(Reuters) – Sino-U.S. ties will stay tense as U.S. President Joe Biden is unlikely to rush into new deals with the world’s second largest economy or reduce tariffs on China, even if he is willing to re-engage with multilateral trade, economists and strategists said.
Following former president Donald Trump’s “America First” stance, the Biden administration has a “Buy American” policy for federal procurement.
That means continued tensions, Rashmi Banga, senior economist at the United Nations Conference on Trade and Development, told the Reuters Global Market Forum.
She predicted the United States would not change its policies in the ongoing tech rivalry with China, which has a large global footprint in digital technology and services.
Given its pivotal role in the Sino-U.S. tech war, Alastair Newton, co-founder and director at Alavan Business Advisory, described Taiwan as “the world’s most dangerous flashpoint”.
“I am not forecasting a war there in the near- to medium-term, but the risk of a miscalculation is non-negligible,” he said.
More pacifically, Newton expected Biden to work with Chinese President Xi Jinping on issues, such as climate change and Iran.
Trade pacts will also be putting pressure on the United States to engage, said Wendy Cutler, former assistant trade representative in the Office of the U.S. Trade Representative (USTR).
The pacts include the Regional Cooperation Economic Partnership (RCEP), which is seen as a China-backed alternative to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and is touted as the world’s largest free trade agreement.
The United States is asserting its presence in Asia-Pacific with alternate arrangements, including “the quad” – an informal grouping of Australia, India and Japan and Washington – to counter China’s political, commercial and military influence in the region.
“The U.S. could choose to let its influence be felt via its relationship with these countries (in the quad group),” said Priyanka Kishore, head of India and South East Asia, Macro and Investor Services at Oxford Economics.
To discourage its partners in the agreement from working with China, the Biden administration was expected to quickly state its intent to rejoin the CPTPP, said Chris Rogers, research analyst at S&P Global Market Intelligence unit Panjiva.
The CPTPP was central to former President Barack Obama’s strategic pivot to Asia, linking 11 countries across the Pacific. Trump withdrew the United States from the pact in 2017 before it was signed.
“Biden will probably walk, not run,” Rogers said, adding that the new U.S. administration’s policy changes are likely to be more considered and consulted upon than Trump’s.
(These interviews were conducted in the Reuters Global Markets Forum, a chat room hosted on the Refinitiv Messenger platform. Sign up here to join GMF: refini.tv/33uoFoQ)
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