U.S.-China trade relations: Q&A with Stratfor’s Rodger Baker on potential U.S. sanctions

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MetalMiner had the opportunity today to interview respected geopolitical intelligence firm Stratfor, acquired earlier this year by RANE (Risk Assistance Network + Exchange) and quiz Rodger Baker, Stratfor’s senior VP of strategic analysis, on forthcoming sanctions against China.

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MetalMiner: We have seen the White House vacillate between overreaction and underreaction in all policy areas. How do you see reaction to the latest crackdown in Hong Kong? Many believe President Donald Trump isn’t interested in political freedoms and is unlikely to do more than issue threats. 

Roger Baker: Despite the warnings in May, and China’s acceleration of the HK national security law, the U.S. response has remained largely muted, with visa restrictions and dual use restrictions fall far short of the May threats, and of the total arsenal of tools the U.S. could draw from. Inside the administration and the government, there continue to be differing priorities on China, with the president focused in the near term on the trade deal, Congress focused on human rights, and multiple elements concentrating on the strategic balance and technology competition. This often leaves U.S. responses looking uncoordinated and even at times contradictory. 

MM: What do you see as the flash points for trade tensions between the U.S. and China? Have the cards not already been played?

RB: Many of the flash points have already been identified, from U.S. attacks on Chinese technology companies and supply chains to questions on China’s ability (or willingness) to fulfill the purchase commitments of the Phase 1 trade deal. September and October is the next big soy buying season, and that is rather close to the U.S. elections, so China’s decisions to accelerate or curtail purchases at that time will be a critical test of the trade dynamic and will likely be based on China’s assessment of the likely path of the U.S. election. 

MM: Last year, markets moved significantly in relation to developments in trade but seem to have become somewhat inured to talk of trade wars this year. What is on the horizon that could change that?

RB: The markets may have factored in the politics of the trade war and the frequent gap between statements and actions. The challenge for the markets will be balancing the trade uncertainty with the economic impact of extended business lockdowns due to COVID, and the likely wave of business closings and long-term debt problems. 

MM: Where would you say U.S.-China trade policy is going? Presidential election aside, there is a hardening attitude to China in both the Republican and Democrat parties. China seems hell-bent on an imperialistic policy and increasingly confident in pursuing it. What do you see as the end game to the West’s responses?

RB: Overall, U.S. policy toward China has moved from cajoling to confrontation. This crosses the aisle, and it crosses sectors.

While the methods and tools will differ, the recognition of China as a strategic competitor will remain. Meanwhile, China is at a dangerous moment, when the world is beginning to shift its attention to China as a threat, rather than as a management issue. But China does not yet have the holistic strength to balance against a more concerted effort to constrain its expanding regional and global activities. This makes China more likely to be assertive around its periphery to secure a buffer space, while simultaneously seeking to exploit the continued fractures of the West to buy space and time. For China, time may be narrowing, should there be a change in U.S. administrations that begins to heal the rifts and shape a more coherent global strategy. 

Stratfor claims it is the world’s leading geopolitical intelligence platform, bringing valuable context to global events, empowering businesses, governments and individuals to more confidently navigate their way through an increasingly complex international environment. By leveraging a deep understanding of history, politics, and geography in conjunction with its unique methodology, Stratfor claims to deliver informed perspectives on today’s events and develops a more accurate view of the future.

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