The USMCA, China and the Politicisation of Economic Intercourse

Uday Khanapurkar, Research Intern, Institute of Chinese Studies

Strategic competition between the USA and China continues apace in the economic domain with tit-for-tat tariffs and strengthened investment regulations. This reassertion of sovereignty has irredeemably politicised economic intercourse. The market share that a state’s productive agents command has, akin to a conventional resource such as oil, emerged as a veritably prominent component of national power, thus bringing the zero-sum character of the international system to the fore. So much so, that the restructured Free Trade Agreement (FTA) between the US, Mexico and Canada, or the USMCA, also reflects the adversarial tenor in US-China relations.

Much attention has duly been afforded to article 32.10 of the USMCA since it quite explicitly targets China. According to this provision, should any signatory to the agreement enter into an FTA with a non-market economy (read China), the other parties reserve the right to dismantle the USMCA following a six-month notice. Continue reading “The USMCA, China and the Politicisation of Economic Intercourse”

Will Mounting Contestations in the Economic Domain Burden Chinese Innovation and Growth?

Uday Khanapurkar, Research Intern, Institute of Chinese Studies

China and the USA, the world’s two largest economies, are currently embroiled in an acrimonious two-front geo-economic tussle. On the trade front, a 10 per cent tariff on 200 billion USD of Chinese exports to the USA came into effect on September 24, 2018; with President Trump threatening further duties on 267 billion USD should the Chinese retaliate. On the financial front, the USA enacted a law in August, 2018, aimed at strengthening the Committee on Foreign Investment in the United States (CFIUS) in order that it may undertake more meticulous scrutiny of Chinese investments in the US and prevent undesirable technology transfers. Combined, these contestations in the economic domain put China under significant pressure.

To be sure, China is at a precarious stage in its economic development. Rising wages and an aging population entail that low-quality manufacturing and assembly cannot generate more growth. Investment spending experiences decreasing returns to scale. Continue reading “Will Mounting Contestations in the Economic Domain Burden Chinese Innovation and Growth?”