US-China ties in deep freeze

Manoj Joshi
Distinguished Fellow, Observer Research Foundation

TIES between China and the US seem to be in a free fall. Reports had earlier suggested that President Joe Biden had sought a call with Xi Jinping to alleviate tensions arising out of the balloon incident and the recent announcement on AUKUS. He had expected that the conversation could take place after Xi had been re-elected President by the National People’s Congress which concluded on March 13. But the Chinese are yet to respond. The delay fits a pattern. Efforts by US Secretary of Defence Lloyd Austin to speak to his Chinese counterpart after the US shot down the spy balloon have not been fruitful. That incident had also led to the cancellation of the visit of US Secretary of State Antony Blinken to Beijing.

Many in the US believe that China is preparing for an invasion of Taiwan. If so, the consequences for both countries could be severe.

The Blinken visit was aimed at restoring some normality into their high-level discourse following the Biden-Xi meeting at the sidelines of the G20 meet in Bali last November.

A hallmark of rising tension are Xi’s recent remarks that have, unusually, named the US. ‘Western countries led by the United States have contained and suppressed us in an all-round way, which has brought unprecedented severe challenges to our development,’ he has said. China has been reeling from the impact of a slowing economy that resulted in just 3 per cent growth in 2022, the second worst annual growth rate in nearly half a century. The US remains China’s single largest trading partner but China’s exports to the US were down 15 per cent, though its imports increased about 3 per cent.

Many in the US believe that China is preparing for an invasion of Taiwan. If so, the consequences for both countries could be severe. It is not clear whether China has the military capacity to overwhelm the island. It certainly lacks the amphibious and airlift capability for bringing and supporting half a million or more troops needed to subdue the island in short order. For that reason, many suspect that its strategy could be different, focusing on partially blockading the island, cutting off its Internet links and invading it as a last resort. But this risks a counter blockade by the US.

Such blockades would lead to the US being denied key imports, especially Active Pharmaceutical Ingredients (APIs) used to make medicines, especially antibiotics. But the Chinese would themselves be affected as they import 20 per cent of their antibiotics from the US. The American consumer electronics sector, too, would have a major problem and China is also a crucial supplier for such components as lithium-ion batteries for cell phones and electric vehicles. There would be an impact, too, in areas like apparel, furniture, machinery, automobiles, telecom equipment.

But the consequences for China could be nothing short of catastrophic. First, China remains reliant on importing oil and natural gas, and second, it needs to import vast quantities of food. Some of the oil and gas vulnerability is reduced by the pipelines between China and suppliers in Russia and Central Asia. But even then, some 80 per cent of China’s imported oil transits through the Indian Ocean.

But its real vulnerability is in the area of food. As author Edward Luttwak has pointed out, it is the world’s largest importer of chicken, mutton, beef and dairy products, as well as animal feed in the form of soyabean, maize, wheat and sorghum. Despite tensions, it is today the US’s largest agricultural export market.

In 2020, China imported over 2 million tonnes of beef, mainly from Brazil and Argentina; it imported 20 million tonnes of corn mainly from the US and Ukraine; 4.5 million tonnes of pork from various sources, including the US; 8 million tonnes of wheat mainly from the US, Canada and France; in addition some 100 million tonnes of soyabean as feed; and it also imports over 8 million tonnes of edible oil. As China’s population ages and it urbanises, this vulnerability will only increase. Luttwak also raises the issue of the PLA’s ability to take casualties, given China’s one-child norm.

The Chinese may have the capacity of keeping the US at a distance from the mainland and Taiwan, but they are nowhere near having a navy that can operate under war-like conditions in the rest of the Pacific and Indian Oceans. The US navy remains the most formidable power in the Pacific and Indian Oceans.

At a strategic level, China has been promoting the notion of self-reliance and supply chain resilience for two decades and more. The rest of the world has only caught up following the Covid experience. According to the Australian Strategic Policy Institute, China now leads the world in critical technologies relating to defence, space, robotics, energy, environment, biotechnology, advanced materials and manufacturing, as well as AI and quantum technology.

China is hoping that it will be able to overcome its external and internal challenges by the development of its science and technology with an emphasis on self-reliance. It has rolled out the concept of ‘dual circulation’ which aims at promoting domestic consumption and reducing its reliance on global supply chains. But there is little it can do in the area of agriculture.

In any case, all the self-reliance is for the future. Any war over Taiwan in the next five years would unfold in a different way. For the present, China remains hugely inter-dependent on the rest of the world. Whether it will decide on war is something no one can foretell. The problem, as history has shown us, is that leaders often miscalculate the risks associated with launching a war.