Don’t buy into narrative of a US-China clash – or a Chinese economic crash

US dialogue efforts, President Xi Jinping’s warm reception in San Francisco, including from business leaders, and China’s still-impressive economic growth say it all

Bernard Chan

Published: 9:30am, 1 Dec 2023

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We live in an era where conflict can destabilise even the most robust international relations and affect global social and economic development. It has rarely been more important for governments, business leaders and people of influence to promote dialogue for the betterment of humanity and to focus on the significant issues we face.

Amid the narrative fuelling geopolitical tensions between the world’s pre-eminent superpowers, there has been an alarming appetite within media factions to promote a dialogue of imminent conflict.

Thankfully, the first steps have been taken to tone down this rhetoric at the recent Asia-Pacific Economic Cooperation (Apec) Leaders’ meeting.

Chinese President Xi Jinping met US President Joe Biden on the sidelines of the meeting in San Francisco in their first face-to-face exchange in a year. What is apparent to all rational observers is that such direct dialogue facilitates a greater understanding of significant issues or disagreements, and provides a basis for progress and resolution.

This level of engagement is necessary to avoid an unintended potential conflict, which our fragile world cannot afford to have. As Xi said in San Francisco, succinctly: “Planet Earth is big enough for both our countries to succeed.”

It was encouraging to notice the warmth of the greetings. Xi received three standing ovations at a dinner with the business community. This suggests a genuine desire for calm as the international community needs a stable and healthy economic US-China relationship. Xi’s meetings were considered a public relations success, with several agreements reached.

03:47

‘Door to China-US relations will not be closed again’: Xi Jinping offers assurances to US businesses

The United States understands the Asia-Pacific is critical to global stability and growth, and that the Chinese economy has been its driving force. Herein lies the root of the problem: China’s economic expansion and increasing sphere of influence challenge America’s long-standing position as the world’s leading economic power, and is perceived as a threat to many in the US.

Catalysts of China’s impressive progress include the Asian Infrastructure Investment Bank, which focuses on sustainability, innovation and green infrastructure. The China-backed Regional Comprehensive Economic Partnership, meanwhile, is a free-trade agreement among Asia-Pacific nations.

China has also applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) between 12 countries – including Pacific Rim nations – that grew out of the TPP, which the US pulled out of under former president Donald Trump.

Elsewhere, Brics – an association comprising Brazil, Russia, India, China and South Africa – is gaining global influence. Expansion is on the horizon: six more nations have been invited to join, and Pakistan has formally requested membership. And, of course, the Belt and Road Initiative has increased China’s sphere of influence through peaceful relationships.

06:32

China’s Belt and Road, 10 years on

It will be interesting to see how our mutually beneficial coexistence develops in the coming year, particularly with the US presidential election looming. Many expect the rhetoric to become more assertive and hostile from both Democratic and Republican candidates in the lead-up. So, expect a continuation of the negative media coverage for a while longer, despite bilateral trade reaching an all-time high of about US$700 billion last year.

While China faces severe headwinds, some well-informed observers believe many of its fundamental economic measures remain stable.

For instance, Weijian Shan, executive chairman and co-founder of leading alternative investment firm PAG, has said Beijing has sufficient tools to combat the economic slowdown and weak consumer sentiment, notwithstanding a fragile banking sector due to the property market slowdown and concern about local government debt.

A booming US economy and a Chinese crash? Think again

Highly regarded think tank The Conference Board expects China’s economy to grow by 5.2 per cent this year, an enviable level of expansion – especially against its US forecasts of 2.4 per cent growth this year, and just 0.8 per cent next year when a short recession is expected.

Of course, a stable and prudent fiscal policy will be a crucial determinant. Still, China is well positioned to overcome its economic hurdles due to its digitisation, sustainable industrial development and technology.

So, will Hong Kong benefit from a thaw in geopolitical relations? Or will the US and Europe continue to use Hong Kong as a pawn in a broader geopolitical game?

Perhaps common sense will prevail alongside the views of the Global South and a growing awareness elsewhere that Hong Kong will continue to play a critical and strategic role for now under our unique “one country, two systems”.

Bernard Chan is a Hong Kong businessman and former Executive Council convenor