[New Cold War Diagnosis①] US: "Regardless of Who Wins the Presidential Election, Early Recovery of US-China Relations Is Difficult"

Ben Steil, Director of International Economics at the Council on Foreign Relations: "Phase One Trade Agreement Dead, Accelerated by COVID-19"
"US Manufacturing Reshoring Only Undermines Domestic Manufacturing Competitiveness"
"COVID-19 Vaccine and Treatment Distribution a Key Variable in International Relations"

[Asia Economy New York=Correspondent Baek Jong-min] Ben Steel, Senior Fellow and Director of International Economics at the Council on Foreign Relations (CFR), assessed that the escalating conflict between the U.S. and China, worsened by the enactment of the Hong Kong National Security Law (Hong Kong Security Law), will not easily disappear even after the U.S. presidential election this November. He also expressed skepticism about the longevity of the Phase One trade agreement reached between the two countries in January.

Ben Steel Mee, Director of International Economics, Council on Foreign Relations

In an email interview with Asia Economy, Steel projected this outlook and expressed concern that U.S.-China tensions will become a serious negative factor for future international affairs. The CFR, where Steel works, is a think tank recognized for its influence in U.S. diplomacy and security fields and also publishes the foreign policy journal Foreign Affairs. He has worked at CFR for 20 years, conducting research on the intersection of international political issues and economics.

Steel evaluated the Phase One U.S.-China trade agreement as effectively a death sentence. He stated, "President Donald Trump is unlikely to focus on immediately terminating the Phase One trade agreement to avoid being labeled a failed negotiator, but this agreement is essentially already dead." He had predicted from shortly after the January agreement that the 'honeymoon' in U.S.-China relations would soon end. At that time, he expressed the view that the agreement would break around the November U.S. election, but the COVID-19 pandemic accelerated the expected split by more than six months. For this reason, he described the Phase One trade agreement as a "compromise meant to break."

Steel forecasted that regardless of who wins the U.S. presidential election this November, it will be difficult for U.S.-China relations to quickly enter a recovery phase. He said, "If President Trump wins, he will believe he has been granted authority to take a hard line against China, and even if former Vice President Joe Biden is elected, the situation will not change significantly." He added, "Given that a significant portion of Americans view China negatively, it will inevitably be cautious to pursue improvements in relations with China."

He also viewed President Trump's manufacturing reshoring policy negatively. Steel said, "The COVID-19 crisis will undoubtedly push the Trump administration to pursue reshoring policies more aggressively. However, so far, these policies have not helped declining U.S. industries such as steel at all," and pointed out, "Instead, they have only undermined the global competitiveness of U.S. exporting companies." This implies that the restructuring of supply chains due to COVID-19 is not beneficial to the U.S. or the global economy.

He also pointed out problems with China's foreign policy. He interpreted that Chinese President Xi Jinping did not follow former Chairman Deng Xiaoping's principle of "keeping a low profile and biding time" (Do Guang Yang Hui), which provoked strong backlash from the Western world. He also said that COVID-19 revealed to the world the Chinese Communist Party's ambition to position itself at the center of global power and influence.

Steel expressed concern that the U.S.-China hegemonic competition and conflict will ultimately lead to deterioration in economic and security environments. He predicted, "Global protectionism will inevitably worsen significantly in the short term." He also pointed out that the distribution of COVID-19 vaccines is an important variable affecting international affairs. Steel advised, "How governments distribute COVID-19 vaccines will be a measure of future improvements in international cooperation."

◆Who is Ben Steel? He works at the Council on Foreign Relations (CFR) and manages the organization's economic blog, Geographics. He is an expert in economics, specializing in international finance, monetary policy, and economic history, and also advises the U.S. Congress. From 1992 to 1999, he gained experience at the Royal Institute of International Affairs in London. He holds a master's and doctoral degree in economics from Oxford University.