as part of its aggressive posture in the Indian Ocean attacked and sunk a Vietnamese ship accusing it of surveillance in the Chinese waters. India, Japan and the US have taken note of this threatening development.