The United States has imposed life-threatening sanctions against ZTE, one of China's leading telecom conglomerates. There is speculation that Huawei, China's high-tech crown jewel, could be the next target. On the cards is an all-out tariff list impacting on $100 billion worth of Chinese goods. Additionally, a new Taiwan Travel Act threatens the One China Policy. A loose Indo-Pacific "QUAD" alliance, partnering with Japan, Australia and India, pushes back against China's growing regional influence. A rally with the European Union is in the offing, questioning China's Belt and Road Initiative.
Treasury Secretary Mnuchin's proposed visit to Beijing notwithstanding, it begs the question whether the United States is hell-bent on checking China's Rise, instead of a mere trade war.
Leaving aside the question whether China's Rise can be arrested, there is no doubt that a trade war is likely to be mutually destructive. While its initial response against American tariffs has been fairly restrained, China has far more potent ammunition up its sleeve.
First, China's massive orders from America's Boeing could be diverted to Europe's Airbus.
Second, retaliatory measures could be taken on American giant enterprises in China, including Walmart and Apple.
Third, business prospects of the Trump family in China could be curbed.
Fourth, a large dangling carrot can be held out to America's powerful oil and gas conglomerates, Trump's main financial backers, that China is ready to buy huge quantities of shale gas from the United States, given a more friendly relationship. (Naturally, China doesn't need to give up its insurance policy of Belt and Road energy supply lines).
Fifth, subject to controllable risks, China could, over time, significantly reduce the purchase of US Treasury bills, thereby driving up US interest rates, dampening America's economic growth and Trump's prospects for a second term as President.
Sixth, China could invest savings from reduced holding of US treasuries in turbo-charging development of China's fifth generation computer chips based on artificial intelligence and quantum computing, on which China has already had a head start.
Seventh, China would open up its markets vigorously, offering very attractive opportunities to the world's best talents, barring those in the United States.
Eighth, encouraging and supporting visits to China of the hundred-odd American trade and business organizations which have petitioned against any trade war with China. They would be shown China's significant improvements in market access and better equipped to fight protectionism back home.
Ninth, China would invest heavily in those states less hostile to China so that they could exert a moderating influence on Washington.
Tenth, China would redouble measures to safeguard protection of foreign intellectual property. It should play a proactive role in international forums and institutions, upholding trade liberalization and curbing protectionist tendencies.
In any case, in what promises to be an Asian Country, China should keep its eyes on the ball, taking natural anti-China tendencies in its stride. Action always speaks louder than words.