Tensions between the US and China are likely to worsen on the eve of the US presidential election in November this year, CNBC reported referring to experts.
The two largest economies in the world were drawn into a protracted trade war, and the situation is now more complicated amid the coronavirus pandemic. US President Donald Trump accused Beijing of a lack of transparency regarding the true extent of the COVID-19 outbreak in China, where the very first cases have been reported.
With Trump campaigning for a second term in office, “the end game for the Trump administration is crystal clear — and that is winning the election,” said Yale University senior fellow, Stephen Roach.
“This is not about improving economic security for Americans, American companies, no matter what they say. This is a politically motivated trade conflict,” he said.
Roach added that he “wouldn’t rule anything out” in terms of the actions that Trump's administration can take, whether it is new tariffs on Chinese imports or default on debts to China.
Trump's administration has recently intensified rhetoric regarding China, as the COVID-19 pandemic is damaging the US economy.
Yesterday, Trump blasted China over the COVID-19 origin in a tweet. According to him, it was the “incompetence of China” that caused “this mass Worldwide killing.”
Secretary of State Mike Pompeo said on Wednesday that the $ 2 billion that Beijing had promised to fight the pandemic was “paltry” compared to hundreds of thousands of people killed and trillions of dollars in damage.
According to a professor at Cornell University Eswar Prasad, Trump's administration will continue to take action - both symbolic and significant.
Recently, the US limited sales from global chipmakers to Chinese tech giant Huawei. This step will provide Huawei with very few opportunities to find alternative suppliers.
“It’s very clear the Trump administration means business and the hardliners seem to be viewing the pandemic as an opportunity to get even tougher on China than was the case before,” said Prasad, who was previously head at the International Monetary Fund’s China division.
In turn, China is aggressively reacting and striking back at the US.
Foreign Ministry spokesman Zhao Lijian said Tuesday that the US is trying to dishonor China and shift the blame for its own mishandling of the viral outbreak.
“Certainly, China has not stood still. Its diplomats have been trying very hard to control the narrative and they’ve become much more blunt about using their economic and political persuasive power to try to bring countries around to their side and making it very clear that countries that don’t play according to their rules are going to be facing consequences,” said Prasad.
According to him, the conflict between the United States and China occurred at a bad time, because the dispute between the two leading economies in the world will not help anyone and adversely affects business and consumer confidence.
“The domestic political dynamics in both countries, I think, are going to be the key drivers here — in particular in the run up to the elections in November. Any negative consequences of tariffs or other economic sanctions against China are going to pale relative to the consequences of the pandemic on the U.S. economy,” said Prasad. “So I think for Trump it certainly makes sense to try to look tough on China and his base is probably going to respond positively.”
