Recent events
China and the USA have a long history in which they have consistently competed with each other politically and economically. USA has been at the top of the world since coming out of the world war 2 as an undesputed champion. USA has controlled the financial market, the trade market, and the economy of the whole world through the power of the dollar. On the other hand, China has also shown massive growth in its economy, technology, and the power of its currency in recent decades. They are competing with the USA in every aspect, especially with the trade market. In the 1970s and 1980s, the USA was the main trader of the whole world and almost controlled trade for every country. But in recent decades, China has improved its trade market so much that it has now overtaken the USA in control of the trade market.
Recently, Xi Jinping and Donald Trump met. They spoke warmly and agreed to many agreements with each other. But Rana Foroohar, in the Financial Times, argues that this also shows the weakness of the relationship between the nations. They dealt with some agreements like soybeans and other kinds of small agreements, and this will not end the long-term conflict between China and the USA.
What is the China and USA conflict about?
USA as a Superpower
China and the USA are two big superpower nations in the world right now. There are no other competitors to these two nations but Russia. Russia is also a big superpower nation led by Putin, but they are not as economically strong as these two nations are. China and the USA were not always in conflict as they are today. When the USA became a superpower after the world war 2, it was economically strong, had big military power, and was the first nuclear country in the world.
So there was no competition for the USA in that era. USA used its power and made its currency the dollar, the world’s trade currency. It gave the USA the power to control the trade of the world. To trade anything, every country needs dollar, and the dollar was the currency of the USA, so automatically, the US dollar became the powerful currency of the world.
In later years, the European Union also tried to make the euro the global trade currency, but it did not become as powerful as US dollar. USA at the time had control over the five structures that Susan Strange describes in her book. The trade structure, the production structure, the finance structure, the security structure, and the technology structure. So, to become a hegemon of the whole world, the USA had all these structures controlled under it.
The emergence of China
China, on the other hand, was a poor economic country in the 1900s. It started developing in the late 20th century when it started from the basics. China tried to start with the production structure. It started producing raw materials, then small industrial products, then large industrial products. On the other hand, it also started to develop its technological advancement as well on the side. China was a communist conceptual country running capitalism on the side as well.
They opened their market for investment, and many of the rich people started to invest in technology, heavy machinery, and many other things. It also produced cheap products and traded them with other countries as well. That helped the country to have control over the trade structure as well. Now, China has become a nuclear power as well and has made its military strong as well.
Now, China and the USA both became superpowers; they also started having conflicts with each other over production and the trade market as well. China also attempts to trade in its own currency to reduce the power of the dollar on the production function. This is what the USA is made about. Trump also tried to reduce this factor and started a tariff war with China. In that, Trump also put tariffs on the countries that were trading with China. All this was a result of a fear that the USA felt. Fear of losing the power of being a hegemon for more than half a century.
Consequences of the conflict:
The China-USA conflict has a major impact on the world as well. They both control the trade system of the whole world. Every country in the world has trade relations with China and the USA. The China-USA conflict has a huge impact on the world economy, and if the conflict escalates, it can divide the world into two blocs. Every country that is trading with China will be banned by the USA, and every country trading with the USA will be banned by China. This conflict can go to even worse results. They both (China and the USA) are nuclear countries, and both can cause the whole world to suffer if they go to war with each other.
For now, these two countries’ leaders ( Trump and Xi Jinping) have been in small agreements with each other. These agreements were just some deals on a surface level, but deep down there is still conflict. Let’s hope there will not be any war for now, and that these two giant countries come to a settlement with each other.
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