Sino-US tension: Know how the world trade system was divided into two poles

Sino-US tension: Know how the world trade system was divided into two poles

Los Angeles. (The Conversation) China has reacted strongly to the visit of US House of Representatives Speaker Nancy Pelosi to Taiwan. In response to Pelosi's visit, China conducted military exercises around Taiwan for three days and announced that it would continue to do so. Apart from this, it has decided to withdraw from the ongoing important talks with the US on many issues including climate change. This strong reaction was natural. Earlier, President Xi Jinping warned President Joe Biden not to play with fire.

Naturally, had Pelosi not traveled, the Biden administration would have faced strong backlash from both the Democratic and Republican parties in parliament. The Biden administration would have been accused of bowing to China's threat to Taiwan, not speaking up on human rights issues related to Tibet and Xinjiang, and not mentioning Hong Kong. In such a situation, the question arises how have the relations between the two leading powerful countries of the world been, and at what level is the trade at present? To find the answer to this question, we have to go through the pages of history.

The United States sided with the Republic of China against Japan during World War II, which took place between 1941 and 1945. When China's leadership fled to Taiwan in 1949 after the victory of the Communists led by Mao Zedong in the civil war in China, the US still believed that the government in exile was China's legitimate government. The US blocked the People's Republic of China (PRC) from joining the United Nations. However, there was a change in America's position on present China in 1972 when US President Richard Nixon visited China to isolate the Soviet Union.

With Nixon's visit, the US recognized the PRC as the sole government of China and also accepted the One China doctrine. The US, undermining its ties with Taiwan, gave them a mere informal look. The US advocated a peaceful settlement of the communists' claim that Taiwan was a splinter province of China, to be reunited with the mainland. After this trade also started between America and China. The US lifted the trade embargo on China in 1940. Economic relations between the two countries improved in 1980 under Mao's successor Deng Xiaoping, which helped China's economy to flourish, while the US also benefited from it. Western manufacturing companies either hired Chinese companies or set up their factories in China.

They benefited from cheap production. In return, the Chinese acquired tremendous manufacturing capacity. As China's middle class grew wealthier, the country became a major consumer market for American companies such as Apple and GM. But with this, the competition between the two countries to dominate the world economy also started. Between 1980 and 2020, China and the US accounted for more than half of the world's GDP. America's GDP grew five-fold, from US$4.4 trillion to $20.9 trillion.

On the other hand, China's GDP increased from $ 310 billion to US$ 14.7 trillion. In recent years, there has been a conflict between the US and China on many issues, which has also affected the trade between them. US President Donald Trump imposed additional tariffs on imported goods from China in 2018 and restricted China's access to various semi-automatic manufacturing technologies in 2020, even as China retaliated.

Trump also blamed China for the spread of Kovid-19 and demanded it takes responsibility for it. The relations between the US and China have seen a lot of sourness during the Trump regime. When President Biden took office in 2021, he began speaking on long-standing complaints about human rights issues in Xinjiang and the threat to Taiwan. He also imposed restrictions on some Chinese companies that had never been seen since the Mao-era trade embargo. Biden also banned goods coming from the province in 2022, accusing China of engaging in bonded labor in Xinjiang province, affecting purchases of goods by many Western companies.

After this, China reportedly moved workers to other parts of the country so that Western companies could continue shopping. In such a situation, the trade relations between the two countries came closer after the year 1980, due to issues like Taiwan, Xinjiang, Covid-19, and human rights, there gradually a rift. Therefore, the relationship between the two countries is expected to deteriorate further in the coming time.

(with language input)