Predicting the course of US-China relations in the post Covid-19 era

Authors: Ayush Banerjee and Dhritiman Banerjee*

The coronavirus pandemic is a natural threat to the geopolitical order. And it is needless to state that this majorly affects the currently international paradigm in a manner that the world has not seen before. Although there have been a few instances where pandemics have shaken the mortality rates, no pandemic has spread this amount of sheer panic among the public at large. This is largely due to the growing interconnectedness and the advent of the cyberspace. Just as the internet has influenced the lives of the most privileged public, data has been influential in academics and politics alike. However, this argument has its own set of problems that continue to affect public-politic relations in ways more than one.

In the same regard, one of the most strained and keenly debated relations in international politics is that between the United States of America and the People’s Republic of China. In the context of the virus itself, the virus originated in Wuhan, a province in China while the most number of fatalities have resulted in the United States of America. This idea fuelled with the new world media at the public level created an atmosphere of tension on such platforms. On Twitter notably, there were several instances of a tweet naming Covid-19 as ‘Chinese Virus’ spread like wildfire. This sparked a major controversy even at the diplomatic level. Even Donald Trump momentarily subscribed to the idea and deliberately worded his speech to use the phrase ‘Chinese/China virus’ to refer to Covid-19 at least 20 times between March 16th and March 30th 2020. The US Secretary of State- Mike Pompeo went on to accuse China of its lack of transparency, even scrapping a joint G7 statement after its members refused to refer to the virus as the ‘Wuhan virus.’ China has remained apologetic ever since. Hence, it can be rightly inferred that the relationship shared between China and USA have strained ever since the Covid-19 outbreak.

However to predict how the outbreak might jeopardise the current paradigm of world politics we must look no further than the Phase One Trade deal signed between the two countries. This deal previously ended an 18-month long trade war between USA and China. Through this deal, China committed to purchasing $200 billion additional foreign goods and services in the sectors of agriculture, energy and manufacturing. However, it is evident that in the post-Covid19 era, it will be rather implausible for China to adhere to the terms of the deal due to reasons more than one. The IMF estimated the reality of an unprecedented economic slowdown in which China is expected to grow at only 1.2% this year. Several reports suggest that investors are planning to pull out their investments from Chinese industries to fit in with the Western bandwagon.

The outbreak turned pandemic coupled with the authoritarian nature of China’s response to the entire situation has had a detrimental effect on their domestic economy creating various tremors in the anticipation of demand for various products and services. For instance, the 12 most Covid-19 affected countries account for over 40% of the Chinese exports. Nations like India and Italy that also make that list of twelve may voluntarily pull out of importing to China as they are set to gain from deferring of investments. These nations are also top suppliers of intermediate goods for the Chinese economy. The Chinese economy is quite dependent on external demand stimuli from the US and most western European states such as the United Kingdom. Therefore, until the point in time the US and EU economies completely recover from this pandemic, Chinese policymakers are bound to hold back domestic stimulus efforts as it will only have little effect if the global economy is in shambles.

The Chinese economy has crippled down considerably due to the ongoing trade war that has led to a disproportionate ratio of debt to the annual Gross Domestic Product. This ratio reached an overwhelming 248.8% by the end of March 2019 and it has only increased ever since. China has also been forced to restructure the debts of the Belt and Road initiative (erstwhile OBOR). This restructuring meant that the capital owed to China as loans by the contributing states have been readjusted to affect the projected collection considerably. As Covid-19 nearly decimates the economy of most developing nations, it is becoming increasingly difficult for these states to pay their loan back to China within the stipulated timeframes. Thus adding to the stress on the Chinese economy at large.

There has already begun a region-specific boycott of Chinese goods and industries, especially in conservative parts of USA, among the southern districts. Instances of racial abuse against ethnic Chinese communities have been on an unfortunate rise. These are all deterministic factors of public consciousness, if not, public opinion for the future that lies ahead of us. This reaction has already seen international spillovers and investors have become more anxious about investing in Chinese companies.

According to Deepanshu Mohan, the world may experience radical shifts in the global political economy post-Covid19 based on two factors namely, the relative degree of economic recovery in the affected nations and the existing domestic political scenarios in such nations. He further states that in the post-Covid19 era, protectionist trade policies are likely to increase in the developed nations who in the name of ‘supply security’ may disentangle trade relations with China which will inversely affect the current geopolitical world order. Donald Trump could also make the pandemic a focal point in the 2020 election campaign and therefore aim to capitalise on the anti-China fervour in the US and thus strain relations even further. There lies evidence for this as well. Trump recently presented his anguish towards China being categorised as a ‘developing’ state under the World Trade Organisation list and due to the low contributions of China to the World Health Organisation. Although this may seemingly appear appropriate accusations, this is far from the whole truth. The USA, themselves have cut major proportions of its funding capacity towards the United Nations especially concerning peacekeeping and security operations.

Minxin Pei, on the other hand, stated that the Covid-19 outbreak has led the average American to view the Chinese political system with chronic scepticism as Americans blamed the repressive Chinese political system for the pandemic with the Harris poll indicating widespread American dissatisfaction with the alleged Chinese cover-up of the virus. This poll also showed overwhelming support for US punitive measures on China and the removal of US investments and businesses from China. These developments could lock the two countries into a cycle of escalation that could trigger another potential international diplomatic conflict leading to numerous security issues and economic degradation. USA and China remain the two largest economies in the world. Hence, it can be inferred that this fallout of diplomatic and economic ties between the two states might amount to significant damage in the entire global political order and the globalised system of economies and markets. In the US itself, the number of jobs created since the recession in 2008 has been washed away in two weeks.

The trade war between the two economic giants had already shaken the world before the outbreak. And the prevalent fault lines will only widen in the post-Covid19 era just as a global economic slowdown is expected. Thus, it is imperative for the world economy that this US-China relation remains amicable and stable. However, the available narratives indicate a significant detour from the ideal stability that USA and China should normatively maintain to protect the global economy from crumbling down like biscuits. The USA has resorted to legislations that are actively anti-China in terms of financial relations and international trade while China has strengthened its protectionist response system both politically and economically during this outbreak.

The Covid-19 outbreak has not acted as an impediment to Chinese aggression in the South China Sea region either. China has recently renamed 44 features in the disputed region, a decision that is considered illegal under international law. This has been time and again criticised by the US Secretary of State Mike Pompeo. With increasing US-China missile competition a reality in the region post the abrogation of the INF treaty, the post-Covid19 era will likely see more prominent conflicts in the South and the East China Sea regions which is a strategically important waterway for both the countries alongside other nations such as Japan, Vietnam, Philippines and India.

*Dhritiman Banerjee is an undergraduate student at the Department of International Relations at Jadavpur University, Kolkata, India. He has recently published for the Millenniumpost, a Kolkata based newspaper as well as contributed to publications like the Geopolitics and South Asia Monitor. His interests lie in International Relations in general and Strategic Studies in particular.