US-China tariff war to persist: Condoleezza Rice
Former US secretary of state says a bipartisan consensus against its increasingly assertive rival will be lasting impediment to global trade and keep downward pressure on oil prices
Tariff tensions between the US and China—seen as a major factor in the benchmark WTI oil price being range-bound in the $50-65/bl band so far this year—may be prolonged longer than markets anticipate, according to former secretary of state Condoleezza Rice.
The breakdown of the post-war consensus for international free trade—reinforced by the collapse of communism and entry of China into global capitalism—is breaking down and drawing the US into protracted action that will continue to diminish global trade, the George W Bush-era secretary told delegates at the Adipec conference in Abu Dhabi.
There is a “kind of disappointment” with the integration of China into the international economy. “That is creating, in the United States, a bipartisan consensus that we are in for a somewhat conflictual period in US- China relations,” says Rice.
“China is a rising power and how to deal with the relationship with China is actually very complex. [It is] not at all simple, and one of the real challenges for the United States today.”
Technology is the foremost problem. There are increasing reciprocal restrictions on investment in each other’s companies, with the US concerned about intellectual property theft and the sense that “Chinese companies are Chinese national champions [that] are actually privileged over international competition”.
Other issues also suggest that a quick resolution to the trade war will not be forthcoming. China's military modernisation “looks very much as if it is intended to push the United States out of the Asia-Pacific”.
Populism and nationalism
The challenges to the US-led world order are not confined to China, with the re-emergence of Russia on the world stage, from Syria to Venezuela.
“It perhaps caught the United States a bit off guard because, after all, the Russian economy, on a good day, depending on the price of oil, is somewhere the size of the Netherlands,” says Rice. Russia’s disruptive capability “including the interference in the American election” is “to this day the major issue of division in the United States”, she adds.
“China is a rising power and how to deal with the relationship with China is actually very complex"
An additional, but related, trend is the global rise in populism and isolationism. “For some people, globalisation has not worked,” she says, citing discontent from West Virginian coal miners to unemployed steelworkers in northern England. But, despite the challenges to the international system, Rice was “optimistic” that the recent trend can be reversed—as the fallout is economically damaging for all sides.
She called on leaders, for example, to refrain from cyber-attacks on each other’s infrastructure. “This should be something about which we should be able to agree,” she says.
“And we should be able to agree that all countries need to find an answer to the three [challenges] of economic growth, energy mix and environmental sustainability. We are going to have our areas of conflict. We also need to emphasise our areas of cooperation.”