Trade wars aren’t about trade today
prepared to quietly concede considerable ground to assuage Trump but uncertain whether this would relieve the pressure.
What about the US? There is no doubt that Trump and his key advisers see China as the most significant and abiding challenge to the US power. The one area where the US retains a clear lead over China is in technology and is determined to preserve it. There are several measures which have been adopted to restrict Chinese access to US technology and more are likely to follow. But while China may be ready to make concessions in trade, it is unlikely to make changes in industrial policy to suit the US. Thus the Make in China 2025 plan — to bring the country to the front ranks in new areas such as artificial intelligence, quantum computing, and electric vehicles — is likely not only to be pursued but even intensified. It is only an economic and financial crisis which may derail this ambitious long-term initiative. Therefore, it is probably too late for the US to prevent the emergence of China as an independent centre of technology generation and innovation.
While the focus on China as the prime adversary is apparent in Trump’s foreign policy, it is not clear what his countervailing strategy is beyond the use of the trade instrument. Strengthening the Western alliance and the alliance system in the Asia-pacific does not appear to be part of the strategy though clearly the US cannot hope to contain China on its own. In fact, by simultaneously engaging in a trade war with his own allies, Trump has created an opportunity for China to make common cause with American allies both in Asia and Europe. China has lost no time to reach out to Europe. It has revived the China-japan-korea trilateral negotiations on a northeast Asia free trade area
Ironically, Trump may himself have created the conditions for the failure of his China strategy by alienating allies and partners alike. In this complex and changing environment, India should be bold in leveraging its relations with each major power to upgrade its relations with another and retain maximum room for manoeuvre. But in the long run, relations with China will remain competitive in nature while the US will probably remain an indispensable partner.
Shyam Saran is a former Foreign Secretary and is currently senior fellow at CPR The views expressed are personal