The wars the US are not winning with China: trade and diplomacy

Written by: (Contributed) on 25 June 2024

(Above: Ahmoot Iranian Flickr.com)

The recent state visit by China's Prime Minister Li Qiang to Australia took place under intense media scrutiny. The media coverage, nevertheless, was highly misleading, as was intended. The US-led trade war with China, for example, was not openly discussed yet remained the main factor behind the high-level Australia-China diplomacy.

Australia is a sub-imperial power with regional responsibilities thrust upon it by Washington and the Pentagon. The diplomatic relationship has proved problematic: and the US is clearly losing the trade war with China; their aggressive imperial foreign policy has seriously backfired.

In mid-June China's PM, Li Qiang, arrived in Australia, greeted by a nineteen-gun salute and full honour guard. The greeted was not out of place, taking into account the agendas of the high-level diplomacy scheduled to take place. While the contents of the agendas have remained confidential, it is not particularly difficult to establish what was going on behind the pomp and ceremony.

The legacy of the previous Trump presidential administration and its US-led Cold War trade war with China hangs like a millstone around the necks of western political leaders. Like most of the foreign policy of the Trump administration, it was established with an air of buffoonery and difficult to take seriously. And it has not worked; in fact, China's economy has continued to surge ahead, leaving the US and its allies behind and in a quandary.

Longer-term the US GDP growth rates, measured from 1960 to 2022 reveal a general decline, largely as a result of Washington and the Pentagon pursuing endless foreign policy adventures without costing the debacles accurately. Studies of US diplomatic involvement and their general intrusion into the sovereignty of numerous other areas of the world, reveal a general trend:

US GDP GROWTH RATES, 1960-2022

1962 - 6.10 %
2019 - 2.29 %
2020 - -2.77 %
2021 - 5.95 %
2022 - 1.94 % (1)

Studies of US allies, including Australia, reveal similar trends due to accompanying US foreign and diplomatic policies elsewhere, across the globe:

AUSTRALIAN ECONOMY, GDP

1963 - 6.22 %
2020 - -.0.33%

2021 - 2.11 %

2022 - 4.2 % (2)

2023 - 1.9 %
2024 - 1.8 % (projection) (3)

China's economy, however, has continued to surge ahead; in 2023 China had about 14 per cent of global exports, up 1.3 per cent from 2017, when the US-led trade war began. (4) China's trade surplus, likewise, is estimated at about $823 billion, nearly double the 2017 estimates; trade surplus is defined when exports exceed imports. (5)

In May, as an act of desperation, US Treasury Secretary, Janet Yellen, requested the EU to follow the US-led line of imposing tariffs upon Chinese trade and goods. (6) It was accompanied by an official diplomatic statement from the Biden presidential administration noting, 'Washington … sees European support as a critical way to isolate Beijing on the global stage'. (7) And they have tried very hard to implement the policy.

China, however, in recent years has shifted attention away from advanced, industrial countries toward the Global South. It has become the 'crucial economic partner for many emerging economies' and has been accompanied by numerous diplomatic initiatives. (8)

China's trade with ASEAN, for example, grew 8.1 per cent in the first two months of 2024. (9)

The China-ASEAN economic data also rests upon earlier dynamic trade: using World Bank economic data it can be established that ASEAN member countries have a combined GDP of $3.6 trillion, and that their economies are 'inseparably intertwined' with China. (10) It has also been noted that 'China's surging influence raises concerns, as do US responses, which increase strategic tension and give short shrift to economics and regional prosperity'. (11)

Similar studies have revealed 'China has been selling less to the west and more to South-east Asia and Latin America'. (12) In fact, during the first five months of this year 'China exported seventeen per cent less to the US. In 2023 alone, China's exports to the US dropped fourteen per cent'. (13)

China has also developed trade hubs in recent times, by using countries including Vietnam and Mexico, to reroute trade to include third parties into regions of economic interest. (14)

While US coverage of these developments has been subject to diplomatic silence, due to the sensitivity of the whole matter, forthcoming policies will be interesting to monitor. Under the existing balance of forces, China has successfully challenged the neo-colonial relations between the US and its allies and the emerging economies. The diplomatic implications are far-reaching both in the short and longer-term.

As the US and its allies fail to win the present trade war, military options and real-war scenarios would appear to have become ever more likely.

The high-level diplomacy between Australia and China in June has to be assessed along these lines; the former is a major diplomatic player with the ASEAN and South pacific countries and has therefore been used by Washington to further 'US interests'. There is no reason to think the position allocated to Canberra by the US has changed in any way whatsoever in recent times; the present diplomatic line remains based in damage limitation, with business continuing to be conducted as 'normal'.

It has not been difficult to find examples to support the position: within hours of Li Quiang and his entourage leaving Australia, a Canberra initiative saw an official government delegation including seven senior cabinet ministers conduct high-level diplomatic relations with PNG in Port Moresby. (15) The size and composition of the delegation has shown quite clearly how the US expects Australia to use diplomatic initiatives to serve 'US interests'.

It was accompanied by incoming Solomon Islands Prime Minister Jeremiah Manele being invited to Canberra for high-level diplomatic talks following a rushed meeting in Honiara two weeks after their change of government with Australian deputy PM Richard Marles. (16) Manele, however, is already on record publicising his government's 'Look North' policies whereby the economic future of the country 'depends on China, rather than its traditional partners like Australia'. (17) The policy is not ambiguous.

Coverage of recent regional developments have concluded that 'Australia is at the cross-hairs of this big shift. It is frozen out by Beijing which is also making a power play in Australia's own backyard in the Pacific Islands – that's why the Solomon Islands matters … China has surpassed Australia in terms of two-way trade with Pacific Islands nations'. (18)

In fact, while the recent 'soft diplomacy' between Australia and China has been noted as standing in 'contrast to the deep suspicion in government, and the national security establishment … about China and its long-term threat to Australian interests', it was, in reality, little other than a theatre production designed specifically to serve other earlier agendas in line with 'US interests' in Australia's designated areas of the wider Indo-Pacific region. (19)

We need an independent foreign policy!

1. US GDP Growth Rates, 1960-2022, Macrotrends.
2. Australian GDP Growth Rates, 1960-2024, Macrotrends.
3. Wikipedia: Economy of Australia.
4. Why the US can't win the trade war with China, The Japan Times, 5 June 2024.
5. Ibid.
6. US seeks EU's support in trade war, Australian, 23 May 2024.
7. Ibid.
8. Four key Take-ways emerging from China's trade data, The Diplomat, 26 March 2024.
9. Ibid.
10. Towards and equal partnership, The East Asia Forum, Volume 15, Number 3, September 2023, pp. 3-5.
11. Japan as a diplomatic asset to ASEAN, ibid., pp. 6-8.
12. China's export machine moves on, Australian, 14 June 2024.
13. Ibid.
14. Ibid.
15. Wong takes China fight to PNG, Australian, 20 June 2024.
16. Solomons PM poised for first visit overseas, Australian, 21 June 2024; and, Marles' diplomatic dash to Solomons, Australian, 21 May 2024.
17. PM hails new Solomon Islands leader, Australian, 3 May 2024.
18. As the Solomon Islands heats up, SBS News, 28 November 2021.
19. Beware the Beijing wolf in panda clothing, PM., Australian, 17 June 2024.