The US-China trade war is evolving into a new Cold War over technology which investors must accept as the “new normal” for decades to come, says Andrew Neil.
Speaking to delegates at PA Northern Congress, the BBC broadcaster and journalist said the media has fundamentally misunderstood that the so-called trade war between the US and China is actually a war for technological dominance in the 21st century.
He said the origin of the disagreement between the two global superpowers stems from the 200-page ‘Section 301’ report from the US Trade Representative’s office, published in the final days of the Obama administration, that forensically detailed how China had “abused and gamed the global system since it joined the World Trade Organisation in the year 2000” at a cost of between $300bn and $600bn a year to the US.
Neil said the US, led by the Trump administration’s “full-throated response”, has subsequently embarked on a struggle not to let China fulfil its ambition outlined in president Xi’s ‘Made in China 2025’ document. Neil described this as a “barefaced blueprint for China to accumulate by whatever means possible the latest technology in AI, robotics, digital, medical and nuclear power generation and bring them by 2025 behind a mercantilist wall, and develop them into world beaters”.
He said: “My strong sense is that the markets just need to get used to this. It is the new normal. This cold war, very different from the previous Cold War, is just the way life is going to be now and the absurd gyrations that follow in the equity or bond markets, every positive or negative development in this Sino Trade War, means that they don’t really understand what is at stake and this is a long game, not a short game.”
He added: “The idea that all this can be resolved by Trump and Xi at, for example, the G20 summit in Osaka later this month is for the birds. This struggle is built into the Chinese-American relationship, it will be with us throughout the 2020s and beyond.”
Neil noted the key difference with the Soviet Cold War is this new war is not about ideology.
“The previous Cold War was fought with the Soviet Union basically being hermetically sealed,” he said. “China and America are totally integrated – there are millions of Chinese students in the US and thousands of American companies operating in China. It is fundamentally about economics and technology, the old Cold War was never about that.”
He added: “To those of you who think this is just a passing phase of the Trump administration, that this is something Donald has cooked up so he can grandstand on the global stage, I would say this to you: undoubtedly it has been made more vulgar, more uncertain and with greater oscillations and changes of direction by Mr Trump’s unique style, but what he is doing, the core of his policy, is now the new Washington DC consensus.”
