Markets shouldn’t overreact even if there’s no US-China trade deal

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China is right. There are a number of issues defining the rivalry of the two nuclear-armed adversaries.

One, the U.S. does not accept China’s territorial claims. Washington considers, along with most of the world, that China’s maritime borders are a territorial overreach sanctioned by international law and arbitration procedures. China indignantly rejects that. The U.S. is constantly clashing with Chinese military assets while it continues to test the disputed naval and air corridors in the South China Sea.

Two, the U.S. formally recognizes Taiwan as part of China, but provides arms to the island and maintains ambiguity with regard to its defense if attacked by Beijing. Tibet is also an irritant in U.S.-China relations. Washington recognizes Tibet as part of China, but Beijing suspects that the U.S. is encouraging the region’s independence.

Three, the U.S. supports Japan in the contested claim over Senkaku/Diaoyu islands in East China Sea. Beijing considers these islands part of its ancient territory.

Four, Washington and Beijing agree that the Korean Peninsula should be free of nuclear arms, but they hold quasi irreconcilable views on how to achieve that objective. Fundamentally, Beijing wants the U.S. out of Korea and out of Asia.

Five, the U.S. is openly opposing China’s broadening global influence. China is branded as a “strategic competitor” and a “revisionist power” hell-bent on upending the American world order.

Six, the case of Huawei is the best illustration of America’s struggle to contain China. It is a fight to keep Beijing from any position of dominance in information and telecommunication technologies. The pending legal case against Huawei in Canada and in the U.S. is a test of China’s response to what Washington considers a simple law-enforcement issue. For China, however, it’s a case of an unacceptable exterritorial application of U.S. laws, based on American sanctions against Iran.

The Huawei case makes many things very clear, and it is a litmus test of whether the U.S. and China can maintain a peaceful dialogue. Remember, China has demanded an immediate release of its citizen — a Huawei executive detained in Canada on Washington’s request and awaiting extradition to the U.S.

Source: CNBC

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