The reasons why U.S.-China relations have come to where they are today are highly complicated. There are several key stages of evolution in this regard. Here we listed out several basic judgments and possible scenarios:
1. What happened in the U.S.-China trade negotiations is a crucial stage in the two countries' relations now. Ex-U.S. President Donald Trump has completely reversed the attitude of the U.S. towards China, and the American society has also re-examined its relations with China. The next key stage is the Hong Kong issue, which has an obvious impact on both the upper and lower classes of American society, and Taiwan and Singapore are benefitting from it. There has been a gradual evolution of U.S.-China relations, and understanding this gradual aspect is crucial in determining the relationship of the two countries.
2. The tension between China and the United States will not see changes merely with Jose Biden becoming the U.S. President. Such tensions indeed will last for a long time. Trump is still a distraction to American society. A Trumpism without Trump as the President means that conservative views and positions are the core values of the Republicans, and such Trumpism will continue to be a long-term presence in the United States.
3. The United States is unlikely to make an immediate and complete economic decoupling from China, because that would be very costly. It is not just United States; Europe too realized this. Economic issues, however, will be interfered by politics, but it will not determine political outcome.
4. It is estimated that there will be a transition period for the world economy as China fully decouples its economy and politics from the world. The full decoupling of China's economy and politics from the world will take place only after Vietnam, India, ASEAN countries and other countries can basically replace China's industrial supply to the world, and all countries maintain the balance of the supply chain. This process is expected to take about 10 years. Unless major events continue to disrupt the process, such as Taiwan Strait war, India-China war, Diaoyu Islands issue, etc.
5. China is now in the process of decoupling, and domestically this manifests as "dual circulation". If political interference can be avoided, then the dual circulation will be maintained for a longer period of time; but if there is political interference, then the decoupling process will be shortened and the dual circulation will turn into a single circulation. Therefore, if China adopts the strategy of "separating politics from the economy" during this transition period, it will be a great blessing for the Chinese enterprises.
6. The rise of nationalism in China is not a major concern, as it is within the control of the inner circle of Chinese policy. The influence of nationalism exists in every country, and it is often well controlled. However, whether nationalism is in a state of balance is highly important. China's nationalism is not in a state of balance right now. This imbalance may have to do with China's desire to push its targets too fast. The observation that "everything in China is a matter of speed" that ANBOUND mentioned years ago remains true today.
7. Finance and capital are passive in the process of China's decoupling from the rest of the world. They can only accept the condition and focus on the Chinese market, which seems to be determined by the nature of the service industry. In other words, the idea of developing in the Chinese market and using China's prosperity as the leverage for the world's capital is simply unrealistic and obsolete. This change happens in a mere decade because with China's external interests have basically benn wiped out, there is no need for finance and capital; what is needed is policies and plans.
8. The corporate sector has also changed dramatically, ending the era of the free market and ushering in the project market. There is little room for entrepreneurs to make money, but there is still potential in the project market aimed at achieving policy goals.
9. Can Chinese entrepreneurs leave China and make their own way? Not likely, at least for most high-profile entrepreneurs in China. Their level of judgment is not sufficient for them to exist in the world market, otherwise, they would be abroad by now.
10. The impact of science and technology is huge. At present, most of the technology is still imported and digested by different parties, which is less and less likely in the future. There are a few reason of this. First of all, Russia has nothing advanced to introduce to China; secondly the West as the source of future technology has been "closed" to Chinese talent. While there might be some improvements in the future, the space for scientific and technological progress will be greatly narrowed. Therefore, technologically China might be surpassed by other countries such as South Korea and Turkey in the future.
11. Concerning the scope for cooperation between Europe and China, this largely depends on whether China's "separation of politics and economy" can be established. The bottom line for the Europeans is to be able to make money from China, and if they are unable to do so, they will follow in the footsteps of the United States.
A final question is, how likely is the separation of economy and politics to be achieved? The possibility in reality is minimal.
The main issue in China is however, speed. While the reforms that China conducts in its education, property, economy and other aspects are necessary, they are done hastily, and this has caused a number of problems. ANBOUND has long noted that these problems in China are related to its measures being done in excessively high speed. It is crucial to understand this, as it is fundamental to the country's macroeconomic policy and strategic policy regulation.
