Financial markets welcomed last month’s truce in the long-running trade war between Washington and Beijing. But the “ phase one” deal should fool no one. By parking core US complaints, including China’s weak intellectual property protection, forced technology transfer and pervasive state subsidies, the ceasefire merely drew attention to the difficulty of reconciling two fundamentally opposed systems.
This comprehensive contest for supremacy between the two nations demands a fundamental rethink of the approach to global investment. Two issues stand out: which economic and political model offers higher returns, and where will the underlying assets be more secure.
China’s handling of the coronavirus epidemic only accelerates this “great decoupling” between the incumbent superpower and its rising challenger. The sluggish response by local officials, evidently petrified of delivering bad news to their all-powerful bosses in Beijing, has highlighted the shortcomings of an autocratic regime that is obsessed with stability.