US-China Watch
With the world in flux as never before, macroeconomic insight and analysis is always at risk of chasing a moving target. That is especially the case when it comes to the US-China conflict, driven by the oft unpredictable crosscurrents between the world’s two largest economies and their ambitious geostrategic aspirations. Through the combination of blogging and tracking the rapidly shifting news flow, the weekly updates below will attempt to keep you abreast of the latest developments on the US-China watch.
On Thanksgiving
For me, Thanksgiving is always a time of appreciation—not just for family and food but also for the deeper issues afflicting all of us. With the world in turmoil, that latter point is an especially tough task today. But a few minutes ago, the first tranche of hostages was released by Hamas and Israel. That single development, in conjunction with a pause in military activities in Gaza, is something we can all be very thankful for.
From my perch as an active participant in the US-China debate, there are mixed sentiments on this Thanksgiving holiday weekend. I am certainly grateful that the US and Chinese presidents met in San Francisco last week. Superpower conflict is not something to take likely, especially with wars raging in Ukraine and Gaza. Global stewardship has been in short supply for all too long. Yet thanks to the deliberate preparation of both sides, the Biden-Xi summit produced progress on military communications, fentanyl, and a presummit agreement on climate talks. Yes, plenty of big issues remain unresolved—especially on trade, economics, and tech—but I was always taught to be thankful for little things.
In that spirit of gratitude, I head back to China next week—my third visit this year and the second trip in six weeks. I continue to be struck by the strident anti-China rhetoric in the United States and a comparable undercurrent of unease in China. As I attempted to argue in Accidental Conflict, I believe that much of the conflict escalation over the past five and a half years is premised on the false narratives that both nations have embraced toward the other. With the confluence of these false narratives the functional equivalent of the high-octane fuel of conflict escalation, the potential sparks of accidental conflict need to be taken very seriously.
The corollary of my argument is that this conflict would not have gotten to such a dangerous point were it not for the misimpressions, the misunderstandings, that the body politics of both nations have embraced. The three-day “Understanding China” conference that I will be participating in next week in Guangzhou couldn’t come at a better time. I am thankful for the opportunity to be a part of this event once again. And I am thankful to all of you, dear readers, for continuing to follow and offer feedback to these dispatches from around the world. Happy Thanksgiving.
China’s Confidence Delusion
There is considerable handwringing over the current malaise of business confidence in China. While there are no hard data that track a precisely calibrated barometer of Chinese business sector sentiment, there is plenty of circumstantial evidence that supports this...
The Phone War
Approximately 6.3 billion people own smartphones, 68% of the world’s population. It is the ultimate consumer appliance—offering interpersonal connectivity, access to the Internet, a platform for a wide range of leisure activities, a revolution in imaging (cameras and...
Diplomacy at the Floor
On November 14, 2022, on the sidelines of the G-20 meeting in Bali, US President Joe Biden and Chinese President Xi Jinping affirmed their mutual desire to put “a floor” under the US-China conflict. That attempt, which was initially derailed by the surveillance...
A Weakened China in Conflict
Conflict is not for the faint of heart. That applies equally to the United States and China as they now mark the sixth year of conflict, the onset of which I date to August 2017 when then President Donald Trump instructed US Trade Representative, Robert Lighthizer, to...
Big Lies and Censorship
This week, there were two telling markers on the road to US-China disinformation—a fourth criminal indictment for America’s 45th president and China’s purging of a sensitive economic statistic. While seemingly unrelated, both developments have one important thing in...
Evergreen Lending with Chinese Characteristics
In my “Lessons of Japan” seminar at Yale, I placed considerable emphasis on the role played by evergreen bank lending as a key feature of the “lost decade” syndrome. The concept was examined carefully in a seminal piece of research by Joe Peek and Eric Rosengren. By...
Stimulating the Chinese Consumer
With China’s economy clearly underperforming, the air in Beijing is rife with talk of stimulus. A July 23 meeting of the Politburo offered some broad guidelines for action, with surprisingly little specificity. Chinese authorities have used a well-worn playbook to...
Palace Intrigue in Beijing
So, what are we to make of the dramatic dismissal of China’s foreign minister? In one sense, the brief July 25 announcement by the Standing Committee of the National People’s Congress—“Qin Gang was removed from the post of foreign minister”—hardly came as a surprise...
Henry Kissinger Meets Li Shangfu
On July 18, Henry Kissinger met with Chinese Defense Minister Li Shangfu in Beijing. This encounter stands in sharp contrast with Minister Li’s refusal to meet with US Defense Secretary, Lloyd Austin, on the sidelines of the Shangri-La Dialogue Security Forum in...
China with Japanese Characteristics
Over seven years ago, there was a stunning article published on the front page of China’s state newspaper, People’s Daily. It took the form of a May 2016 interview with an anonymous “authoritative person,” long rumored (but never confirmed) to have been a high-ranking...