Subsequent developments have shown that neither the US nor China is all powerful by itself in this interdependent world. China’s arrogance displayed during the Covid pandemic about its monopoly of supply chains has resulted in active steps by the US, Canada, European Union, Japan, Australia, India and other countries to create alternatives. In China, the shock created by real-estate collapse and its effects on related major industries such as cement, steel and glass is adding to unemployment. The persistent low domestic consumption means increased export dependence.
The US, for its part, has seen the futility of sanctions on Russia, and China has successfully retaliated against Trump’s tariffs. The Iran war has shown that even a country facing a civil war-like situation because of economic collapse can create trouble for powerful countries.
Trump and Xi, both known for arrogance, are meeting as somewhat chastised leaders of powerful economies. The best outcome the rest of the world expects is that they do not engage in Cold War II, dividing the world into their zones of influence, expecting everyone else to choose sides. More importantly, the US should not repeat Nixon’s misconception – feeding the dragon makes it a bigger threat, not a friendlier partner.
Engagement with China –enriching it by trade – has not created even a semblance of democracy, and has not prevented the likes of the Tienanmen massacre, the Covid lockdowns and the mass deaths that followed their abrupt end. The US will tumble into the same pit again if the industry leaders accompanying Trump once more opt to enhance investment in China, with all its coercive conditions that entails, including forced technology transfer.
Democracies represent a more stable investment environment, unlike China’s lurch with policy flip-flops from Mao to Deng Xiaoping to Xi. The US needs to tilt more towards democracies and away from totalitarian regimes, even when the latter are deemed to be necessary evils.