Context:

The intensifying head-to-head clash between the United States and China has set alarm bells ringing. 

Since 2018, still continues:

• Beginning with a trade war in 2018, U.S. policy towards China has morphed into a draconian technology denial regime aimed at hobbling China’s rise. 
• Simultaneously with a view of preventing any Chinese military venture to capture Taiwan, the U.S. has taken major steps across the Indo-Pacific to shore up its military edge.

A détente is distant:

• The recent G-7 summit put forward a united West plus Japan view on China. 
• Besides condemning its “economic coercion” and “militarisation activities”, it created a new group to deal with hostile economic actions, mainly by China, to coerce nations. 

The new Washington Consensus:

• It was designed to re-establish U.S. hegemony. 
  • The old one, which was based on free markets, embraced China with the hope it would, over time, integrate into the American-led liberal international order. 
• But China, in a sense, went rogue.

Aspects of the strategy:

• Technology denial to China. 
• Turn the old Consensus on its head by protectionism and a new industrial policy based on state subsidies. 
• To reach out to China and claim that all that Washington wants is to “de-risk and diversify” its economy, and guard its key technologies using a “small yard, with a high fence”.

Impossible to replace:

• Seeing U.S. export restrictions to over 600 Chinese entities, all in the last couple of years, Beijing does not see much difference between “de-risking” and “containment”. 
• The battle over chips risks “enormous damage” to the U.S. technology industry. 
• China made up roughly one-third of the U.S. industry’s market and would be “impossible to replace as both a source of components and an end market for its products”. 
• There are more than a dozen companies who derive between 25% to 50% of their revenue from China. 
  • Almost all the big names in the U.S. have a strong presence there anyway.

A dangerous game of ‘chicken’:

• The two U.S. and China now seem to be involved in what the Americans call a game of “chicken” which comes with a high risk of miscalculation, war or a messy global economic breakdown.

The issue is China’s diplomacy:

• China has achieved a great deal. It may have stolen IP, and will continue to do so, but it has also put down serious money in developing its tech and education sector.
• Where it seems to have lost out is in its diplomacy where it has created significant adversaries through its assertive behaviour, be it in the East Sea, South China Sea or the mountains of Ladakh.

U.S. dealing with global geopolitical challenges:

• The U.S. is not the smartest country when it comes to dealing with global geopolitical challenges.
• Its enormous wealth and power and echo-chamber think tanks make it difficult for it to understand distant countries and cultures. 
• But worse is the American tendency to fight first and ask questions later. Vietnam, and the recent examples of Afghanistan and Iraq are proof of that. 

What is in the Context for India?

• U.S. estrangement with China enhances India’s geopolitical value, something the present ruling dispensation is reveling in. 
• But while the Sino-American hostility may bring benefits to India, a breakdown would be catastrophic, for not just India but also the world. 
• New Delhi is not unaware of this and has stepped carefully in its own relationship with China, whether at the global and regional levels or the Line of Actual Control in Ladakh.

News Source: The Hindu