We at Classiarius have said from the start, the US and China see each other as rivals and the South China Sea, the trade deficit and other challenges are here to stay. The first big challenges were mentioned by the US military in 1945, then a crisis in the Taiwan Strait Crisis – One, Two and Three. The Third Taiwan Strait Crisis of 1995 and 1996 took place and the result was President Bill Clinton sending two aircraft carrier battle groups to Taiwan, forcing China to back down. This humiliation put China on the path to build a blue water Navy and of course challenge the United States in the region. China is now constructing its 3rd carrier.
More recently a Chinese executive was arrested in Vancouver – this executive is the Chief Financial Officer of Huawei who is the daughter of the firm`s founder. As the confrontation with the US takes another step in the wrong direction, US and European equity markets fell, and US President Trump referred to himself by saying, “I am a tariff man.” The relationship with China is in a tailspin as the Huawei Telecommunications firm is said to have tried to sell US telecommunications equipment to Iran. The US was seeking to extradite Ms Meng Wanzhou, from Canada while China protested, saying that her human rights were violated.
The Trump Administration has employed the power of the US financial system and the of course the legal system to further its policy agenda. And we at Classiarius feel that the US will drive a wedge between China and its neighbors in the South China Sea and beyond. We must keep in mind that China has made it clear that it is an expansionist power and that it will use its Navy to challenge India, Japan and Australia in the future. It has become clear that the US is going to challenge China every chance it gets so this arrest of an executive is no surprise.
More on this China challenge in the coming weeks as it is far from over.