Can the U.S. and China avoid catastrophe?

“China is preparing to shape the twenty-first century, much as the U.S. shaped the twentieth. Its government is deciding which features of the global status quo to preserve and which to reject.”

Evan Osnos has a new in-depth essay in the New Yorker titled “The Future of America’s Contest with China.” It’s worth a read. Another excerpt:

I lived in Beijing for eight years, starting in 2005. For the past six years, I have lived in Washington, D.C. This fall, I went back and forth between the two capitals, to gauge what lies ahead for a relationship that is more dangerously unstable than it has been since 1972, when Richard Nixon clasped Mao’s hand in Beijing, setting the course for China’s opening to the world. I talked to those who forged the relationship, and those who would remake it — in politics, business, security, entertainment, and technology — and found them startled by the depth of the rupture and the speed with which it has grown.

“The relationship is in free fall,” a senior White House official told me. Dèng Yùwén 邓聿文, a former top editor of a Communist Party journal who now lives in the United States, told me that when he talks to officials in Beijing they spare him the bluster. “They are very, very worried that the relationship will continue to deteriorate, that the economic impact will hurt people’s confidence and further growth, that it could have effects beyond their grasp,” he said.

Also new this week is a podcast from MacroPolo, the in-house think tank of the Paulson Institute, called Heartland Mainland: The Iowa China Podcast. The first episode, featuring conversations with Chinese students at universities in Iowa, is excellent.

The two co-hosts of Heartland Mainland, Matt Sheehan and Holly He, plan to release a series of episodes exploring Chinese students, agriculture, manufacturing, and politics in Iowa all leading up to the Iowa Caucuses on February 3.

Recent news from the front lines of the U.S.-China techno-trade conflict:

What if China doesn’t give Trump’s “Great Patriot Farmers” special treatment? Will we get another Trump tantrum, à la August 2019? This news from Caixin via CNBC is not encouraging (or, it is encouraging, if you think Beijing maintaining equal treatment of all trading partners is better than appeasing Trump’s demands):

China remains vague on how much the country will increase purchases of U.S. farm goods, considered a critical part of a trade agreement with Washington.

Hán Jùn 韩俊, vice minister of agriculture and rural affairs, confirmed to Chinese financial news site Caixin that import quotas for wheat, corn and rice will not increase.

“These are global quotas. We will not adjust them just for one country,” Han told Caixin, according to a CNBC translation of his Chinese-language quotes in an article published Tuesday.

The U.S. trade deficit with China has decreased by 15 percent, likely pleasing Trump — though some economists say a large part of that could be due to U.S. retailers stockpiling Chinese products before tariffs hit, the Guardian reports.

American consumers bear the brunt of trade war tariffs, according to new research from the Federal Reserve Bank of New York, the New York Times reports (porous paywall). No surprise there.

Huawei can’t believe its luck: Bloomberg details how the company surged back from what its own managers thought was the brink of death after a U.S. Commerce Department blacklisting last May:

It turns out they were far too pessimistic. Huawei recorded an 18 percent rise in sales to a new high of 850 billion yuan ($122 billion) last year, although that was down from about 23 percent in the first half and missed its own internal targets. Company projections for 2020 are similar.