Trading insults in the New Cold War dividing China and the US

Technology, trade and the Covid-19 pandemic illustrate the challenges facing the two super powers

Forged in the furnace of World War II, the United Nations is still gripped in big power politics even during the 75th-anniversary celebrations.

US President Donald Trump told the UN General Assembly earlier this week that China must be held accountable for having “unleashed” the Covid-19 “plague” on the world.

China’s UN Ambassador Zhang Jun retaliated by branding Trump’s claims, which were made in a pre-recorded address, as “lies.”

His boss President Xi Jinping was slightly more subtle. He made it clear that “China had no intention of fighting a Cold War or a hot war with any country,” in a thinly disguised verbal broadside at the United States.

“No country has the right to dominate global affairs, control the destiny of others, or keep advantages in development all to itself … bully or boss the world,” he told the UN General Assembly in a pre-recorded video.

Human rights

Still, a New Cold War exists as Xi’s ruling Communist Party tramples over human rights in Xinjiang Province, Hong Kong and Inner Mongolia, as well as militarizing the South and East China Seas.

A blur between China’s state-owned and private companies has also stoked the flames of a trade row between Beijing and Washington, which has boiled over into a technological battle of wills.

Earlier this week, a report released by the Columbia University and Boston College underlined the impact of massive state subsidies across an array of industries in China, and the impact on American businesses.

The academic study revealed that for every 100 factories that opened in China, 12.5 US plants in the same sector were closed.

“The key findings support the concern that US firms are displaced by China’s manufacturing prowess, not just in ‘sunset’ industries [old technology] which the US was happy to retreat, but also in industries that both countries are eager to lead, in a race that has been significantly shaped by the Chinese government,” the report, entitled A Race to Lead: How Chinese Government Interventions Shape the Sino-US Production Competition, stated.

Moreover, this tilting of a “level playing field,” looks certain to continue and accelerate in the near future.

Cash injection

Already the Xi administration was committed to investing US$1.4 trillion in the technology industry as outlined by the “Made in China 2025” policy.

But on Wednesday, the state-controlled National Development and Reform Commission announced plans for another massive government cash injection into core tech sectors such as 5G, artificial intelligence, or AI, and semiconductors.

Before the announcement, UN Secretary-General Antonio Guterres warned that the world was “moving in a very dangerous direction” amid deteriorating diplomatic relations between Beijing and Washington.

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“We must do everything to avoid a new Cold War. Our world cannot afford a future where the two largest economies split the globe in a Great Fracture,” he said.

“A technological and economic divide risks inevitably turning into a geo-strategic and military divide. We must avoid this at all costs,” Guterres added.

The only problem with his statement is that China and the US are simply not listening.