The US and China are entering a new Cold War, which could be more destructive for the world than the geopolitical competition between the US and the Soviet Union at the end of World War II, the consultant said on Friday.
What separates the two rivals is the degree of interdependence between the US and China today, said Alan Dupont, Cognoscenti Group’s chief risk advisory director. The Australian company advises clients on geopolitical, financial and national security issues.
“Unlike the first Cold War, in which the main confrontation between the United States and the Soviet Union was geopolitical … both systems, as a set of countries, did not have a special relationship with the trade and financial points of view. This is not the case today, he said in an interview with CNBC’s Squawk Box Asia.
“That’s why I think the consequences of this conflict – the increasing rivalry between the US and China – will (potentially) be very serious,” he added.
U.S.-China relations have worsened to the worst in decades since President Donald Trump took office in 2017. Since 2018, the two countries imposed on each other a series of new tariffs, which grew into a destructive trade war, which spread to other areas. such as technology and finance.
More recently, tensions in the US and China took another turn for the worse when the Trump administration accused Beijing of not warning the world about the coronavirus pandemic earlier and hiding the scale of its outbreak. Beijing denied the allegations.
Washington also hit Beijing for undermining the freedom of Hong Kong, a semi-autonomous Chinese territory that has special trade relations with the United States.
Several analysts warn that rivalry could deepen, as Trump is expected to take a tough stance against China as he seeks a second term in the White House. The US is scheduled to hold a presidential election on November 3.
“Now the competition is becoming more and more systematic, and it really is becoming a winner who gets everything – so this is the worst potential result,” DuPont said.
“If there is no circuit breaker – this is not foreseen in the near future – the concern is that, although we are dealing with the consequences of the pandemic, you are increasing tension between the US and China, which will spread around the world and the impact on global supply chains, for business and finance around the world. “