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Market Digest Nigeria

Politics

US,China are in a deeper Global power struggle driven by Coronavirus

When United States President Donald Trump took the podium at the White House briefing room one afternoon last week, his prepared remarks included a reference to the “coronavirus”.

But a close-up photograph revealed that Mr Trump had used one of his signature Sharpies to cross out the word “corona”, changing the phrase to “Chinese virus”.

Mr Trump was scathing as he accused Beijing of concealing the outbreak first detected in Wuhan that has become a pandemic now paralysing the United States. “Certainly, the world is paying a big price for what they did,” he said. And the next day, he was joined at a White House briefing by Secretary of State Mike Pompeo, who accused China’s government of distorting vital health data and said its response “creates risk to people all around the world”.

The withering criticism is an abrupt change in tone for a president who has long sought to stay on friendly terms with his Chinese counterpart, Mr Xi Jinping, and who initially praised Mr Xi’s government for “doing a very professional job” against the epidemic. But as Mr Trump and top US officials toughen their condemnations of Mr Xi’s government, national security and public health experts fear that the two world powers are heading into a new Cold War that could seriously undermine joint efforts to quash the virus and salvage the global economy. Even some health officials in the Trump administration have warned that denouncing China’s government could make it more resistant to sharing accurate data about the virus.

China has shared the genome sequence of the virus, and Chinese scientists have written many public papers on the virus, even if officials initially covered it up. China also has the power to interfere with medical supply chains into the US, and its economic policies are crucial to the wider global economy. Professor Eswar Prasad, a China expert and professor of trade policy at Cornell University, called the new hostility “dispiriting”.

“The US-China relationship has deteriorated to a new post-Tiananmen low at a particularly unfortunate time, when the two countries ought to be joining forces to limit the ravages wrought by the pandemic on public health, economic activity and financial markets,” he said. Ms Kelly Magsamen, a former diplomat and deputy assistant secretary of defence for Asian and Pacific affairs during the Obama administration, added that “a posture of competition” undercuts efforts to contain the virus.

“Rather than China bashing just for the sake of China bashing, we need to be working together to get this under control,” she said. But China hawks see the pandemic as a chance to spotlight what they call the sinister nature of China’s Communist Party, turn international opinion against it and combat its anti-American conspiracy theories.

“It is obvious from the facts that there is an information hot war and an economic hot war that we’re currently in,” said Mr Steve Bannon, a former Trump White House strategist and leading conservative critic of the Chinese Communist Party. China’s government, Mr Bannon added, “has proven to the world they’re an existential threat to the Chinese people and to the world, not just the United States”.

Mr Bannon in effect speaks for the many senior Trump administration officials who have long pressed for a more confrontational posture toward Beijing. These officials warn that a fast-growing China, under Mr Xi’s increasingly authoritarian rule, seeks military, economic and technological domination over the US and its allies. They include Mr Pompeo, a hardliner who employs the term “Wuhan virus” despite widespread criticism of that phrase, which incenses Chinese leaders. Mr Pompeo has condemned Beijing for suppressing initial reports about the illness, including by local doctors whom the government reprimanded for posting about it on social media.

Another influential hawk is Mr Matthew Pottinger, Mr Trump’s deputy national security adviser and the main architect of strategic policy on China in the White House. Mr Pottinger is a former Wall Street Journal reporter who covered China, including its 2003 Sars crisis, and chronicled government efforts to suppress information about that epidemic. He has publicly recounted being “punched in the face” by “a government goon” while reporting on corruption in Beijing.

And in an appearance at the Heritage Foundation this month, Mr Trump’s national security adviser Robert O’Brien focused his commentary about the virus on what he called China’s culpability for its ferocious spread, saying “this outbreak in Wuhan was covered up”.

But some of Mr Trump’s economic advisers, including Treasury Secretary Steven Mnuchin and Mr Larry Kudlow, director of the National Economic Council, believe that antagonising China over strategic issues threatens economic cooperation that is required in an interconnected global economy in which China holds many of the cards.

The hardened messaging from Washington has infuriated China’s government, whose officials and news outlets have fired back, accusing the US of an attempt to deflect blame offshore – and even of producing the virus: This month, a Chinese Foreign Ministry spokesman pushed a conspiracy theory online that the US Army might have taken the virus to Wuhan. China also has significant leverage over global health supplies. US officials have criticised China for buying up a vast portion of the global supply of medical masks, and called for bringing the supply chains that produce pharmaceuticals, medical devices and protective gear back to the US.

“President Trump is in a very difficult situation, because he still needs the cooperation of the CCP on many things – not just on the economy but on this virus,” Mr Bannon said, referring to the Chinese Communist Party. “We are still coupled.”

Mr Trump seemed to acknowledge as much last Friday (March 20), when he couched some of his earlier criticism of China’s government. “I respect China and I respect President Xi,” Mr Trump said, calling the Chinese leader – with whom he has spent months trying to negotiate a comprehensive trade agreement – “a friend of mine”.

Mr Trump officials are also gauging the effect of the coronavirus and a related spike in tensions on their trade talks. Chinese and US officials have not publicly said whether China will be able to meet a commitment it made under an interim trade pact in January to purchase US$200 billion (S$291 billion) in American goods over the next two years, but widespread economic disruptions make that appear unlikely. The current friction is as much about political rhetoric and national pride as it is about economics, however. Senior administration officials are outraged over China’s propaganda campaign playing up its efforts at sending medical supplies around the world – a clear attempt to whitewash the party’s reputation both at home and abroad after a bungled response to the outbreak, US officials say.

The officials also say the US might have been able to help contain the virus had China not initially refused to admit international experts, including ones from the Centres for Disease Control and Prevention, into Wuhan. Chinese interference “probably cost the world community two months to respond”, Mr O’Brien said last month. Mr Geng Shuang, a Chinese Foreign Ministry spokesman, rejected such talk. “Their claims of China lacking openness and transparency are simply fact-distorting,” he said last Friday.

straitstimes

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