One of the significant outcomes of the Alaska ministerial meeting with the USA (March 18-19, 2021) was China’s assertion that it now considered itself as an equal of the former and would not be guided by the US values or judgements. Whether others agree or not, China’s President Xi Jingping believes that China’s time has come and it can now look at the world as USA’s equal (this is what Xi told the delegates to China’s National People’s Congress in March, 2021).
Consequently, the Sino-US rivalry, which had gained momentum after Joe Biden’s appointment as the US President, has escalated further. Recently, the USA, Canada, UK and the European Union (EU) announced coordinated sanctions on China for alleged human rights violations of Uighur Muslims in Xinjiang.
China was taken aback as it had started believing that the EU would follow an approach independent of the USA, after both had signed the Comprehensive Agreement on Investment in end-December, 2020. These countries have also taken a united position against China’s imposition of its security law on Hongkong which takes away most of latter’s earlier autonomy.
USA and Japan took a strong position against China when they announced after a bilateral visit by Japan’s PM Yoshihide Suga to USA (April 16-17) that they would counter “China’s intimidation” and work together on its challenges in the East and South China Seas to ensure a free and open Indo-Pacific (IP).
They underlined the importance of “peace and stability across the Taiwan Strait”, but upon return, Suga has downplayed Japan’s involvement in any military conflict over Taiwan.
France joined the USA, India, Australia and Japan in conducting three days naval exercises in the Bay of Bengal from April 5 to “develop closer links, sharpen skills and promote maritime cooperation in a free and open IP”. UK and Germany have also announced plans to despatch their warships to the IP in the near future.
Indonesia and Philippines have spoken out against China’s aggressive activities in the South China Sea with the USA promising to stand by with its ally Philippines in its confrontation with China. The Australian government has cancelled two Belt and Road (BRI) deals signed by China with Victoria state government.
Japan is seeking support also from Germany and India against China’s aggressive behaviour (visit of Japanese PM to India towards end April was cancelled due to 2nd wave of Covid) besides the USA. India’s External Affairs Minister S. Jaishankar recently rebutted China’s claim of likening the Quad to NATO saying it was infact, doing the opposite and “others can’t have a veto about what he would discuss with whom”.
China has signalled to the USA’s allies and foreign companies to pay attention to its interests as well or be prepared for its retribution. It has imposed reciprocal sanctions against the US, Canadian, British and the EU countries’ entities and individuals and foreign companies who have opposed its interests.
China’s Foreign and Defence Ministers have been touring the EU, Middle East and ASEAN countries in search of new partners; Russia and Iran, both estranged with the USA, have conveyed their support to China; others such as Germany, France and South Korea have taken a more independent stand refusing to side fully with the USA.
China believes that the visits of the European countries’ warships to the South China Sea are at best symbolic and they would not join the USA in a military confrontation with her. Similarly, Japan is far away from taking any offensive posture against Beijing, constrained by its constitution. India will also maintain its distance from the USA and not like to make China its enemy.
Irritated by the persistent US opposition, China turned cool to promise any new targets to President Biden on April 22 to reduce its long term emissions saying it can’t be part of a “US centered climate cooperation circle”.
To secure a leadership role with the developing countries, China has asked the USA to shoulder more responsibility (in accordance with the differentiated responsibility principle) to tackle climate change questioning the commitment of the future US presidents to any ambitious targets if someone like Trump or even George Bush is back.
China is deriving comfort from its 18.3% GDP growth in the first quarter of 2021 (over quarter 1, 2020) though it loses considerable lustre when compared with -6.8% growth in that quarter and mere 0.6% increase over Q4, 2020.
Other bright spots were rise in industrial output in March 2021 by 14.1% and retail sales by 34.2%. FDI in China in the first quarter of 2021 surged by 43.8% over Q1, 2020 mainly from the EU, ASEAN and BRI states. However, several economists believe that China’s pre-pandemic target of 6% annual growth is yet to stabilise.
President Biden has had some success in uniting his European and Asian allies on human rights and technological issues like banning the Chinese Huawei from 5G networks.
But China believes that the USA’s allies would be loathe to support her in diverting the supply chains away from China or take other concrete actions to damage their economic interests with Beijing given their huge dependence on her for trade and other economic interests as their Covid-hit economies recover from recession.
Being a formidable competitor, President Xi Jingping has taken pre-emptive steps to deepen China’s economic ties with USA’s allies and others such as Germany, France, East European countries, Japan, South Korea and ASEAN, BRI states, the American and other foreign companies.
He remains confident that China would be able to carry on its high economic growth for many years and to transform its economic power into technological and military power with the support of USA’s allies and its indigenous capabilities. There are no signs on the horizon yet to suggest that the USA would able to constrain China’s economic power (its global manufacturing competitiveness) in any meaningful way.