Stephen Wertheim of the Quincy Institute recently characterized the United States and China as being engaged in a kind of “performative Cold War” where the two powers are locked in something that looks and feels like a new Cold War but doesn’t have any real substance.
To what extent is this true? And to what extent does this matter?
We know that relations between the United States and China are currently positioned in a 30-50 year low-point. However, in the months since Biden took office, it’s not that clear whether relations have deteriorated or improved. Sure, Biden has yet to remove many of the openly destructive Trump-era policies. Still, we could also argue the US and China have already engaged in three productive high-level meetings:
High-level talks in Anchorage (March 19, 20)
Bilateral climate talks in Shanghai concluded with a Kerry-Xie joint statement (April 18)
Multilateral engagement at the Leaders Summit on Climate (April 22, 23)
Although the first US-China meeting in Alaska was not amicable and involved lengthy heated exchanges between the two sides. In hindsight, much of this tension was performative and intended to projections of strength in front of the two country’s respective domestic audiences.
Conversely, both the bilateral and multilateral climate talks in April appeared to be far more congenial and productive, as all sides managed to cut through the tensions to at least demonstrate a sincere commitment to tackling climate change. The mere fact that the United States organized a multilateral climate summit is a complete turn from the Trump administration in its own right. We’ll take progress where we can find it.
It’s likely too optimistic to believe fighting climate change can be the transformational issue that forces the US and China to overcome their gap in values. The more likely scenario involves the United States and China continuing to remain engaged in a multidimensional hybrid relationship of cooperation and structured competition. Of course, structured competition can easily lead to unstructured competition and eventually open conflict.
Perhaps US-China relations feel largely performative because it’s extremely easy to see how things can get worse but really hard to imagine how things can get better. In the meantime, we have no choice but to be content with a semi-orchestrated balance between competition and cooperation.
Previous Notes
Current Events and Additional Reading
China Semiconductors
TSMC to invest $2.8bn in China to ramp up auto chip production
For TSMC, being the world's largest foundry with nearly 500 customers has its peculiarities. On the one hand, the company can serve almost any client with almost any requirements. On the other hand, it has to stay ahead of everyone else both in terms of capacity and in terms of technology. As far as capacity is concerned, TSMC is unchallenged and is not going to be for years to come. As for fabrication technologies, TSMC has recently reiterated that it's confident that its N2, N3, and N4 processes will be available on time and will be more advanced than competing nodes.
TSMC Update: 2nm in Development, 3nm and 4nm on Track for 2022
For TSMC, being the world's largest foundry with nearly 500 customers has its peculiarities. On the one hand, the company can serve almost any client with almost any requirements. On the other hand, it has to stay ahead of everyone else both in terms of capacity and in terms of technology. As far as capacity is concerned, TSMC is unchallenged and is not going to be for years to come. As for fabrication technologies, TSMC has recently reiterated that it's confident that its N2, N3, and N4 processes will be available on time and will be more advanced than competing nodes.
Digital Yuan
Why We Should Not Worry About the Digital Yuan
In an April 4 op-ed for Bloomberg, the economist Niall Ferguson ominously warned that China is «minting the money of the future.» That suggests that the digital yuan is an innovation coined virtually by an unstoppable Chinese mint-of-the-future, having something to do with internationalizing the yuan and harboring some mysterious power that will dethrone the dollar.
It doesn’t, hasn't, and won't.
Digital renminbi is no threat to dollar dominance
More than 50 years after Valéry Giscard d’Estaing lamented the dollar’s ‘exorbitant privilege’ and two decades after the euro’s launch was seen as a threat to dollar domination, the latest mutation has hit – will the digital renminbi surpass the dollar? Adding to the fog are errant questions about whether the dollar’s demise will be fast and furious, and whether it is a winner takes all hegemonic proposition.
Photo by Marek Piwnicki on Unsplash