Fundamental differences between US and China overshadow common interests, says panel

In the short term, the United States and China will likely reach some sort of a trade agreement as "both sides need to claim victory", says Mr Tao Dong, vice-chairman for Greater China at Credit Suisse private banking in Hong Kong. PHOTO: REUTERS

HONG KONG - The United States and China may see eye to eye when there are overlapping practical concerns, but the fundamental difference in beliefs between the two countries casts a long shadow over any common ground, an investment conference panel has said.

Still, full military engagement between the two powers in this era is unlikely, the panel concluded on Monday (March 25), the first day of the Credit Suisse 22nd Asian Investment Conference.

In the short term, they will likely reach some sort of a trade agreement as "both sides need to claim victory", said Mr Tao Dong, vice-chairman for Greater China at Credit Suisse private banking in Hong Kong.

He was one of three panellists speaking on whether the US and China can avoid the so-called Thucydides Trap, where rivalry between an established power and a rising one often ends in war. The conference ends on Thursday (March 28).

Mr Tao believes that the Chinese leadership is willing to have trade concessions for five years of peaceful development, although over the longer term, competition between the two would simmer.

"(In) the past five presidential campaigns in the US, bashing China has been a consistent dominating process...I am pretty sure that when the 2020 presidential election in the US comes, China will be a country people love to hate," he said.

Another panellist, Professor Pei Minxin of Claremont McKenna College, cited examples of areas in which the interests of the US and China are at odds.

He said that unlike China's interest in being the major party in East Asia, the US does not want one country to dominate the region.

And while the US had hopes that China would find a place in an American-dominated system, the Chinese are interested in maintaining their unique one-party system that is in conflict with American ideas of democracy.

But third panellist David Li Daokui of Tsinghua University believes that the wish for stability in global affairs would bind the two sides.

"The two countries do not want to see other countries acquire nuclear weapons, for example. The two countries do not want to see extreme Islamism become a big issue in many parts of the world and the two countries, lastly and most importantly, do not want to see another... global financial crisis in the near future," Professor Li said.

In the hour-long discussion, the panel presented mixed views when asked if the US and China have any common ground in Asia.

Mr Tao said there is common ground, particularly in South-east Asia, but he said he fails to see how the US can offer the kind of commercial benefits that the Chinese can for the rest of Asia, while Prof Li is of the view that both powers are aligned on denuclearising North Korea.

But Prof Pei pointed out that as long as there are countries in the region that are afraid of China, the US will be invited to stay.

He added that "unless that kind of rule-based system emerges in East Asia, the US will not give up its critical role as the guarantor of the East".

The biggest worry for now, however, is the unpredictability of US policy, said Prof Li, referring to US President Donald Trump's administration.

This means that "China does not know what kind of consistent policy the US might implement", he added.

The panel discussion also touched on the role of Hong Kong amid US-China geopolitical rivalry.

Prof Pei said the territory "will be unavoidably collateral damage" if tensions escalate as the US will have to treat Hong Kong like the mainland, while Prof Li thinks Hong Kong will play a greater role as a bridge between the East and West.

More importantly, the ongoing US-China trade war has changed the mindsets of Chinese leaders, who now believe that China must not rely on exports and imported technology, said Mr Tao.

"The centre of the next round of Chinese growth will be driven in the Greater Bay Area," he predicted.

So Chinese policies will gradually gear towards the Greater Bay Area, especially if infrastructure investments fail to jumpstart the economy, he said.

The panel discussion comes ahead of another round of trade talks in Beijing between the world's two largest economies this week.

China has lowered its economic growth forecast to a range of 6 to 6.5 per cent for 2019. It has also vowed massive tax cuts amid other "targeted" measures to address the deepening slowdown, which has pushed unemployment higher, adding pressure on the leadership.

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