China not a threat to US

Cold War Now or Hot War Later

I don’t believe China is a threat to the US, and I would be willing to put money on the line that China-US relations will not deteriorate over the next decade. For decades pundits have been predicting such a conflict–a clash of civilizations of the ‘east vs. west’–to no avail. The evidence suggests otherwise. Rather, China and the US are closer than ever in terms of copying and appropriating each other’s cultures and values, with China copying America’s consumerist and capitalist culture and America copying/emulating China’s proclivity for central planning and statism (as the recent shutdowns and massive stimulus programs have shown). The media and pundits generally have a terrible track record of predicting this sort of stuff. If someone says ‘so and so going to be a crisis or lead to war’ there is a very high likelihood it won’t.

Unlike the USSR, China is heavily invested in the US, such as treasuries, businesses, and real estate. Although there was trade between the USSR and the US, China and the US are considerably more economically codependent, especially China, in which the US accounts for about 1/5 of China’s exports. “In 2017, China exported goods worth $431 million to the USA out of total export value of $2.2 trillion. That amounts to almost exactly 19% of all Chinese exports. [1]

As discussed earlier, fears over intellectual property theft are also probably overblown. The risk of some theft is offset by American companies having access to a massive market of potential consumers. Having 100+ million potential customers for the latest iPhone or latest blockbuster, is worth the possible risk of theft. In spite of decades of trade with China, it’s not like China has ever been able to copy an iPhone or produce blockbusters that rival that of Hollywood. This is because a company such as Microsoft, Nike, Disney, or Apple is more than just its intellectual property, but also its infrastructure and network, which cannot be copied. These pundits who whine about IP theft, their views are at odds with the actual companies, that are willing to accept some risk of theft in exchange for access to China’s vast consumer market.

Biden being president is possibly bigger threat to diplomatic and trade relations than Trump. Although Trump is portrayed by the media as being anti-China, Biden has promised to hold Xi Jinping accountable for the pandemic. Interestingly, Trump has resisted publicly blaming or condemning China besides intimating on a couple occasions that the virus may have originated from a Chinese lab. Trump and his economic team implicitly understand that regardless of whose fault the virus is or where it originated from, that sowing unnecessary discord with a major trade partner such as China will hinder an already weakened economy.