US President Donald Trump and his Chinese counterpart Xi Jinping, met on 30 November 2018, during the G20 summit in Argentina.
The purpose of the meeting was to find some common ground and thus ease the tensions that arose between the two superpowers, after the US’s increasing of tariffs on imports from China, and a series of retaliatory measures taken from the Chinese government, against US products.
The meeting appeared to be a success, with the US committing to not raise tariffs further on 1 January 2019, as initially planned, and both parties committing to more meetings in the near future, that would help cement a trade deal between them.
Only five days later, the CFO and “heiress” of Chinese telecommunications manufacturer Huawei, was arrested in Canada, at the request of US authorities, on charges of violating the US sanctions against third countries (mostly Iran) by supplying them with US-made equipment.
Huawei may indeed be a (technically) private company, but it still maintains close links to the Chinese Communist Party and is widely regarded as one of the national champions of China. Hence any move against Huawei is interpreted by many as a move against China. As such, many saw the move as proof that the trade war between the two countries is still ongoing, only this time, without tariffs, but rather, via other means.
I beg to differ…
I believe that the arrest would have taken place irrespective of whether the two countries were at a trade war or not. Huawei has been under the scrutiny of US authorities for over two years now. It just happened that the necessary evidence was gathered now, and so, the arrest was initiated. Furthermore, the US have every reason to be suspicious of Chinese companies selling US-made equipment to sanctioned countries. Let us not forget the example of ZTE, China’s second largest telecommunications equipment manufacturer, that almost went bankrupt when it was proven to be conspiring to evade US sanctions against Iran.
Most analysts agree that China will soon overtake the US as the world’s largest economy. The data certainly point that way. But the fact of the matter is that the US still remain the largest innovation hub of the planet, while China is merely the best reverse-engineer. Guess who has more bargaining power between the two. Make no mistake, should either the trade war, or the evasion of sanctions continue, come decision time, 90% of the world’s economies would opt to keep their ties with the US, rather than sever them in favor of China. This will continue to hold true for at least the next 50 years and you can say whatever you want about Trump, but I can assure you: He knows that he’s in an advantageous position against Jinping, and he intends to use his advantage to the fullest extent possible.