US, China must renegotiate relationship under Biden administration: ex-IMF chief economist

CONCERNING the US-China relationship, there is no going back to the era of goodwill that preceded outgoing US President Donald Trump's administration, according to top economist Dr Raghuram Rajan.

Instead, both superpowers must renegotiate their relationship as part of a multilateral discussion. This dialogue may be "more reasoned" under President-elect Joe Biden - who will be inaugurated on Thursday, 1am (Singapore time).

"It is a mistake to see the Trump administration's views on China as something unique to that administration. Many in Washington would applaud the Trump administration for standing up to China," said Dr Rajan on Wednesday. The former chief economist of the International Monetary Fund (IMF), who is also the former governor of the Reserve Bank of India, was speaking at a conference held by the Bank of Singapore, an OCBC subsidiary.

"Anyone expecting the tariffs will come off on Day One obviously doesn't see the environment in Washington," he added. "What we may have is a more reasoned dialogue, without abrupt actions. But it is going to be a very realistic, very pragmatic dialogue, where both sides have very clear views of each other."

A key shift underpinning US-China relations today, said Dr Rajan, is the rise of China as both a military and economic power that can genuinely rival the US. "The belief that China will not challenge the United States - that belief has gone out the window," he said. He pointed to many commercial activities that have become problematic as a result, such as ship, drones and artificial intelligence, that have military as well as commercial applications.

However, he foresees differences in the tone and approach of negotiations during Mr Biden's upcoming term. "The main difference, I think, is that the Biden administration will not adopt a 'go it alone' strategy," he said. "It will try and involve its alliance partners in Europe and Japan.

"They've talked about creating a coalition of democracies, making it 'democracies vs China' - maybe trying to put China in too much of a corner, but certainly trying to get a good discussion going on a modus vivendi between the rising superpower, China, and the existing superpower, the United States; and how this can be an arrangement that other big powers, such as Europe, and growing powers, like India and Brazil, can live with.

"That has to be a more multilateral discussion rather than a bilateral one," he added.

Mr Biden has made past references to a coalition of democracies. His campaign has called for a global "Summit for Democracy", to "renew the spirit and shared purpose of the nations of the Free World". In November, when asked if the US would join the Regional Comprehensive Economic Partnership, he replied that the US needed to "be aligned with other democracies... so we can set the rules of the road instead of having China and others dictate outcomes because they are the only game in town".