US-China trade war to benefit Malaysia? Not so fast, says ex-Chinese diplomat

China and the US have been locked in an escalating trade war. (AFP pic)

KUALA LUMPUR: A former Chinese diplomat has cautioned against buying into the presumption that Malaysia will benefit from the trade war between the US and China.

Dr Ruan Zongze admitted that the escalation of the trade war will certainly have an impact on Malaysia.

“Some people may say that Malaysia can capitalise on the friction between the US and China, and to anticipate some shift in business from China to Malaysia.

“I don’t think the assumption that Malaysia will benefit from a trade war is an accurate assessment,” he told a forum titled ‘US-China Relations: A View from China”, held at the Institute of China Studies (ICS) in Universiti Malaya today.

Ruan, who is now with the China Institute of International Studies, a think-tank affiliated with the Foreign Ministry, pointed out that even if there were short-term benefits, in the long run, owing to the escalation of the trade war, the global supply chain will be interrupted.

“This interruption will hurt Malaysia as well. Secondly, there is the unilateral approach taken by the US. Like I said, China is not the only target. It will not be the only victim. They can target anyone.

“Today’s China may be tomorrow’s you. The US’ unilateral approach is a very sharp weapon and can hurt almost anybody,” he said.

Ruan also cited the unpredictability of US president Donald Trump, with uncertainty over what his next move will be.

“Unpredictability is the most powerful weapon Donald Trump has. He leaves everybody guessing. We cannot take anything for granted.

“If this trade dispute is not handled well, it will interrupt the global supply chain and not only hurt China, but could also hurt Malaysia and other Asean countries, that China has strong ties with,” he said.

Between January and May this year, Ruan said Asean had overtaken the US as China’s second largest trading partner, with the European Union being first.

Dr Ruan Zongze.

Ruan said the change was remarkable, with the US dropping to third, and Japan fourth. He also noted that if the US cuts itself off from the world, and starts conflicts around visas, trade and tariffs, it will get hurt.

“Asean has become more prominent. I do not see a limit in China’s cooperation with Asean. Its relationship with Asean has been booming.

“One of the key policies for China is to show respect and commitment to Asean centrality. I think this is fundamental to China.

“Asean countries are no threat to anybody. They are neutral. This is the best ever, the value of Asean centrality.

“From China’s perspective, we are fully committed to supporting this,” he said.

In the last several decades, Ruan noted that the secret to China’s success, has been its commitment to peaceful development. This is something China will insist on, as it is good for the country and serves its fundamental interests.

“China has no interest in being engaged in a conflict or war. They will shy away from that, unless their hand is forced,” he said.

China not the Soviet Union

Ruan said the US approach towards China will not work, simply because China is not the former Soviet Union, or Japan.

He pointed out how the US had, during the Cold War, defeated the Soviet Union through its policy of containment, by using numerous strategies to prevent the spread of communism abroad.

The policy had been a response to a series of moves by the Soviet Union to enlarge its communist sphere of influence in Eastern Europe, China, Korea, and Vietnam.

“Today’s China is not China’s China. It is the world’s China. We have close ties with everyone. China is the largest trading partner of 130 countries. Can you imagine that?

“In the last decade, China has been trying to embed its economic needs and interests with those of the rest of the world… to be part of the international system. China has signed over 500 international treaties,” he said, adding that the country was not a challenger of the current international order, but rather, a stakeholder.

Ruan said the country was also fully aware of its imperfections, and that it had a lot to prove.

“This is why China needs to further reform and open up. As a matter of fact, we understand, and are fully aware that we have a long way to go.

“We may be the number two economy in the world, but in terms of per capita income, China is lacking. We are aware of our own problems,” he said.

Prospects for US-China relations

In moving forward, Ruan said he was “not so pessimistic” about the prospects for US-China relations, and held a strong belief that both countries will find a way out.

“From the Chinese side, we study history, and we want to be different. We want to put US-China relations on a different track. We should not be stupid enough to repeat mistakes the old powers made.

“We should be smart enough to provide alternatives. And what are these alternatives? For China, we have been proposing to counterparts in the US, let us look at a new way to characterise this relationship because it is so extraordinary and unique.

“It must be based on principles of non-confrontation, no conflict, mutual respect, and win-win,” he said.

Ruan was however, more than aware that not everyone agrees with the Chinese version of US-China relations, but pointed out that China has a different voice.

“We strongly suggest and articulate that this is the only way for China and the US. We cannot afford alternatives. We cannot afford for the US and China to have a showdown with each other in a dirty or nasty way.

“In the past, our driving force was the fact that we had an external threat. Both China and the US worked together. We had a shared interest to confront the Soviet Union threat during the Cold War.

“Because the Cold War is over, the US, China and the rest of the world should enjoy peaceful development by growing the economy and addressing social problems.

“We do not need an external threat again to push US-China relations,” he said.

The future, Ruan said, should be about sheer responsibility. As two major powers, the US and China are responsible for bringing good and positive things to the world, instead of trade wars, tariff wars, and conflict.

“All this will put the rest of the world in a very awkward position. Both the US and China’s allies want good relations with the two countries.

“Picture this extreme scenario. If the US picks a fight with China, how many allies or partners will follow the US? Very few. If China picks a fight with the US, how many allies will follow China? Very few.

“Most of them, do not want the two to fight each other. They want to maximise their relationship and interest with both the US and China,” he said.

Both China and the US have been locked in an escalating trade war that has seen them level increasingly severe rounds of tariffs on each other’s imports.

Both countries recently agreed to restart trade talks after a hostile month-long standoff.