Iran Caught in US-China Feud
There is domestic consensus in the US about mounting an all-out pressure campaign to rein in the pace of Chinese economic and technological growth. In the meanwhile, the coronavirus crisis and the upcoming US presidential election have escalated the tensions. Iran should take the opportunity with farsightedness to fulfill its national interests.
There is domestic consensus in the US about mounting an all-out pressure campaign to rein in the pace of Chinese economic and technological growth. In the meanwhile, the coronavirus crisis and the upcoming US presidential election have escalated the tensions. Iran should take the opportunity with farsightedness to fulfill its national interests.
Confronting China’s Rapid Growth
Since the middle years of Obama's tenure, the US adopted the policy of pivot to East to rein in or even halt China. The Chinese officials believe that the Republicans and Democrats have agreed on an unwritten compromise on confrontation with China. According to the compromise, if China’s economic development and modern technologies continue to grow at such rapid pace, Europe and the US will be affected and their global position will become practically unsteady. Considering such reality, the US ruling establishment has made a strategic decision to impede China’s development. On the other hand, there is a domestic consensus in China that it should by no means give up its right to development in the face of the US’ measures and threats. Moreover, China has made massive investment in the Third World and African countries by avoiding ideological conflicts over the past years, has begun to export technical and engineering services to those countries, has extended its major influence, and has practically isolated the US.
Trump’s slogans and attempts against China are rooted in this strategic concept. One of the pillars of Trump’s policy on making America great again is confrontation with China through mounting the international and regional pressures, a tariff war, promotion of Chinaphobia, restrictions on imports from China, and, above all, imposing sanctions on Chinese companies. In addition, Trump’s policy on China includes personal and electoral considerations as well.
The US-China trade war had begun before the coronavirus crisis, but the outbreak of coronavirus encouraged Trump to fan the flames of Chinaphobia with an extremist and nationalist approach. Chinaphobia has its roots in China’s remarkable economic growth over the past 40 years. In these decades, the value of China’s exports rose from almost zero to $2,655 billion in 2018. China is now the world's second largest economy. Gross domestic product (GDP) in the US in 1980 was $2.8 trillion and its GDP per capita was $12,553. In the same year, China’s GDP was $305 billion and its GDP per capita stood at $309. At that time, GDP per capita in the US was 41 times higher than that of China. But in 2020, the US GDP and its GDP per capita would reach $2.3 trillion and $76,000 respectively, while the GDP in China will be worth $15.5 trillion and its GDP per capita is projected to reach $10,970. In other terms, the GDP and GDP per capita in the US in the past 40 years have increased 8-fold and 5-fold respectively, while in China, the GDP has increased 51-fold and the GDP per capita 36-fold. At present, China has a population of 1.4 billion, more than four times the size of the US.
Over the past 40 years, China has been transformed from a traditional and agrarian society into an industrial and modern one with a 10% annual growth in industry and exports. Economic reforms in the 1980s changed agriculture in China. Prior to reforms, 4 people out of every 5 Chinese were engaged in agricultural sector. Over the past 7 years, the share of agriculture in China’s GDP has been lower than 10 percent. Around 30% of the Chinese population is engaged in industries and construction. The industry that accounts for 40% of China's GDP is higher than that of India (25%), Japan (26%), and the US (20%). The service sector makes up about 46% of China’s GDP. As per the 2013 data, the share of service sector in China’s GDP exceeded the secondary industry.
Improvement in the financial conditions of the lower class and expansion of the middle class would create a suitable market for the emerging digital technology companies in China.
Digital Technology
Apart from those fundamental changes, China’s digital economy is also growing rapidly. Based on estimates, China's digital economy would stand at about 30% of the GDP. China now has nine of the world’s 20 biggest Internet companies. As a result, the US’ decision to impose sanctions on Chinese tech giant Huawei under allegations of espionage and violating the privacy of citizens has become a major source of conflict between China and the US. However, such sanctions and international pressures have not prevented Beijing from making progress in new technologies.
Beijing has plans to boost its economy by investing an estimated $1.4 trillion in various fields of new technologies and artificial intelligence by 2025. In the master plan, China has called on private tech giants like Huawei Technologies Co. to lay fifth generation (5G) wireless networks, install cameras and sensors, and develop artificial intelligence (AI) software that will underpin autonomous driving to automated factories and mass surveillance. The new infrastructure initiative is expected to drive mainly local giants from Alibaba and Huawei to SenseTime Group Ltd. at the expense of US companies. As “technology nationalism” mounts in the US and China, the investment drive will help the Chinese companies attain self-sufficiency as part of objectives set forth in the “Made in China 2025” program. Such Chinese initiatives have already drawn fierce criticism from the Trump administration.
Coronavirus and Escalating Tensions
The spread of coronavirus in the US has turned into a domestic and factional subject for achieving objectives in the presidential election. Trump alleges that Beijing will spare no effort to make him lose the election, and has also claimed that his election rival, Joe Biden, will be the suitable option for China. Trump’s purpose in raising such allegations is to slander his rival and accuse him of working with a country that has spread the coronavirus in the world, to the extent that Trump has even threatened to sever all US relations with China.
The coronavirus crisis in China broke out amid China’s economic and strategic competition and worked as an escalation factor that increasingly harmed US-China relations. The coronavirus pandemic has so far taken more than 120,000 lives in the US and has infected around 2.2 million people. A survey shows that around 70 percent of American people view China as the source of the crisis. A number of individuals and institutions in the US, Australia, Germany and the UK have been trying to sue and demand compensation from China for concealing the extent of the coronavirus outbreak. The Western move to claim compensation, which has gone through legal procedures in some countries, could become a source of long-running tension in the relations between the West and China. A number of countries and companies have even devised practical plans to remove supply chains from China. Japan is more insistent on this initiative.
As the US is moving closer to election and the results of mishandling of coronavirus in the US have become clearer, Trump has intensified punitive measures against China to point the finger at China in a blame game. The US has organized domestic and foreign actions against China. In the international relations sphere, disagreement between China and the US at the UN Security Council prevented the formulation of a global action in the fight against coronavirus.
According to the Phase 1 of a trade agreement that was signed by Trump on January 15, China will be purchasing $52.4 billion in liquefied natural gas, crude oil, refined products, and coal within the next two years. However, tensions between the two countries have heightened after the Chinese government passed new national security legislation for Hong Kong. The White House said it no longer considers Hong Kong autonomous from China, but would treat Hong Kong as a Chinese city. The new move will jeopardize Hong Kong’s special trade and economic status with the US. As a result, the US senators said they have plans to introduce a bill to impose new sanctions on China. The US lawmakers have also mounted pressure on China over its treatment of ethnic and religious minorities and censorship of information about the coronavirus outbreak.
As China is opening up its $45 trillion financial market to international actors, a body advising the US Congress has warned of growing risks for American investment in China’s market, including the plans of US financial firms such as “JPMorgan Chase & Co” and “Goldman Sachs Group Inc.” for expanding their activities in China. The US Senate has also passed a bill that would limit the ability of Chinese companies to raise capital from US investors.
The US administration is also weighing plans to prohibit federal pension fund from investing in China. The US Commerce Department has also added 33 Chinese firms and institutions, many of them focusing on artificial intelligence and facial recognition, to an economic blacklist, accusing them of assisting in the suppression of China’s minority Muslim Uighur population. The US Department of Commerce would also blacklist nine Chinese institutions for “human rights violation” and announced the impending addition of the People’s Republic of China’s Ministry of Public Security’s “Institute of Forensic Science” and eight other Chinese companies to the “Entity List”.
Iran’s Position
In conclusion, it should be acknowledged that the full-blown rivalry between the US and China could give Iran an opportunity to fulfill its interests in spite of the unilateral sanctions. A series of Chinese officials somehow believe that Iran considers China the “other alternative”, meaning that Iran does not pay attention to China as long as it has good political and economic relations with Europe, but it begins to hold a strategic view of China only when it is disappointed with the West. Therefore, the Chinese are doubtful about the future developments in relations with Iran. The Minister of Foreign Affairs of Iran paid a visit to China to submit an official memo to Chinese authorities, focusing on long-term strategic, technological and economic cooperation for 25 years. This could help give the Chinese government an assurance that Iran has a long-term strategy for cooperation with China.
China’s image in the public eye has been damaged, but China is trying to improve its image by adopting an active public diplomacy and sending free masks and medical items to the countries worldwide. The reciprocal assistance and aids from the Chinese and Iranian people and governments amid the coronavirus crisis have improved conditions for cooperation between the two countries and have opened a new chapter in mutual cooperation.
This is a perfect opportunity for Iran to expand its ties with China, particularly in the field of medical and strategic cooperation and oil barter schemes. Under such circumstances, Iran should raise the level of relations with China to gain stronger political and economic leverage in the existing challenges of dealing with the West.
(The opinions expressed are those of the authors and do not purport to reflect the opinions or views of the IPIS)