Beppu, Oita Pref. – The confrontation between the United States and China seems to be growing increasingly severe. Secretary of State Mike Pompeo, effectively the No. 2 man in the U.S. government, has bitterly criticized President Xi Jinping by name and made it clear that Washington will alter its policy toward Beijing. In July, Pompeo said that the U.S. rejects China’s maritime claims in the South China Sea, a departure from its earlier position that territorial disputes in the region should be resolved by the countries involved.
Earlier this month, the U.S. dispatched the highest-ranking official to Taiwan since it severed diplomatic ties in 1979. President Donald Trump, formally nominated as the Republican candidate for the November election, promised in his re-election campaign pledges to win back U.S. jobs from China and get Beijing to pay the price for spreading COVID-19 worldwide. Naturally, the Chinese government spokesperson has reacted strongly. But China is diplomatically smart — President Xi and Premier Li Keqiang have both remained silent. Beijing knows that exchanges of abusive language between top leaders will only make future negotiations more difficult.
Recent moves on the part of the U.S. may lead people to think that the U.S.-China confrontation has entered a new stage — that a new cold war has finally begun. But is this really going to lead to a difficult era like the Cold War between the U.S. and the Soviet Union? A closer look at U.S.-China relations will show that unlike the U.S.-Soviet standoff of the 20th century, several complicated elements are involved in Sino-American ties. The U.S.-China confrontation is indeed quite different from the Cold War between Washington and Moscow in several aspects.
First, the U.S. and China are now almost equal in terms of the size of their economies. The U.S. is still far ahead in nominal GDP, but China has already topped the U.S. in purchasing power parity terms. During the Cold War, there was a steep gap between the U.S. and Soviet economies. Today, the U.S. and Chinese economies are neck and neck — just like the British and German empires prior to World War I. The race is not limited to the size of their economies. The two countries are engaged in a fierce competition in the areas of advanced technologies such as artificial intelligence and military/space technologies. We might call it a battle between GAFA (Google, Apple, Facebook and Amazon) and BAT (Baidu, Alibaba and Tencent).
Second, the U.S. and China, despite their fierce rivalry, are inseparably tied to each other through economic and personnel exchanges. That is the crucial difference with the Cold War confrontation between the U.S and the Soviet Union. As University of Tokyo professor Noriyuki Yanagawa points out, you can’t grasp the whole picture of the U.S.-China confrontation by just watching developments in Washington and Beijing. You need to see the ties between Silicon Valley on one hand and Beijing Valley, Shenzhen and Shanghai on the other.
While the U.S. gross domestic product in the April-June period plunged an annualized 33 percent from the previous quarter, Tesla, the U.S. electric vehicle maker that now exceeds Toyota Motor Corp. in terms of aggregate market value, increased its profits during the same period — and the biggest factor behind the better earnings was the launch of full operation at its latest plant in Shanghai. Zoom Video Communications, whose services are widely used for online conferences and teaching in Japan amid the COVID-19 pandemic, is a new American company founded by Eric Yuan, a Chinese who moved to the U.S. in 1997 at the age of 27.
During the Cold War, there were very few human exchanges between the U.S. and Soviet-led bloc, as symbolized by the Berlin Wall. That’s the key difference with U.S.-China relations today. Xi’s daughter has studied at a U.S. university. Around 370,000 of the 1.1 million foreigners studying at U.S. schools are from China. Both economically and in terms of human exchanges, the U.S. and China are closely connected. A large portion of the medical equipment and supplies such as masks — which countries around the world are scrambling to secure amid the pandemic — are made in China. The U.S. relies heavily on China in that respect. It is not a problem that even the U.S. as a superpower can quickly resolve.
Third, there is a need to distinguish between Trump’s personal characteristics and the national interests of the U.S. Former U.S. Defense Secretary Jim Mattis said that Trump is only interested in dividing the U.S. and does not seem interested at all in uniting the country. He went on to say that the U.S. can unite without Trump.
The July issue of Wedge, a monthly Japanese magazine, quoted a high-ranking official of an American think tank as saying that Trump has no interest in human rights issues either at home or overseas, including Hong Kong, and cares only about his own re-election. In contrast, the official said, Democratic candidate Joe Biden will take a hard-line position on human rights issues. In other words, Xi rushed to impose the national security law on Hong Kong because it would have been difficult to enact if Biden is elected U.S. president. In that sense, the result of the U.S. presidential election in November will no doubt be the watershed that determines the shape of future U.S.-China relations.
How should Japan behave in response to this complicated rivalry between the U.S. and China? Japan has the security treaty with the U.S. and entrusts its defense to the U.S. nuclear umbrella. But in economic terms, China is Japan’s biggest trading partner for both exports and imports. Based on these indisputable facts, the only path for Japan will be to uphold the security alliance with the U.S. while keeping relations with China as friendly as possible in order to maintain business relations and make money.
The hardest scenario for Japan — though it may be welcomed by some fanatical right-wingers — would be for the U.S. to press Japan to show the flag and confront China. To avoid such a development, Tokyo needs to do what it can to ease the confrontation between Washington and Beijing. It may be a narrow path, but that is what’s needed to protect our national interests from a medium- to long-term perspective.
Haruaki Deguchi is president of Ritsumeikan Asia Pacific University in Beppu, Oita Prefecture. A popular lecturer and author of more than 40 books, he founded Lifenet Insurance in 2008 after a career spanning nearly 35 years at Nippon Life Insurance Co.