The post-crisis China

China has been using the cover of the COVID-19 crisis to pursue politically controversial economic deals, such as a Chinese-financed Belgrade-Budapest railway plan that was smuggled through Hungary’s legislature as a part of its COVID-19 emergency package. Similarly, Huawei has been loudly making the case for why the crisis justifies an even faster 5G rollout. And in the United Kingdom, a Chinese state-owned venture-capital fund recently tried to take control of one of the country’s top chipmakers, Imagination Technologies.

As a diverse and dynamic region of 650 million people on China’s doorstep, Southeast Asia has been emerging as a hotbed of strategic competition between China and the United States. Although the pandemic does not appear to be reshaping the regional order in fundamental ways, it could well accelerate preexisting trends and bolster China’s position. A key near-term variable is the sequencing of economic recovery. If China recovers faster from the outbreak, it could reinforce its already advantaged economic position, advance its strategic goals as a result, and undercut U.S. efforts to compete with Beijing in the region. But China could also face resistance and pushback, as it is currently encountering in Europe, if its regional diplomacy becomes increasingly hostage to nationalistic impulses and rhetoric.

[T]he share of China in US trade has fallen sharply from 2018. Figure 3 provides some of the most recent data, suggesting that by March 2020, only 10 per cent of US merchandise imports came from China, which accounted for less than one-fifth of the US merchandise trade deficit.

[T]he rivalry between China and the United States in the twenty-first century holds an uncanny resemblance to the one between Germany and Great Britain in the nineteenth. Both rivalries take place amidst the emergence of economic globalization and explosive technological innovation. Both feature a rising autocracy with a state-protected economic system challenging an established democracy with a free-market economic system. And both rivalries feature countries enmeshed in profound interdependence wielding tariff threats, standard-setting, technology theft, financial power, and infrastructure investment for advantage. Indeed, for these very reasons, the Anglo-German duel can serve as a useful guide for policymakers seeking to understand the dynamics of the emerging Sino-American competition—as well as the strategies and tactics likely to be employed and the risks and dangers likely to be incurred.