Abstract
President Trump stated that “Phase One of the Trade Deal with China” could be signed on January 15th 2020, adding that he would like to complete phase 2 after the US Presidential elections, in efforts to end the ongoing trade war between the two largest economies in the world and one which has caused market turmoil and affected growth. However, LCIR considers the trade war to be a permanent feature of American policy towards China, the basis of which is the fear by America that China is set to overtake her in technological dominance with respect to artificial intelligence (AI) and 5th generation technology (5G). This is a situation which America considers as a vital threat to its global dominance and will not accept. Hence, the trade war with China is set to escalate with efforts by America to halt China’s economic rise, especially in the vital new fifth generation (5G) technology sector.
Analysis
Background
Observers of American policy towards China will ascertain that America has sought superiority in Eurasia and develops plans and policies towards China aimed at preventing it from advancing ahead of her. Eurasia is a vital region towards which the United States has developed a strong policy to ensure its hegemony over it, which continues to serve the interests of American institutions to date. Since the collapse of the Soviet Union in 1991, the political milieu in America has been divided into two main parts regarding the design of American policy toward China:
The first involves engaging or cooperating with China to become a stakeholder and responsible in the US-led international system. The second affirms that China’s intentions cannot be trusted, and that it is ultimately a competing force that stands against the Western international order led by America.
In the mid-1990s, the U.S. foreign policy establishment settled on the classification of China as a rival force and adopted policies to restrict China’s rise. In the era of Clinton and Obama’s political administration, the containment policy of China was adopted, and in the era of Republican administrations of Bush Jr. and Trump, it took a more aggressive policy of containing China whereby Trump has now mobilized for an open trade war on China.
The U.S. containment policy had two main goals:
- To avoid China’s emergence as a regional power, and
- To prevent it from changing any aspect of the Western-based international order. To achieve these goals, the United States has adopted several measures, including;
- raising Chinese human rights violations in Tibet, East Turkestan, and Hong Kong.
- keeping China preoccupied with the North Korean nuclear crisis and regional conflicts in the South China Sea.
- using India, Japan, and Australia to restrict China’s military ambition and growth in the Asia-Pacific region
- obstructing China’s access to the latest technologies, and
- withdrawing from the Chinese Belt Initiative.
The US political establishment has adhered to the containment policy with minor changes in some measures to curb China’s power ambitions. However, after the 2008 global financial crisis and the American catastrophic wars in Afghanistan and Iraq, the United States realized that the policy of containing China was not enough and decided to reinforce it. The goal of Obama’s strategy in what is known as the “Asia strategy” was to transfer military equipment and soldiers from Europe to Asia and the Pacific, and to confront Chinese military capabilities. Then Trump began targeting the Chinese economy directly, and his administration named China as a “currency manipulator” and started a trade war with Beijing, and this advanced the efforts to contain China in the system based on international rules.
The Trade War
America started a trade war with China in order to limit the rise of China, and this accelerated due to the trade deficit, as America imports $558bn of goods and services from China, and in return, China imports $179bn worth of goods and services from the United States.
However, a convergence was recently observed between them in order to achieve their respective interests. According to reports, a partial trade agreement was put into place , “that would put an end to the escalating trade war between the two largest economies in the world since last year. Trump previously said that phase one of the trade agreement would cover about 60% of the comprehensive agreement, and from it is assumed that it will include China’s commitment to buy more American agricultural products, in exchange for the United States lowering its tariffs imposed on Chinese goods …” (Al-Arabi Al-Jadeed, 05/01/2020 CE). Al Arabia had also published on on the 15th December 2019, the following: “21 months after the start of the trade war between the two largest economies in the world, the United States reached a phase 1 agreement with China but will not be inked before next January. Under the agreement, the United States confirmed that it will reduce tariffs of 15% to half on $120 billion worth of Chinese imports, but it will maintain the tariffs that amount to 25% on $250 billion worth of Chinese imports. And the United States dropped plans to impose new tariffs of 15% on $160 billion worth of Chinese products that were scheduled to come into effect today, which include toys and smartphones. Beijing also agreed to import additional US goods and services worth at least $ 200 billion over the next two years. China will also suspend the application of additional tariffs on some American imports scheduled to start today as they will suspend the imposition of additional customs duties of 25% on cars and 5% on American spare parts. China has made clear that it will continue to suspend customs duties on about $ 126 billion of American products, in addition to its pledge to increase the purchase of US agricultural products by up to $ 50 billion annually”.
Trump has been keen to find a growing market for agricultural exports because he is running general elections this year and does not want to lose the votes of the heavily indebted farmers because there are not enough export markets. Prior to that, Al Bayan News website published, “The Chinese Ministry of Commerce said – in a statement Friday evening – that the agreement was based the principle of equality and mutual respect, and it includes nine chapters: the preface, intellectual property rights, technology transfer, food and agricultural products, financial services, exchange rate and transparency, trade expansion, bilateral assessment and dispute settlement, and the final terms.” (Al-Bayan News, 13/12/2019).
American Fear of China’s Technological Dominance
However, this does not mean that these agreements on the trade war will end the state of economic tension between the two sides, because the trade war is not the real motive for controlling China, but there is something behind it that is deeper and more dangerous for the U.S. economy and its international priority. China is a leader in fifth-generation technology (5G), the next generation of wireless communications, and most importantly, the gateway to artificial intelligence. The US Defence Innovation Board that includes former Alphabet chairman Eric Schmidt, LinkedIn founder Reid Hoffman and Walter Isaacson, the author and a former chief executive of the Aspen Institute wrote: “The leader of 5G stands to gain hundreds of billions of dollars in revenue over the next decade, with widespread job creation across the wireless technology sector… The country that owns 5G will own many of these innovations and set the standards for the rest of the world… that country is currently not likely to be the United States.” (ZDNet 16/08/2019).
5G is superfast, tests on the speed of communication via G5 technology achieved record speeds, 1 terabyte per second, which is 200 times faster than its current counterpart. According to tests conducted by a research team from the 5G Innovation Centre at the University of Surrey in Britain, a file around 100 times larger than a full movie can be downloaded in just 3 seconds. The new speed is faster by about 65 thousand times than the average download speed in the G4 networks. The number of devices connected to the Internet is expected to range from 50 to 100 billion devices this year, so there is a need for new and different frequency bands to meet this wide demand for Internet connectivity. As for how 5G works technically, a technology known as “MIMO” which stands for “multiple-input multiple-output” will play a role key in the operation efficiency standards of 5G networks. MIMO technology uses several small antennas to serve data flow individually. Samsung has relied on this technology to provide amazing data download speeds, and 5G networks are likely to use more broadcast stations”. (Al-Arab 13/08/2017).
In 2017, Google CEO Eric Schmidt revealed at the World Economic Forum (WEF) that “it won’t be long before China overtakes the United States in the development of advanced artificial intelligence (AI)”. For AI manifests itself in:
- The use of artificial intelligence chatbots to understand customer problems faster and provide more efficient answers.
- The use of artificial intelligence assistants to parse critical information from large free-text datasets to improve scheduling.
Experts point to the great interest and investments in artificial intelligence over the next few years, and Deloitte estimates that $ 57.6 billion will be spent on artificial intelligence and machine learning by 2021, five times higher than in 2017.
It was not surprising then that Trump publicly opposed Chinese Tech giant Huawei, which produces 5G, and has stated on several occasions the threat posed by the Chinese company. Trump said at the last NATO meeting, “I do think it’s a security risk, it’s a security danger”. For this reason, the United States pressed many Western countries (Italy, the United Kingdom, Germany, etc.) to exclude Huawei from bidding or activating 5G in their countries, all under a false pretext of security violations. The United States also asked Canada to arrest Meng Wanzhou, Huawei’s chief financial officer for allegedly violating US sanctions against Iran. The reality being that America is primarily interested in banning the Chinese 5G network, with Trump has also moving to block sales of silicone chips to China.
The Chinese have long worked to become independent in technology under the China 2025 plan, but the way the Americans have interacted with Huawei and other Chinese companies has accelerated China’s efforts to gain full independence in key technologies. The Chinese had announced plans to create their own operating system by 2022, and this door was closed to IBM, Microsoft, Dell and other US companies. Moreover, China plans to build its own silicone chips. It has doubled the salaries of thousands of Taiwanese chip engineers and is moving them to China over the past few years. American analysts expect that within five to seven years, China will achieve independence in the chip industry. By following these measures, Beijing will make huge revenues from the new economy of artificial intelligence.
America is doing its best to restrict China’s ability to take the lead in the 5G system and artificial intelligence, because this technology is just as important as the steam engine, electricity and the silicon chip. These technologies are the engines of production and economic growth. Thus, the current trade war is more than just a trade war to confront the trade balance between America and China, it is also technology war, especially 5G. According current data, it is expected that the world will have a bipolar technological system: The West led by America, and the rest of the world led by China. And if the Chinese technological system dominates Eurasia, the possibility of China threatening US policies in this area will increase.
Therefore, the U.S.-China trade agreement, even if it was concluded and then signed in all its phases a year later after November’s U.S. presidential election will not be more than a break in battle. in the field of fifth generation technology America will not accept to be on equal terms with China; even if China accepts it.
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