Laura He, CNN

The United States is not seeking to decouple from China’s economy or hold it back, Commerce Secretary Gina Raimondo told senior Chinese economic officials Tuesday in Beijing.

“The US-China commercial relationship is one of the most globally consequential, and managing that relationship responsibly is critical to both our nations and indeed to the whole world,” Raimondo told a group of officials, including Vice Premier He Lifeng, during her second day of meetings in the country.

“And while we will, never of course compromise in protecting our national security, I want to be clear that we do not seek to decouple or to hold China’s economy back,” she said.

Hours later, when she met with Chinese Premier Li Qiang, Raimondo emphasized that point.

“President Biden asked me to come here to convey the message that we do not seek to decouple,” she told Li. “We seek to maintain our $700 billion dollar commercial relationship with China.”

The Chinese premier said he hoped the two countries can strengthen communication and maintain the health of US-China economic relations.

“Only through dialogue can we understand each other’s concerns, find common ground and increase the possibility of cooperation,” he said.

“Economic and trade relations are the ballast for sino-US relations,” he added. “A well-maintained economic and trade relationship is beneficial to both [our] countries and the whole world.”

“We hope that commercial relationship can provide stability for the overall relationship,” Raimondo said in reply to Li.

She also said the United States hoped to work with China on other areas of concern, such as climate change, artificial intelligence as well as America’s fentanyl crisis.

‘Rational’ practices

Vice Premier He, the head of China’s powerful economic planning agency, noted earlier that Chinese President Xi Jinping and US President Joe Biden met in Bali last November where they had reached an important consensus for the development of bilateral relations.

He said that he hoped the United States will work with China to “adopt rational and practical practices” and put the leaders’ recommendations into practice. He added that he was ready to work with Raimondo.

Earlier Tuesday, Raimondo had met with Culture and Tourism Minister Hu Heping. The two agreed to advance “people to people ties” through increased tourism as well as educational and student exchanges, according to Raimondo.

The commerce secretary’s visit to China, the fourth by a Biden official in three months, comes as the two sides seek to stabilize rocky relations. Her visit also coincides with a worsening slowdown in the world’s second largest economy.

China’s growth forecasts have been downgraded by economists as exports and foreign investment slump, a real estate crisis deepens and worries spread about its general financial health.

From Beijing’s perspective, Raimondo’s department has played a key role in a number of areas, including restricting semiconductor exports, that have been the source of mounting friction.

On Monday, Raimondo said it was “profoundly important” that the US and China have a stable economic relationship. She added that the majority of US-China trade did not impact national security concerns, and it was possible to promote and protect US trade and security at the same time.

After her Monday meetings, the United States announced that the two sides would establish new channels of communication for economic issues, including a working group composed of officials and businesses from both countries and a mechanism to exchange information on US export control enforcement.

Graham Kanwit

Whether China is a developing or developed nation has long been a source of debate among researchers and China experts — especially as China has risen to become the world’s second largest economy and a global manufacturing powerhouse.

At the recent summit of the BRICS countries (Brazil, Russia, India, China and South Africa) in Johannesburg, Chinese leader Xi Jinping said “China has been and will always remain a member of [the] developing countries.”

However, in Washington, lawmakers in Congress have introduced legislation requiring the U.S. administration to use its influence in international organizations to strip China of its status as a developing nation.

The debate may sound academic, but it has real-world implications. The benefits that come with the developing nation label include preferential tariff treatment from developed countries, making their exports more competitive in international markets. China also uses its developing status to justify subsidies to industries such as fishing and tech, even when many are effectively state-owned and have global impact.

The development status of a country is determined in different ways by different international organizations. The World Trade Organization, for example, allows countries to self-identify as “developing” or “developed.”

Other international organizations like the World Bank and International Monetary Fund employ a variety of metrics to measure a country’s standard of living, using indicators such as average national income per person, gross national income (GNI) per capita, life expectancy, and education measures.

Weifeng Zhong, a senior research fellow at George Mason’s Mercatus Institute, tells VOA these are different ways of trying to measure the same thing.

“I think it comes down to, on a per capita level — meaning per person — how high the income is, so when the national income per person in a country is high enough, we think of them as developed country rather than developing country,” Zhong said.

How China is classified

Beijing classifies itself as a “developing” country in the WTO. However, the World Bank and U.N. Development Program classify China as an “upper middle income” country, while the IMF calls the country an “emerging and developing economy.”

Analysts say China is unique in ways that make it defy easy classification.

“You have a country that has many of the traits of a developing nation and has historically qualified as one and technically in many ways still qualifies as one, but has also many of the attributes of a rich advanced economy and in some ways a massive rich advanced economy,” Philippe Benoit, director of research at Global Infrastructure Analytics and Sustainability 2050, told VOA.

China also defies classification on another commonly used indicator – energy consumption. “For structural reasons, energy demand, energy use in China is going to increase for a number of years until they achieve a level of development, a level of income per capita that allows them to flatten that,” Benoit said.

China’s burgeoning energy needs have spurred the state to seek resources in poorer developing countries.

But China often behaves like a developed nation internationally, some analysts say. Many developing countries, particularly Latin America, Africa, and Central Asia, rely on China for development assistance and infrastructure funding.

Benoit calls China a “hybrid superpower.” He said its global power projection approximates that of a traditional superpower and it displays developed country traits such as its major investments in tech and high speed rail . It also has highly developed cities such as Beijing and Shanghai.

But he adds, China also has developing country traits, such as the persistence of poverty in many areas of the country. In 2019, the International Energy Agency (IEA) found more than 35% of the population in China still lacked clean cooking technology and relied on highly polluting fuels such as coal.

“What we mean when we say developing is a country that faces significant poverty issues — where there’s inadequate access to water, sanitation, transport, education — countries where the standards of living are basically, as a general proposition, unacceptably low,” Benoit said.

Robert Ross, professor of political science at Boston College and associate at the John King Fairbank Center for Chinese Studies at Harvard University, told VOA the developing nation classification no longer matches economic realities given China’s reduction of extreme poverty and its status as the second largest economy and the world’s largest manufacturer.

“Many Chinese people acknowledge ‘it makes no sense to treat us as a developing country,’ and they will acknowledge that it undermines both the interests of the developing world and gives them unfair advantages in the American domestic economy,” Ross said.

US-China relations

The question of China’s development status has added to Washington and Beijing’s strained relationship. In March, the U.S. House of Representatives unanimously passed a bill called the PRC Is Not a Developing Country Act.

On June 8, the U.S. Senate Foreign Relations Committee also approved the bill, now retitled the Ending China’s Developing Nation Status Act. It calls on the State Department to “take actions to stop China from being classified as a developing nation by international organizations.” No date has been set for the full Senate to vote on the bill.

In response to the Foreign Relations Committee’s approval of the act, Wang Wenbin, spokesman for China’s Ministry of Foreign Affairs, accused the U.S. of attempting to sabotage China’s development.

“China’s status as the world’s largest developing country is rooted in facts and international law. It’s not something that can easily be wiped away by a U.S. Congressional bill,” Wenbin said at a June 9 press conference. He added, “It’s not up to the U.S. to decide whether China is a developing country.”

Ross said China’s development status “is not a very important question,” but rather a political issue between two competing superpowers.

“China is resisting American efforts to improve American competitiveness against China, and so with that, the United States has a trade war and a tech war to undermine China’s economic development and its technological development. For China’s part — it’s the part that’s competing with the United States — it’s going to use every instrument available to improve its own position.”

With many developing nations benefiting from Chinese investments and trade, Ross said these countries are unlikely to endorse efforts by the U.S. to change China’s development status, especially since they see this issue as a political war of words between the two superpowers.

(Source: VOA News)

Nouriel Roubini

The US and China remain on a collision course. The new cold war between them may eventually turn hot over the issue of Taiwan. The “Thucydides trap” – in which a rising power seems destined to clash with an incumbent hegemon – looms ominously. But a serious escalation of Sino-American tensions, let alone a war, can still be avoided, sparing the world the cataclysmic consequences that would inevitably follow.

There will always be at least some tensions when a rising power challenges the prevailing global power. But China is facing off against the US at a moment when America’s relative power may be weakening, and when it is committed to preventing its own strategic decline. Both sides are thus becoming increasingly paranoid about the other’s intentions, and confrontation has mostly supplanted healthy competition and cooperation. Both sides are partly to blame.

Under Xi Jinping, China has become more authoritarian and moved further toward state capitalism, rather than adhering to Deng Xiaoping’s concept of “reform and opening up.” Moreover, Deng’s maxim, “hide your strength and bide your time”, has given way to military assertiveness.

With China pursuing an increasingly aggressive foreign policy, territorial disputes between it and several Asian neighbors have worsened. China has sought to control the East and South China Seas, and it has become increasingly impatient to “reunify” with Taiwan by any means necessary.

But Xi has accused the US of pursuing its own aggressive strategy of “comprehensive containment, encirclement and suppression.” On the other hand, many in the US fear that China may challenge US strategic hegemony in Asia – a decisive factor in the region’s relative peace, prosperity and progress since the second world war.

Chinese leaders also fear the US is no longer committed to the “One China” principle that has underpinned Sino-American relations for half a century. Not only has the US become less “strategically ambiguous” on the question of whether it would defend Taiwan; it has also fanned Chinese fears of containment by reinforcing its Indo-Pacific alliances through the Aukus (Australia, the UK and the US) pact, the Quad (Australia, India, Japan and the US) and an Asian pivot by Nato.

A first step toward preventing a collision is recognising that some of the reigning concerns are excessive. For example, US anxiety about China’s economic rise is reminiscent of its attitude towards the rise of Germany and Japan decades ago. After all, China has significant economic problems that could cut its potential growth to only 3%-4% a year, far below the 10% annual growth rate that it achieved over the past few decades. China has an ageing population and sky-high youth unemployment; high debt levels in both the private and public sectors; falling private investment as a result of intimidation by the ruling party; and a commitment to state capitalism that hampers total factor productivity growth.

Moreover, Chinese domestic consumption has weakened, owing to deepening economic uncertainty and the lack of a broad social safety net. With deflation setting in, China now must worry about Japanification: a long period of lost growth. Like so many emerging markets, it could ultimately end up in the “middle-income trap,” rather than reaching high-income status and becoming the world’s largest economy.

While the US may have overestimated China’s potential rise, it also may have underestimated its own lead in many of the industries and technologies of the future: artificial intelligence, machine learning, semiconductors, quantum computing, robotics and automation, and new energy sources such as nuclear fusion. China has invested significantly in some of these areas under its “Made in China 2025” programme, but its goal of achieving near-term dominance in 10 industries of the future now seems far-fetched.

American fears about China dominating Asia are also excessive. China is surrounded by almost 20 countries, many of which are strategic rivals or “frenemies” – most of the few allies it does have, such as North Korea, are a drain on its resources. While its belt and road initiative was supposed to make new friends and dependencies, it is encountering many challenges, including massive failed projects (white elephants) that are leading to debt defaults. As much as China wants to dominate the global south and its international “swing states”, many middle powers are resisting and countering this ambition.

The US has rightly imposed some sanctions to keep key technologies out of the Chinese military’s hands and to frustrate China’s quest for dominance in AI. But it must be careful to limit its strategy to one of derisking, rather than decoupling, apart from some necessary technological decoupling and limits to direct investment in China and the US. As it determines which sectors to include in its “small yard and high fence” approach, it must avoid going too far. The trade sanctions that Donald Trump imposed on China applied to a vast range of consumer goods, and should be mostly phased out.

On Taiwan, the US and China should try to reach a new understanding to defuse today’s dangerous escalation. Joe Biden should clearly reaffirm the One China principle and realign his public commitments and statements with the principle of “strategic ambiguity.” The US should sell Taiwan the weapons it needs to defend itself, but not at a pace or scale that could provoke China to invade the island before its “porcupine” defence advances too far. The US should also state clearly that it opposes any Taiwanese move toward formal independence, and it should avoid high-level visits with the country’s leaders.

China, for its part, should stop its air and naval incursions near Taiwan. It should state clearly that eventual reunification will be strictly peaceful and mutually agreed; it should take new steps to improve cross-strait relations; and it should defuse tensions with other neighbours on territorial disputes.

China and the US need to pursue policies that will reduce economic and geopolitical tensions and foster healthy cooperation on global issues such as climate change and AI regulation. If they fail to achieve a new understanding on the issues driving their current confrontation, they will eventually collide. That would lead inexorably to a military confrontation that would destroy the world economy, and which could even escalate to an unconventional (nuclear) conflict. The high stakes demand strategic restraint from both sides.

(Source: The Guardian)

Meryl Sebastian

India and China have agreed to de-escalate tensions along their disputed border after a conversation between its leaders, a senior Indian official said.

Prime Minister Narendra Modi and President Xi Jinping spoke on the sidelines of the Brics summit in South Africa on Wednesday.

Beijing said the meeting was held at Mr Modi’s request.

Relations between India and China have been worsening for more than three years.

The two world powers are facing off against each other along their ill-defined 3,440km (2,100-mile)-long border – known as the Line of Actual Control (LAC) – in the Himalayan region.

Mr Xi and Mr Modi met on the sidelines of the Brics summit in Johannesburg. The Brics countries – Brazil, Russia, India, China and South Africa – are often seen as a counterweight to the Western-led world.

On Thursday, Indian Foreign Secretary Vinay Kwatra said that both sides had agreed to step up efforts for the disengagement of troops along the LAC.

“The Prime Minister underlined that maintenance of peace and tranquility in the border areas and observing and respecting the LAC are essential for the normalisation of the India-China relationship,” Mr Kwatra said.

“In this regard, the two leaders agreed to direct their relevant officials to intensify efforts at expeditious disengagement and de-escalation,” he added.

China’s Foreign Ministry said in a statement that the two leaders had “a candid and in-depth exchange of views on current China-India relations and other questions of shared interest”.

“President Xi stressed that improving China-India relations serves the common interests of the two countries and peoples, and is also conducive to peace, stability and development of the world and the region,” the statement said.

It also added: “The two sides should bear in mind the overall interests of their bilateral relations and handle properly the border issue so as to jointly safeguard peace and tranquility in the border region.”

According to The Indian Express newspaper, no interpreters or note-takers were around when the two leaders spoke to each other.

Mr Xi and Mr Modi last spoke on the sidelines of the G20 summit in 2022.

Mr Xi is expected to arrive in India for the G20 summit hosted by Delhi on 9 and 10 September.

(Source: BBC News)