Oriental Review — Why China Is Confident It Can Withstand US Pressure

Add technology warfare to economic warfare, information warfare, and cyberwarfare in the arsenal of hybrid warfare.

The main battle between the US and China today is for the position of global technology leader. It is believed that the victor on this front will be whichever country provides the best conditions for developing such advanced industries as artificial intelligence and 5G. And these are exactly the Chinese industries that the US is trying to damage by raising tariffs on high-tech Chinese goods and putting Chinese companies on blacklists.

In addition, the US looking at the precedent of a rising Japan, which was forced to submit to the US.

Having learned from Japan’s ordeal, China doesn’t trust the West’s advice and is flatly refusing to open its own financial market. Beijing also has a number of advantages that we Russians believe will prevent the country from repeating Japan’s unfortunate experience.

First, the yuan is not as integrated into the global financial system as the yen had been. China is not bound by any international financial obligations as Japan had been with the Plaza Accord, so Beijing is less dependent on Washington and can negotiate on an equal footing, as well as take independent steps.

Second, China has an enormous domestic market with one and a half billion consumers. Despite America’s tangible impact, the market is coping well with the pressure. The Chinese government is placing great emphasis on developing domestic demand and consumption in order to build a “moderately prosperous society” by 2021.

Third, the Chinese economy itself is considerably stronger than the Japanese economy had been at the peak of its development. If we compare the volume of Japanese exports in 1982 with China’s exports in 2016 in real prices (base year – 1970), it works out as $63.3 billion and $1.186 billion respectively. China is also banking on cutting-edge technologies. Today, China’s top exports are expensive high-tech products: broadcasting equipment, computers, office equipment, integrated circuits and telephones.

This "trade war" involving US sanctions in addition to tariffs could benefit China in the same way that Russia benefited from it by import substitution, development of the domestic market, and re-industrialization to replace imported technology. It could also drive China and Russia closer, since Russia has the natural resources and technological expertise that China needs, while China as the factories.

Oriental Review
Why China Is Confident It Can Withstand US Pressure