Donald Trump has threatened China with “consequences” if Beijing deliberately allowed the COVID-19 outbreak. the US is preparing to find out during the investigation. This may become an occasion not only to reset the trade agreements reached but also to impose economic sanctions against the PRC. What are the options for hitting Beijing has resources in Washington’s Arsenal, and how can the middle Kingdom respond?
China may face consequences if it is proved that it deliberately allowed an outbreak of a disease caused by a new coronavirus, the US President has threatened Donald Trump. According to him, the Americans are conducting an investigation, and if it turns out that the Chinese “deliberately allowed it”, that is, the outbreak of the coronavirus, then “there must be consequences”, that is, punishment. Prior to the events, Washington’s relationship with Beijing was constructive, trump said. As an example, he cited the conclusion of a trade agreement under which China buys products from American farmers for $ 250 billion. At the same time, Trump does not mention that the US managed to achieve this only after a series of trade attacks on Beijing.
“Am I mad at you?” China? Perhaps, Yes.
But it all depends on whether this (the coronavirus outbreak) was a mistake or was done deliberately,” the US President says.
US Secretary of state Michael Pompeo expects that the Chinese authorities will allow foreign specialists to enter the laboratory in Wuhan.
We must understand that now there is a bright information war between the US and China. A number of American media claim that the” zero patient ” with the coronavirus allegedly turned out to be a certain employee of the laboratory in Wuhan. That is, an unroasted bat or pangolin has nothing to do with it. The virus that went on to kill all over the world could have come from a Chinese lab. Therefore, it is so important, according to trump, to understand whether this was done on purpose or it was still a fatal mistake of some employees.
Before that, in early April, our intelligence suspected China of underestimating data on the virus, and Pompeo has repeatedly publicly accused China of hiding the scale of the problem and of slow information exchange. He recently demanded that China and other countries be more transparent in relation to statistics. Transparency from Peking was also demanded in France and Germany.
Beijing officially refutes all these speculations. The version about artificial creation of the coronavirus is not supported by any evidence, the official representative of the Chinese foreign minister said Zhao lijian April 16. The Chinese Foreign Ministry also refutes the accusations of hiding information, saying that China has maintained an open and responsible position on data about the coronavirus epidemic from the very beginning.
It is possible that such statements by Donald trump are preparing the ground for real punishment of China. In fact, it doesn’t matter if the US has real evidence of Beijing’s deliberate actions in spreading the virus. If Washington wants to, it will decide to blame China even without sufficient evidence. The world’s first economy needs only an excuse to punish its rival
in the geopolitical arena.
The preferred method of punishment in such cases is the imposition of economic sanctions by the States. China may be in the same boat as Russia and Iran.
In this case, it is important for Washington to enlist the support of the European Union so that the Europeans also exclude the Chinese from their economic life.
The shutdown of the Chinese industry due to the virus has already shown many countries that you can not put all your eggs in one basket. The situation revealed the strongest dependence of the rest of the world on the production of components in one country — China. And under the aegis of China’s blame for the coronavirus, sanctions could solve some of the economic problems of Americans and Europeans. For example, you can move some production to the United States or diversify supplies from other countries.
The US intends to strengthen the consciousness of Americans and the world community about the guilt of external forces, primarily China, in the spread of the coronavirus, and China should prepare for an expansion of the economic war on the part of the US, said a member of the State Duma Committee on International Affairs Sergey Zheleznyak.
The claims of the President of the United States to China have many dimensions.
“This may be a desire for justice, there is also a political background. In a little more than six months, a new presidential election will be held, and trump’s advantage over Biden remains small — only 7 percentage points, according to The predicted prediction platform, which can be easily lost. No US President has ever left for a second term during a recession in the economy, ” says Mikhail Kogan, head of analytical research at the Higher school of financial management.
“Sanctions are already a proven tool. It can be used to restrain the recovery of the Chinese economy, which is already gradually moving to normal life and getting a head start compared to us and EU economies,” the source said.
The US really can take action against Beijing, for example, to impose economic sanctions and engage the European Union, agrees Associate Professor of international security faculty of world politics of Moscow state University Alexei Fenenko. In his opinion, Washington needs the EU to bury the Chinese silk road economic belt project.
This project expands China’s ability to export its products to various markets, including Europe, and strengthens China’s position on the world stage. While the US is trying to cut off this export oxygen for a competitor country, return production back to the US, and become the main exporters themselves.
Us trade war with China, which is still not over, may begin with a new force. Only the first phase of the trade agreement was signed, where the Americans were able to force China to buy both American hydrocarbons and American food. The blame placed on China for the spread of the virus will help Washington negotiate new preferences when discussing the “second phase” of the trade agreement.
If the Americans call China guilty, then trump can easily write off part of us debt obligations, deciding that the Americans do not owe anything to a country like China, does not exclude Fenenko. As you know, the American economy thrives not only on the printing press and the availability of reserve currency in the form of the dollar but also on the fact that other countries are willing to lend to it. If the US begins large-scale dumping of its debt, it will hit the entire global financial system, in which they themselves play a major role. At the same time, the situation of the American economy is already flimsy.
The US has adopted unprecedented incentives to support its economy, which will increase the budget deficit to almost $ 4 trillion. U.S. government debt and corporate debt will reach record levels by the end of 2020 due to the coronavirus pandemic. The IMF expects our economy to fall by almost 6%. The Washington Post compares the situation to the great depression of the 1920s. In such a situation, Washington is unlikely to declare war by dumping its debt.
“Writing off the national debt is unlikely to be on the agenda since the US has many other options. Rather, there is a risk that the two countries ‘ trade talks will return to the zero stage, and that sanctions will be imposed on China’s financial sector, which was discussed a year ago. Instead of government debt, Chinese companies that are listed in the United States may suffer, or American investors may be banned from investing in these companies,” Kogan does not rule out.
In addition, work with the “allies” may be strengthened to prevent the deployment of the construction of mobile networks of the fifth generation, and the implementation of the “New silk road” initiative may be blocked, the expert adds.
China does not have as much of an opportunity to respond as its rival.
“The only thing that China could do is completely throw all us debt obligations on the market and inflict a severe blow to the American economy. But whether China will decide to take such a step is a question, ” says Fenenko.
About a year ago, during the escalation of the us-China trade war, the Chinese media heated up this scenario. There were rumors that the Beijing authorities were already discussing the possibility of dumping the US national debt and how to do it better. Then the words didn’t come to the point. The risks have not changed since then. China is the second-largest holder of American securities after Japan (just under 1.1 trillion dollars), and a large-scale sale of them will harm not only the Americans but also the Chinese themselves. Although in recent years, Beijing has been gradually reducing investments in us public debt — by tens of billions of dollars. This decrease in investment has a beneficial effect on the exchange rate of the yuan against the dollar, which is important for the export of Chinese goods.
Most likely, such sharp movements from China will not follow in response to a potential “punishment” from the United States. Beijing is well aware of what he wants to trump.
“China needs time to diversify its economy and reorient export flows to other countries in order to reduce its dependence on the American economy. China will maneuver, continuing, albeit at a slower pace, the implementation of the Made in China policy in order to eventually be able to have more trumps in the confrontation with the United States,” Kogan concludes.