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Is the US-China Trade War the Beginning of a New Cold War?

Some actually believe a full-blown cold war with China is inevitable, that it’s too late to reverse course given China’s global ambitions. Publicly, the trade war is about convincing China to play fair by agreeing to open its markets to American companies. But our spat with the Chinese isn’t really about tariffs or intellectual property. Those grievances are secondary. The real issue is China’s growing political influence and its divergent worldview, which is increasingly seen as an alternative to the U.S. model.

For over two decades, the United States neglected vast areas of the globe, places once deemed strategically valuable but no longer posing a risk to its national security were forgotten. America was too busy fighting wars in the Middle East and the idea that China would embrace democracy still resonated with policymakers. It was a pipe dream and the power vacuum we left behind was quickly filled by the Chinese, who were eager to secure natural resources and new markets for its nascent enterprises.

Much to our chagrin, China made inroads in Latin America, Africa, and both Western and Eastern Europe. They build roads, railways, ports, factories, power stations, etc. Nobody gave a shit because globalization was in full throttle and a lot of people were getting rich doing business with China. Then came the Financial crisis. And while Western governments imposed draconian austerity measures, China was the only country willing to lend money when nobody else would. One example was Portugal, a country the Chinese invested heavily in during the crisis and now play a critical role in its energy and transportation sectors. Similar investments were also made in Bulgaria, Serbia, Greece, Italy, Brazil, the Philippines, and Venezuela to name a few.

But nothing has been as divisive and controversial as Huawei, a company many perceive as a risk to the digital infrastructure of both Europe and the U.S. The Chinese see it as an aggressive form of protectionism meant to undermine their business interests. They also know hardliners in DC see China as a threat to American hegemony. Trump’s crude and abrasive behavior has made that clear and how this plays out will depend on whether or not he is reelected. If Trump and his hardliners prevail, then the relationship is likely to deteriorate further and we will have a Cold War. New lines will be drawn and new alliances will be forged.

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