Inspite of the growing antagonism between America and China, many global investors stay heavily invested in China in the hope that the US Government will at some stage move towards a rapprochement with China just because American businesses have invested trillions of dollars in China. Speaking to our friends in New Delhi it seems that no such climbdown is on the cards – Washington DC sees China as a rival great power and will now work systemically to neuter China. Bestselling author Adam Tooze makes the same point in the FT:

“It has become a cliché that the one thing that America’s divided democracy can agree on its policy against China. But if the dogs of war are in full cry, what is worth noting is the dog that no longer barks. The “peace interest” anchored in the investment and trading connections of US big business with China has been expelled from centre stage. On the central axis of US strategy, big business has less influence today that at any time since the end of the cold war….

In recent weeks, the Biden administration has buried neoliberalism and declared a new Washington consensus. National industrial policy is all the rage. National security adviser Jake Sullivan boasts that it is not part of his job description to defend the interests of American investors in China. As a result, multibillion-dollar investments in China hang, in political terms, by a thread…

Since the question of war has been posed, a diplomatic effort at the highest level is required. The first priority should be to defuse tension over Taiwan, as seemed on the cards after the Biden-Xi meeting at the G20 in Indonesia. Those hopes were dashed, however, by the gratuitous escalation of the Chinese “spy” balloon incident in February.”

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