China USA and the push for a new Cold War

The trade war between China and the USA is risking turning into a full-blown crisis as Beijing is accusing the Washington of pushing relations towards a “new cold war”. A public statement by China’s foreign minister, Wang Yi, highlighted the growing tensions between the world’s two largest economies: “It is time for the United States to give up its wishful thinking of changing China and stopping 1,4 billion people in their historic march toward modernisation.”

He added that political attacks on China over the coronavirus and global trade matters “are taking China-US relations hostage and pushing our two countries to the brink of a new cold war”.

The debate over trade has intensified as the economic fallout from the coronavirus pandemic is being felt in Beijing. According to a paper published by the World Economic Forum the value of Chinese exports fell by 17,2% year on year in the first two months of 2020, while imports slowed by 4%. The research evidenced that “major industries have suffered at the hands of Covid-19, with nuclear reactors, electrical machinery and equipment, plastics and organic chemicals among the worst affected.”

The battle over world trade was further complicated by China’s proposed national security legislation for Hong Kong, that could most probably prompt US sanctions, end its special status in bilateral economic relationship and threaten the city’s status as a financial hub.

Thousands of protesters have taken to the streets in opposition of China’s proposed crackdown. Beijing has threatened to allow its secret police and other security services to operate openly in Hong Kong for the first time and to impose new, unspecified restrictions. If this would happen at least eight bureaus of the Ministry of State Security would be directly involved in the intelligence activity concerning the Hong Kong. Should Beijing put such words into action, Secretary of State Mike Pompeo warned that his country would reconsider China’s special trading status.

In the meantime on the mainland millions continue to work from home and people keep their distance in public and at work. Economists predict China’s gross domestic product may shrink by 10% in the first quarter of this year, the worst contraction since 1976. With Europe and the United States wrestling with their own pandemic developments, demand for China’s manufactured goods has collapsed exception made for masks, medical equipment and sanitary supplies. Recurring COVID-19 outbreaks in China would compound the damage.

The Chinese strategy is aimed at buying time until a vaccine will be available. Trials are expected to last at least through the end of this year, while dozens of other vaccine studies are underway around the world.