Experts fear that tensions between the US and China could lead to war

A bill requiring Chinese technology company ByteDance to sell TikTok or face a ban on the social media app in the US passed both the US House of Representatives and the Senate earlier this year with broad bipartisan majorities.

Both political parties increasingly agree that tougher action must be taken against China and Chinese companies. “Democrats and Republicans don’t even agree on the color of the sky, and they both voted for this bill,” said Jacob Helberg, a commissioner on the U.S.-China Economic and Security Review Commission and senior adviser to Palantir CEO Alex Karp, at Assets‘s Brainstorm Tech conference on Monday.

Since joining the World Trade Organization over two decades ago, China has become the factory floor of the world and grown into the world’s second-largest economy.

Several US politicians are now spreading the message that China’s growth has come at the expense of the US economy. They also fear that China could quickly undermine the US’s technological lead and Washington’s global influence.

Many of China’s trading partners belong to the “group of middle powers: the Brazils, Japans and Saudi Arabias of the world,” said Ben Harburg, managing partner at MSA Capital, a China-focused venture capital firm, on Monday. “And they depend on China for their economic development.”

While Harburg and Helberg acknowledged that China is trying to decouple itself from the United States, they called for other policy responses to maintain Washington’s influence.

Harburg said the US is exerting its “soft power” by allowing Chinese students to study at US universities. This openness also encourages talent from outside the US to stay and benefit the US economy.

The Trump administration made it harder for prospective students to obtain visas to study in the U.S. and also revoked visas for some Chinese students, citing national security concerns. The COVID pandemic also severely limited the ability and interest of Chinese students to study in the U.S. (Chinese students still make up the largest share of international students, although students from India combined are a close second).

Nearly 75% of international students plan to stay and work in the United States after graduation, according to a 2022 report by FWD.us, an organization that advocates for immigration reform.

Helberg, on the other hand, argued that “American strength” is reflected in the US’s technological lead. He agreed with the Biden administration’s current policy of relying on export controls and supporting domestic manufacturing to maintain the US lead and thus continue to deter China from more aggressive actions.

The “outskirts of war”

On Monday, both Helberg and Harburg warned that the tense relationship between the US and China could become even more dangerous.

“Everyone is waiting for the hammer to fall in Asia,” warned Helberg.

Harburg warned, using a phrase from Henry Kissinger, that the US and China were on the “promontory of war”.

US military officials fear that China is seeking to quickly acquire the ability to invade Taiwan, which Beijing views as a renegade province, by the end of the decade. More than 60 percent of US economic experts consider a conflict between mainland China and Taiwan, even if it does not develop into open war, to be at least a “moderate possibility.”

Analysts also fear that a possible miscalculation in the hotly contested South China Sea could trigger a larger conflict.

US Defense Secretary Lloyd Austin recently downplayed the possibility of war with China, saying it was neither imminent nor inevitable.

On Monday, both speakers agreed that the winner of the U.S. presidential election in November must maintain the drive to reindustrialise the country by promoting education or improving incentives for companies to invest in U.S. manufacturing.

Shifting supply chains back out of China and “rebuilding American strength” is “the best policy we can pursue for the 2020s and 2030s,” Helberg said.

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