Gain insight on how the Covid-19 pandemic affects the rocky relationship between US and China, Donald Trump and Xi Jinping. And, find out how this affects Malaysia.
The Covid-19 pandemic has given more fuel to the blame game between China and the United States (US). Just few months ago, US and China signed a “Phase One” trade deal and declared a cease fire on their 18-month trade war. Previously, the conflict was the biggest threat to the global economy before the pandemic occurred.
A survey in March by American think tank Pew Research Centre showed that roughly two-thirds of Americans held an unfavorable view of China, the worst rating for the country since the polls began in 2005.
The survey, which polled 1,000 people, found that cyber attacks, the US trade deficit, military rivalry, and human rights violations were the issues Americans most associated with China.
How has and will the volatile relationship between these two giants affect the global economy?
#1. Tense International Relations
US President, Donald Trump at a recent press conference said that US intelligence officials are investigating the origins of Covid-19 in Wuhan, China. There will be a consequences if China was found to be “knowingly responsible” for the outbreak that has now killed more than 200,000 people around the world.
Both US President Donald Trump and US Secretary of State Mike Pompeo say they have seen evidence that the new coronavirus could have spread from a laboratory in the Chinese city of Wuhan.
However, China has dismissed the claims as “groundless”, and the World Health Organization says it has received no evidence to back them up. Other Western governments have called for an independent investigation into the origins of the virus, an idea supported by the European Union.
According to Ken Jarret, a senior adviser at consulting firm Albright Stonebridge Group and a former president of the American Chamber of Commerce in Shanghai, deepening distrust and antagonism on both sides might be “the true casualty” of the coronavirus pandemic.
“I do fear this will get worse in the months ahead because, as the cost of this calamity becomes more apparent to Americans, it will be a natural inclination to try to blame somebody for this,” he said in the chamber-hosted China Voices podcast on April 7.
#2. Trump Pushing to Change Dependency of US Supply Chains from China
During early February, when the virus was spreading fast and lockdown was enforced extensively across cities in China, US companies worried that the Chinese lockdown would affect production of industrial goods. China’s industrial production fell in January and February as Beijing scrambled to contain the outbreak.
Almost 95% of Fortune 1,000 companies have first or second tier suppliers in China, with most of these suppliers located near Wuhan, the epicenter of the outbreak.
The Trump administration is pushing for an initiative to change the global industrial supply chains from China to elsewhere as it weighs new tariffs to punish Beijing for their handling of the pandemic outbreak.
Keith Krach, undersecretary for Economic Growth, Energy and the Environment at the US State Department told Reuters that they’ve been working to reduce the reliance of US supply chains in China
Dan Wang, an analyst at Gavekal Dragonomics, said the power conflict between the US and China would change economic structures.
“Given that the US and China are more openly adopting a mindset of great power competition, it is becoming increasingly risky for companies to depend too much on either country as links in their supply chains,” he said.
In the latest move, the US Senate on May 20th, 2020 approved legislation that may see Chinese companies listed on US stock exchanges such as Alibaba Group and Baidu being delisted.
China and US best chance to improve their relations is to work out strategies to improve their economy and dependency on one another. Stopping the blame game and reassessing their current situation will help improve relationships. US-China tensions continue to affect Malaysia as a smaller country especially in terms of Malaysian exports. China and US are Malaysia’s 1st and 5th most important trading partner respectively. Malaysia looks to be welcoming Chinese diplomacy and gifts from China during the pandemic, with China acknowledging Malaysia’s support when China was fighting the pandemic and China Global Television Network (CGTN) naming Malaysian Health Director-General Noor Hisham Abdullah as one of the world’s top doctors in the fight against Covid-19.
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What other impact arises from US-China volatile relationships post-pandemic? Share with us in a comment below.