The Resurgence of the West

Insights 11/14/2019
Reading time: 2 minute(s)

The U.S. and China are fighting for the dominant position in the world. If the U.S. and a united EU would react to China’s claims for power, a dominant, global system could arise that would be strongly oriented toward Western values.

The U.S. and China are in a trade conflict. In addition to economic issues, it is also about political claims to power. It remains to be seen how the showdown will turn out. Potential development scenarios are presented in the white paper “The Next Digital Superpower” of Vontobel and Eurasia Group. The first blog article assumed that there would be a baseline scenario and no clear winner. The direct competition between China and the U.S. is leading to a bipolar world.

An alternative scenario would be to noticeably reduce China’s influence through a coordinated reaction from the U.S. and its allies. The prerequisite for this is having someone else in the White House who takes multilateral approaches and for the conflicts in the EU to subside so that a uniform policy becomes possible.

The West is assuming technological supremacy

The U.S. and the EU are making a transatlantic compromise about issues in the area of technology and data protection. This increases the pressure on the Chinese technology sector with the goal of limiting its access to areas that are important for economic competitiveness, the military, and national security.

The sanctions against Huawei are reaching a maximum extent. The West is taking over the leadership when it comes to 5G technology even if it is being done at significantly higher costs and slower than Huawei would have done it. China will not just accept the coordinated activities of the U.S. and its allies, but it will try to weaken the Western coalition with economic countermeasures and bilateral diplomacy intended to drive wedges between members of the EU. To do so, China will use its ties to the 17+1 group among other things.

China’s concessions

The Communist Party is being put under more and more pressure in China since its social contract is being undermined by increasing economic weakness. If China is given the opportunity to save face politically, it may ultimately sit down at the negotiating table. The U.S. and its allies will take advantage of their economic strengths and work out compromises that are strongly oriented to Western values.

The situation that is described here depends on how far-reaching a coalition led by the U.S. is. The probability that China would actually be successful in its attempts to weaken the coalition is high. It could also be difficult to achieve the required political stability in Europe. That is why this scenario is classified as less probable than the baseline scenario.

Coming up soon on the Inspirations Blog, find out what will happen if the U.S. and China agree on compromises about important issues.

The Next Digital Superpower: Scenarios for the U.S.-China conflict

The U.S.-China trade conflict dominates global business headlines. However, it is about more than a hand-ful of trade disagreements. Instead, the present conflict is the cumulation of a long-building undercurrent of fundamental disagreement about the state of the world.

In the whitepaper “The Next Digital Superpower”, Vontobel, working in cooperation with the Eurasia Group, conveys an understanding of the drivers of the complex interdependencies between political, so-cial, and economic trends. The study also analyzes the potential impact on the global economy over the next five years.

Download the whitepaper here for free!