Geopolitics and a sandwiched nation

On Monday, United States Secretary of State Antony Blinken concluded his visit to China, the first by an American secretary of state in the last five years. The US described Sunday's talks with Chinese counterpart Qin Gang which lasted five and a half hours as “candid, substantive and constructive”. The Chinese propaganda machine too called the discussions “candid, in-depth and constructive”. The US strategy of diplomatic engagement comes at a time when relations between the world's two largest economies are at their lowest point since 1979. Relations rapidly deteriorated in recent years primarily over the question of Taiwan which Beijing views as “the core of China's core interests, the most consequential issue and the most pronounced risk in China-US relations.”

- ACHYUT WAGLE

There were global apprehensions that the Taiwan issue might escalate into a full-blown military conflict with instant ramifications on the international supply chain, financial markets and global security. The biggest achievement of Blinken's China sojourn is the agreement to continue the “conversation” in the future. Observers feared that the global economy, already feeling intense heat from the protracted Russia-Ukraine war, might face another deadly shock if any form of conflict involving the two largest economies began in the South China Sea, the world's busiest maritime corridor.

But the fact is that despite the adamant diplomatic posturing and intense competition for geopolitical influence, both sides have deeper economic interests which they are not prepared to forsake. US-China trade is poised to cross $700 billion in 2023, making China America's largest single country trade partner surpassing Canada and Mexico. The merchandise trade balance is heavily skewed in China's favour. This is the reason why Blinken and Qin agreed to “encourage more people-to-people and educational exchanges, increase the passenger flights between the two countries and to welcome more mutual visits by students, scholars and business people.” The US has a huge Chinese diaspora and China is host to hundreds of American multinational companies. US foreign direct investment stock in China is valued at about $2 trillion.