The seizure of a US drone by China set off alarm bells worldwide this weekend. But when it comes to a standoff between China and the US under president-elect Donald Trump, economic measures will have preference over military ones, writes business analyst Shaun Rein in International Business Times.
Already there are rumours that General Motors or Ford will be penalised for monopolistic behaviour with their distributors in China. Expect that the next major purchase of air planes by state-owned carriers like Air China or China Eastern Airlines will come from Airbus rather than Boeing. American businesses will probably have more difficulties getting visas to the country. The hope is that the American business community exert pressure on Trump to take a softer stance.
China prefers to use economic sticks to get what it wants and it usually works. With the impeachment of South Korean president Pak, one of the front-runners for the South Korean presidency Moon Jae-in has said he might rethink Thaad missile deployment in order to promote closer China- South Korea ties. This came after pressure from South Korean businesses hit by China blocking tour groups to South Korea and a banning of Korean pop stars in China.
Going forward it is clear China does not want a military stand-off with the US – they are taking a responsible approach to the international community to focus on economic trade and fill in the vacuum left by the US since Trump is against NAFTA and TPP. President Xi is rumoured to be the first Chinese president to attend the World Economic Forum in Davos in January.
At the same time, Trump should ratchet down his rhetoric on one China. Beijing will use force if necessary to protect what it considers its sovereignty.
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