Securing stable relations with China must be high on the agenda for Biden or Trump
Whoever wins the upcoming U.S. Presidential Election in November, Joe Biden or Donald Trump, it’s imperative they secure stable relations with China that would claim victory in an all-out trade war.
Mr Biden is getting ready to give his official acceptance speech on Thursday night to the Democratic National Convention to become the party’s nominee to run against Trump on November 3.
The definitive foreign policy issue of this election will be managing China and sustaining the United States’ tenuous economic dominance over its key trade and commerce rival.
The Democratic and the Republican candidates appear to agree that maintaining a tough stance on China will score points with the electorate.
As such, we can expect to see both Biden and Trump step up their China-bashing between now and the election date.
Although this move could well be a way to win the keys to the White House, whoever does win on November 3 will have a prime opportunity to secure a stable relationship with China. Something that should be at the top end of the priority list.
Cooperation between the world’s two largest economies will benefit both countries by boosting economic growth, encouraging investment, safeguarding jobs, keeping prices down for consumers, reducing poverty and environmental problems and helping to stop human-rights abuses and military interventions.
Nevertheless, there is another key reason why the incumbent or the challenger must secure amicable relations with China.
Reducing tensions between the U.S. and China needs to be high up on the to-do list for the occupant of the Oval Office, as it can be reasonably argued that in an all-out trade war, China would come out on top.
The main reason for this is because America’s trade deficit with China is often over-estimated, barely giving it the upper hand.
In addition, unlike the Fed, China’s central bank is not independent and could be forced to slash interest rates to boost domestic demand and devalue the currency, making Chinese exports more competitive.
China is also better positioned than the U.S. to help industries that would be harshly impacted by a trade war.
Moreover, the ruling Communist Party of China could deal with the political hit of a trade war better than the winning party in the U.S., as the Chinese leaders have no need to play popularity games.
As such, whoever comes out on top in this U.S. Presidential Election must make the most of the momentum victory will bring and swiftly move towards securing cordial relations with China.
Nigel Green is CEO and founder of deVere Group, one of the world’s largest independent financial advisory and fintech organisations.