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No end in sight to the US-China confrontation

Dang Yuan
July 24, 2020

The closure of the US consulate in Chengdu is the latest development that spotlights the rising tensions between Beijing and Washington. Here's an overview of all the points of contention.

US-China conflict
Image: imago images/B. Trotzki

After the US ordered China to close its consulate in Houston, Beijing retaliated by ordering Washington to close its consulate in Chengdu, in Sichuan province.

In a speech on Thursday, US Secretary of State Mike Pompeo accused China of "tyranny" and called on the "free world" to confront the threat posed by Beijing.

"The US and China cannot ignore the fundamental ideological differences between our countries," he said.

It is the latest escalation in a confrontation that has intensified since Donald Trump became US president, but whose origins lie way before Trump's presidency.

Read more: US orders China to shut consulate in Houston, Texas

A bitter trade row

After his election in 2016, Trump announced his intention to reduce the US' trade deficit with China. The US' imports of goods from China far outweigh its exports to the Asian country. In 2018, Trump slapped punitive tariffs on imports from China, citing a 1974 trade law. The reason given was that Beijing had failed to sufficiently protect intellectual property rights and therefore violated the interests of US firms.

The punitive measures threatened, and in some cases implemented, covered bilateral commerce worth $50 billion (€43 billion), and this figure is expected to rise to $500 billion in the next few years.

China has decried the US measures as protectionist. Every time a new round of US tariffs came into force, China retaliated by slapping duties on American goods. While Washington let its trade policy guided by Trump's "America first" motto, Beijing presented itself as a champion of open world trade and globalization.

Read more: Sieren's China: Expensive damages - US-China trade dispute

At the end of 2018, after a meeting with China's President Xi Jinping on the sidelines of the G20 summit in Argentina, Trump struck a conciliatory tone. Both leaders then agreed to give a pause to their trade dispute and give negotiators three months to hash out a deal.

It took until January 2020 for both sides to ink a partial trade agreement. Under the deal, China agreed to increase imports of industrial and agricultural products from the US. Since then, things have been a bit quieter on this front.

High-tech dispute

Over the past several years, China's high-tech firms have come under increased scrutiny of US regulators. This is particularly the case with telecom suppliers. In April 2018, the US Department of Commerce imposed a seven-year ban on the supply of semiconductors and other high-tech components to the Chinese company ZTE. The reasoning behind the ban: the company's violation of US sanctions on Iran and North Korea. The technology group, which is listed on the Hong Kong stock exchange, had to admit in an ad hoc announcement in May that it could no longer maintain operations due to the ban, as ZTE depends on high-tech components from the US for its products. In July, ZTE paid $1.4 billion to have the ban on supply lifted.

The US used the same argument against the telecom supplier Huawei. In May 2019, Washington added Huawei and 68 companies affiliated with Huawei to the so-called "Entity list," which makes trade in US products subject to approval.

An outcome of this decision is that consumers will not receive security updates for Google applications on their Huawei phones. Even more significant for the company, Washington has been exerting massive pressure on foreign governments and companies to stop Huawei from playing a role in the expansion of 5G networks abroad.

Meng Wanzhou, Huawei's chief financial officer and the daughter of the company's founder Ren Zhengfei, has been under house arrest in Canada since December 2018. Meng was then detained by Canadian police in Vancouver on request from the US.

Huawei is alleged to have illegally sold US equipment to Iran. A Canadian court will decide on Meng's extradition to the US. Following Meng's detention, China arrested two Canadians under charges of espionage, although Beijing has denied that the arrests are in retaliation to Canada's treatment of Meng.

Corona crisis

The outbreak of the COVID-19 pandemic, the first cases of which were detected in the Chinese city of Wuhan, gave Trump and his coterie of hardliners another reason to criticize China.

Washington accused Beijing of not being forthcoming when it comes to sharing important information about the novel coronavirus with the international community, especially the World Health Organization (WHO).

China has denied all accusations and rejected "politicization" of a scientific question about the origin of the virus. While the United States announced its withdrawal from the WHO, China increased its contributions to the UN body, which primarily supports countries with weak health systems in coping with the health challenges.

Read more: Is the US-China rivalry tangling a coronavirus vaccine with geopolitics?

South China Sea

Even before Trump's presidency, China had massively expanded its presence in the South China Sea, a key maritime trade route where China has overlapping territorial claims with countries like Vietnam and the Philippines.

Beijing claims that it is building artificial islands there to "provide humanitarian aid in the event of a disaster."

On the artificial islands, military installations like radar stations, runways and hangars have been built and rockets stationed, satellite imagery shows. Even if this is initially at the expense of the directly affected neighboring countries such as Vietnam and the Philippines, the US sees itself as challenged by China's actions and maritime expansion.

With the so-called freedom of navigation sorties, in which the US sends its warships through the disputed waters, Washington has demonstrated that it rejects the Chinese claims. Most recently, Secretary of State Pompeo rejected the so-called "nine-dash line" in the South China Sea, which is officially regarded by China as a border, and described China's claims as "illegal."

Hong Kong Security Act

On July 1, Beijing's security law for Hong Kong came into effect. The law criminalizes separatist activities and foreign interference in the Chinese special administrative region.

It is criticized in the West and by pro-democracy forces as spelling an end to Hong Kong's autonomy, guaranteed by Beijing under the "one country, two systems" framework.

The US responded by slapping sanctions. In mid-July, Trump signed into law a measure to punish individuals and institutions that "wipe out Hong Kong's freedom." It foresees the freezing of US assets of officials involved and a ban on their entry to the US.

Trump also revoked the preferential trade treatment Hong Kong enjoyed with the US. The city is now being treated as part of China when it comes to customs duties and visas. Beijing, for its part, has reacted with entry bans for certain US politicians and is threatening to impose visa restrictions.

In June, a US law condemning China's oppression against the Uighur Muslim minority in Xinjiang province also came into force. The legislation imposed sanctions on a number of Chinese officials, including a member of the Communist Party's politburo.

The US and China have also imposed visa restrictions on each other in the dispute over Tibet. Beijing has announced that it will take measures against US citizens who "misbehave" on the Tibet issue.

The Taiwan question

Tensions between Taiwan and the mainland also have an impact on China-US ties. Washington has committed itself to helping Taiwan in the event of a military threat from the People's Republic.

That is why it supplies armaments, which regularly draws angry rebukes from Beijing.

About two weeks ago, the US government gave the green light for the modernization of the Patriot air defense system in Taiwan, worth $620 million. The arms manufacturer Lockheed Martin is the main defense contractor in the deal, and Beijing threatened with sanctions. According to the nationalist newspaper Global Times, China could stop supplying Lockheed Martin with rare earths, of which China is the largest producer.

Read more: US to sell tanks, missiles to Taiwan amid tensions with Beijing