Sino-US tensions unlikely to go away

GEOPOLITICAL tensions between the United States and China will continue to escalate, and are unlikely to go away anytime soon. Relations between the two superpowers have been tense for years over a number of issues. These include Taiwan, trade practices and – in the past year – Russia’s unprovoked attack on Ukraine. The mistrust has spread to almost every aspect of the bilateral relationship, including national security and strategic alliances. It worsened last month after the US shot down a balloon it believed to be a spy craft in its airspace.

On Tuesday (Mar 7), Chinese Foreign Minister Qin Gang warned of catastrophic consequences if the US were to allow its relationship with China to spiral downwards. He accused the US of engaging in suppression and containment of China rather than engaging in fair, rule-based competition. The US, he said, should change its “distorted” attitude towards China or “conflict and confrontation” will follow.

With neither side willing to make significant compromise, this can only mean the path to a resolution is remote, with Taiwan a dangerous flashpoint. A deglobalised world is here to stay, with trade increasingly weaponised. As both countries move to disentangle their economic linkages and interdependence in a bid to boost resilience and self-sufficiency, more volatility can be expected in the global financial markets. This could even become the norm with valuations fluctuating as developments transpire.