US-China Relations – What’s Next In This Wicked Game In 2020?
The agreement between the United States and China on the first phase of the trade transaction was a long-awaited event, but, it was won back, so it provided rather restrained support for quotations. The turnover in US-China relations entailed the trading on the exchanges of mainland China opened with growth in the main indexes.
So, the Shanghai Composite – an indicator of the situation on the Shanghai Stock Exchange – at the opening rose 0.18% to 3095.73 points. The main indicator of business activity on the Shenzhen trading platform grew by 0.13% to 10986.65 points.
- Growth was also observed outside the PRC. In the green zone, the ASX 200 is growing at 0.6% and KOSPI added 0.26%.
Economics previously wrote, the United States and China signed an agreement on the first part of a trade deal. Celestial Empire has committed itself to the purchase of American goods for more than $ 200 billion, and a quarter of this volume, as our portal has already noted, is energy.
Where will countries continue to compete with each other?
The worldwide tension for economic rule and control is unfolding in the US-China relations, struggling for the Arctic and Indian ocean regions, which could be the next mark in confrontation after the trade war, the South China Morning Post inform.
Two years ago, China included the Arctic in its One Belt – One Way trade and infrastructure initiative, which aims to connect the countries of Europe, Asia, Middle East and Africa, with a network of ports, roads, airports, pipelines, and other infrastructure projects.
In 2018 Celestial Empire released the China’s Arctic Policy, a document that sets out as the One Belt – One Way initiative applies to the Arctic. As it is signed at the document, China intends to stimulate developers to create infrastructure lengthways the Arctic itineraries and motivate its navigation enterprises to conduct test flights throughout the sea. Transport itineraries will widen, so China will contribute to economic and public advancement. The paper emits that China has common interests with other the Arctic states.
However, Washington is wary of Beijing’s ambitions and the possibility of turning Chinese trade and science projects into a security risk, SCMP notes. Then, US-China relations do not get better, even after signing trade agreements.
China set its sights on the Arctic
The US opposed China’s status as a subarctic country and accused Russia of aggression in the Arctic China is an important partner of Russia in the development of the Northern Sea Route In May 2019, U.S. Secretary of State Mike Pompeo opposed China’s status as a subarctic country.
He said that China’s recent actions have raised doubts about its intentions. Pompeo told representatives of the Arctic Council that Beijing calls itself a subarctic country. But the shortest distance between China and the Arctic is about 900 nautical Miles. There are only arctic and non-arctic countries. There are no other countries, he said. Pompeo consider that this is part of a well known scheme. Beijing is trying to develop critical infrastructure using Chinese money, Chinese companies and Chinese workers – in some cases, to ensure the continued presence of Chinese security forces,” said Pompeo.
The offer of US President Donald Trump to buy Greenland in August was perceived by some as related to these concerns. This happened after the Chinese state corporation China Communications Construction withdrew its application for the construction of two airports in the autonomous territory of Denmark, where the US Air Force base is located.
- Meanwhile, the key to success for China is cooperation with the Arctic countries, said Gao Tianming from Harbin University of Engineering in northeast China.
The progress of the economical passage in the Arctic requires large-scale formation and rebuilding of infrastructure lengthwise, the whole itinerary from Iceland and Greenland in the West to Chukotka in the east to. He explained that in such a circumstances, the future building of the passage and China’s stance in the lead depend on the alacrity of the Nordic states and Russia to greet the contribution of China.
Meanwhile, Russia welcomed Chinese investment, as Western sanctions have limited access to capital and technology, and the strengthening of diplomatic relations requires a more accommodating attitude towards Beijing’s Arctic aspirations.
UN warns of trade war threat to global economy
In UN report to the annual meeting of world leaders in Davos, the UN expressed concern that trade tensions could act as a drag on economic growth, with detrimental consequences for sustainable development.
The UN said that the trade conflict between the US and China slowed economic growth in 2019 to a minimum in a decade, and it is likely that a re-escalation of the conflict, financial turmoil, or aggravation of geopolitical tensions could undermine recovery this year.
Although the first-phase deal significantly reduces tensions, it will not put an end to the trade war between the two largest economies in the world. US duties on Chinese imports worth $ 370 billion are still in force. In addition, the parties are likely to discuss more complex issues, including Chinese subsidies to state-owned companies and industrial policy, in negotiations on a second-phase deal.
Although the easing of trade tension should help accelerate global GDP growth to about 2.5% this year from a 10-year low of 2.3% in 2019, the likelihood of a relapse is high, the UN warned. Failure to keep risks under control will mean that GDP growth in 2020 will slow to about 1.8%, which will have negative consequences for government efforts to achieve sustainable development goals.
Antoniu Guterres, UN Secretary General said, that these risks can cause serious and long-term damage to development prospects. They also threaten to stimulate the further rise of policies focused on domestic needs, at a time when global cooperation is paramount.
According to UN forecasts, US GDP growth will slow down from 2.2% in 2019 to 1.7% in 2020. A decrease in business confidence after a long trade conflict in US-China relations , as well as a weakening effect of tax cuts, will slow down the growth of the world’s largest economy.
- The growth of China’s economy, the second largest in the world, is expected to slow to about 6% this year compared to 6.1% in 2019.
Economic growth in the EU is projected to remain relatively weak compared to previous years amid declining manufacturing output. GDP growth is expected to accelerate slightly from 1.4% in 2019 to 1.6% in 2020.