From a trade imbalance to technology competition, a range of economic flashpoints are fueling tensions between Washington and Beijing — and they’re among the areas on which both Republicans and Democrats can agree.
What lies behind these concerns?
US debt
Republicans in particular are worried about this issue, worried that China has too much American debt.
The fear is that Beijing could use it to pressure Washington by threatening to resell its bonds, reducing the value of the holdings.
While the US debt exceeds $34 trillion, only about $8 trillion is held abroad.
China is a major holder of US debt, with $816 billion and just over $1 trillion when Hong Kong is included, according to Treasury Department data.
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But it is the second-largest foreign holder behind Japan — which holds $1.1 trillion — and ahead of Britain.
Technical race
US President Joe Biden has focused on the technology, highlighting its importance in ensuring national security.
Whether it’s semiconductors, artificial intelligence or electric vehicles, Washington is seeking to stay ahead of or catch up with Beijing in a number of areas — including preventing advanced tools from falling into the hands of the Chinese military.
A major target during former President Donald Trump’s tenure was telecoms giant Huawei, which the United States has tried to keep out of its 5G networks and those of allies.
Restrictions have increased under the Joe Biden administration, particularly on cutting-edge semiconductors essential to the development of artificial intelligence.
The goal, Commerce Secretary Gina Raimondo said in October, is to limit Chinese access to advanced chips that could power innovations in artificial intelligence and sophisticated computers critical to military applications.
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In critical minerals, of which Beijing has abundant supplies, Washington is also seeking to sidestep China.
Trade
While China is no longer the top source from which the United States imports goods, the perceived trade imbalance between the world’s two largest economies remains a concern.
Trump’s tariffs on Chinese goods and efforts to secure a trade-balancing deal have failed to turn the tide, and the Biden administration has largely maintained the levies while continuing efforts for “friendly support” — or diversifying supply chains between allies and partners.
There seems to be some impact with US-China trade growing less quickly, although a deeper look shows that some Chinese goods are simply being routed through other countries.
Currency war?
The issue of exchange rates and the use of currency for political and commercial purposes was also a recurring issue.
For years, Washington has accused Beijing of keeping the yuan at a deliberately lower rate against the dollar in order to boost exports.
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In November, the US Treasury highlighted China’s “lack of transparency” in its exchange rate mechanism, saying it warranted monitoring.
Concern now centers on the internationalization of the yuan, with the Chinese currency still barely present in trade.
As of the end of 2023, less than 3.5 percent of payments through the SWIFT international electronic transfer system were made in yuan — compared with nearly 19 percent in euros and more than 50 percent in dollars.
China wants the yuan to strengthen, especially in trade, as a hedge against possible US sanctions. Beijing, in turn, believes that Washington is weaponizing the dollar.
Source: AFP