Speaking Thursday at the Bloomberg New Economy Forum in Beijing, former Secretary of State Henry Kissinger said the current trade war between the US and China could explode into an armed conflict larger than World War I.
“A discussion of our mutual purposes and an attempt to limit the impact of conflict seems to me essential,” says Kissinger, who engaged in trade talks with Communist China in 1971. “If conflict is permitted to run unconstrained, the outcome could be even worse than it was in Europe. WWI broke out because of a relatively minor crisis…and today the weapons are more powerful.”
The US and China have entered the “foothills of a Cold War,” but it is not too late to find a solution. To prevent war, explains Kissinger, will require a serious commitment from both sides to understand and overcome the political causes behind the conflict.
“Everybody knows that trade negotiations, which I hope will succeed and whose success I support, can only be a small beginning to a political discussion that I hope will take place.”
Factors exacerbating US-China tensions include:
- US sanctions on Chinese tech companies
- Accusations of IP theft and spying
- China’s persecution of Muslims
- US endorsement of the pro-democracy movement in Hong Kong
- Competition in the South China Sea
The trade war with China began in June 2018 when President Trump declared a 25% tariff on $50 billion of Chinese goods. Since then, both sides have imposed escalating tariffs that have squeezed the farming and manufacturing sectors.
President Trump had planned on signing a preliminary trade deal with China during a summit in Chile in November, but the event was canceled due to protests.
A new set of tariffs affecting $160 billion of Chinese goods is set to go into effect on December 15th.