The rivalry between the US and China in technology and commerce will not end because Joe Biden is president

Hong Kong (CNN Business) – US President Donald Trump has spent much of his term naming Beijing as Washington’s biggest political and economic opponent. But don’t expect drastic changes when Democrat Joe Biden takes the helm, even if he avoids the bluster and unpredictability of his predecessor.

Economists and trade pundits believe the United States and China will further separate when it comes to trade and technology as Washington continues to examine virtually every aspect of its relationship with the world’s second largest economy.

“We have a fundamental and systematic rivalry between these two systems,” said Alex Capri, researcher with the Hinrich Foundation and principal investigator and professor at the National University of Singapore. “In many ways, that rivalry will escalate.”

Fundamental tensions

This year highlighted the great tensions and lack of trust between the two most powerful nations in the world. Despite reaching a trade deal in January, the US and China still have to resolve several points of economic conflict, including the US allegations that Beijing steals American technology and gives too much preferential treatment to state corporations at the expense of companies. foreigner.

Meanwhile, Washington has become increasingly cautious of Chinese-made technology and whether it could be used to spy on Americans. This fear has led lawmakers, Republicans and Democrats, to view China as a major threat to American national security. Just look at support for sanctions Washington has imposed on tech firm Huawei and the steps US politicians are taking to make it harder for Chinese companies to trade on US exchanges, for example.

The coronavirus has only exacerbated these differences as China and the US exchange accusations about the initiation and mismanagement of the pandemic. And clashes over Hong Kong and alleged human rights violations in China’s Xinjiang region have widened a political divide that is likely to continue to grow in the years to come.

“Biden has been pretty clear on how he wants to proceed, and there has been bipartisan support for a hard line,” said William Reinsch, a trade expert at the Center for Strategic and International Studies who served for 15 years as president. of the National Council of Foreign Trade. He noted that the Senate may very well remain under Republican control into the new year. The best Democrat can hope for is the narrowest of the Senate majorities.

The president-elect “will be under constant critical pressure from Chinese Republican hawks in Congress to be more aggressive,” Reinsch told CNN Business late last week. “There isn’t much they can do about it in the short term other than complaining, but it will make the atmosphere worse than it already is.”

A change of tone from Biden with China

There will almost certainly be a style change with the Biden administration. Trump is known for being mean: he once said the US could not “continue to allow China to rape our country” and repeatedly referred to COVID-19 as the “Chinese virus”.

“Biden’s tone will be different, he will be much more diplomatic,” said Capri of the Heinrich Foundation. He hopes the new regime will follow the established procedure more closely before slapping China with more tariffs or sanctions. He noted that thousands of American companies have sued the United States for imposing tariffs on Chinese goods, a decision they believe severely damages their businesses.

“Frankly, there was chaos at the Commerce Department during the Trump administration,” Capri added. “Historically, the process has been to consult with the American industry.” (The Trump administration defended its uncompromising approach to China as necessary to correct an unbalanced relationship, and the president told reporters in January that his “phase one” trade deal would create “economic justice” for Americans.) . .

China also seems to be preparing for a less fiery rhetoric.

Putting aside questions about Beijing’s position on the outcome of the US elections, the Chinese government said on Monday it “signaled” that Biden declared victory, while acknowledging that the elections would be determined in accordance with US laws and procedures. . .

“China and the United States should strengthen communication and dialogue,” Chinese Foreign Ministry spokesman Wang Wenbin told reporters on Monday, adding that this desire extends to promoting “healthy and stable” relations.

Chinese bureaucrats and diplomats are divided over whether Biden would be a better US representative to deal with than Trump, according to Ian Bremmer, president and founder of the consulting firm Eurasia Group. China’s “wolf warriors,” diplomats who aggressively defend Beijing and fiercely counter criticism of the country, would probably prefer Trump, as his leadership undermines traditional American alliance partners and provides grounds for equivalence. moral in terms of human rights and unilateralism, Bremmer said last week.

In general, however, “the Chinese don’t want to see the American model implode,” he added. “[Ellos] they realize they are taking advantage of a stable America that continues to play an important role in the global order.

An inevitable result

No matter how Biden talks about US-China relations, the two countries are likely to continue trying to untangle their economies.

JP Morgan analysts wrote last month that a Biden victory would leave the two countries battling over 5G networks, quantum computing, artificial intelligence and biotechnology.

“By competing for dominance in these areas, the US and China have decided to disengage, reduce cooperation, limit technology sharing and even close … trade in some cases,” they wrote.

Capri said China is preparing for a bigger break between the world’s two major economies.

If you are China, you are not doing anything different. In fact, you are doubling down, “he said, adding that he hopes the country will further reduce its dependence on American products. importance of politics.

“It is a huge problem for the Communist Party of China to depend on American technology,” Capri said. “It’s that simple.”

Beijing may also find a Biden administration much more effective in building an international coalition to challenge China on state subsidies, foreign corporate rights, or intellectual property protection. Relations between the United States and the European Union were strained under Trump as the two allies squabbled over trade.

“The lack of a common position among developed countries in recent years is largely due to the current US government’s inclination to ‘go it alone’,” wrote Louis Kuijs, director of Asia Economics at Oxford Economics. , a research note, Monday.

CNN’s Beijing office and Hanna Ziady contributed to this report.