A New Cold War Brewing Between China and the U.S.?

There’s been a lot of focus on the so-called ‘new trade war’ between China and the United States.
 
But how do Donald Trump and Xi Jinping really view each other?
 
When analyzing international relations, it’s often easy to get caught up in the personal melodrama between leaders of states.
 
Trump seems to hold no punches in his criticisms of China while also professing a “very deep respect” for the country.
 
And despite his frequent accusations that China is cheating in its economic relationship with the U.S., he's also one of the most popular U.S. presidents ever among ordinary Chinese citizens!
 
In fact, media sources said authorities were censoring anything found objectionable, minimizing the potential that an outcry on social media platforms could motivate a backlash against U.S. brands.
 
However, despite what the media might lead you to believe...
 
The rivalry between the U.S. and China didn’t start the day Trump was elected. The rivalry runs much deeper than the whims of whoever is in power.

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If you want to truly understand what is happening between the U.S. and China, look to the source of the rivalry...
 
China has been able to generate major economic surpluses from the trade imbalances it's had with the likes of America.
 
With these surpluses, they have done two things:
 
1. Make plenty of investments in various assets around the world, particularly US Treasuries.
 
2. Expand both their military and infrastructure. This is at the root of the tension we've seen throughout the region.
 
And on the military front, the China-U.S. relationship is a lot more clear-cut... the Eagle and the Dragon are not ‘friends’.
 
The last few years have seen an upsurge in tension in the area.
 
It’s no secret that China’s ambitions to claim practically all of the South China Sea as its own exclusive territory has many of its neighbors experiencing varied shades of anger, fear, and capitulation.

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It’s also provoked some brazen responses from the U.S., which has sought to curtail China’s aggressive attempts at expansion by sailing guided missile cruisers and destroyers within clear view of some of China’s recently-installed military facilities on Woody Island.
 
The island in the Paracel group of islands is China’s largest military outpost in the South China Sea, with more than 1,000 military personnel stationed on it full-time. The island has hosted multi-role fighters, surface-to-air missiles, and anti-ship cruise missiles.
 
The Paracels are a collection of small islands and reefs that the Chinese have fortified with extra land and structures off the coast of Vietnam. They have been hotly-disputed since the 1970s, when the Chinese launched a successful naval assault to take them from the Vietnamese.

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In May, the latest flare-up occurred when China accused the U.S. of a “provocation” when it “breached its sovereignty” by sailing near some of the Paracel islands and docking in Da Nang, Vietnam. This was the first time a U.S. aircraft carrier (USS Carl Vinson pictured above) docked at a Vietnamese port since the end of the Vietnam War in 1975.
 
The United States didn’t directly respond, merely asserting that it was exercising a very normal “freedom of navigation” exercise in international waters.
 
But the message was clear: the U.S. is not going to sit back and watch the Chinese claim the South China Sea as their own sovereign territory. This may have provided some slight relief to other smaller nations in the area, worried about China’s increasingly assertive encroachment.
 
Is there any resolution in sight?
 
It looks like all sides in this dispute are unwilling to give an inch through talks, barring some smaller states which see no choice but to bow to China’s regional might. That might is not only restricted to its military, but to its economic power. Things are calm for now, but can easily heat up if new moves are made.
 
We’ll be keeping a close eye on the South China Sea, making sure we are one step ahead of the game if China decides to make a move that will affect business in the region.

Peter Pham