China’s foreign minister, Wang Yi, issued a stern warning to Antony Blinken, the US Secretary of State, during his visit to Beijing on Friday. He stressed that the US and China face a crossroads in their relationship, seeing a choice between maintaining stability or spiralling downwards. These diplomatic tensions are influenced by several issues, including political disputes over Taiwan and Ukraine, and economic disagreements. This escalates as America’s attitude towards China’s economic tactics hardens.
Amid the escalating geopolitical frictions, Ireland finds itself in a difficult position. With its significant role as an international hub for US businesses, and expanding trade and investment ties with China, Ireland is caught in the crossfire. Depending on the outcome of the upcoming American election, with even greater challenges possible if Donald Trump retains his presidency, the nation will have to navigate a complex relationship with the US, as Washington starts to draw clearer boundaries between allies and non-allies.
An underlying apprehension among Western countries is that China, in an attempt to maintain economic momentum, is saturating their markets with environment-friendly tech items, such as solar panels and electric vehicles. It is also gaining a strong foothold in various technological sectors. Much like the US, the EU is weighing its alternatives, potentially levying import tariffs on electric vehicles. Western nations accuse China of dumping products at low prices on their markets, facilitated by the Chinese government’s direct or indirect subsidies. This propels a drive to bolster their own companies with more governmental support.
The extent of America’s economic focus on China is significant and goes beyond daily headlines. Case in point- the recent legislation passed in the US demanding that ByteDance, a Chinese company, relinquish control over TikTok within nine months or face a ban in the US. Although the validity of America’s fears regarding TikTok’s affiliation with the Chinese government is debatable, from Ireland’s perspective, this is secondary.
Ireland’s main concern is whether the Minister for Health, Simon Harris, is wasting his time on this social media platform. The view from the US, however, would be vastly different, focusing primarily on security issues. Furthermore, Dublin houses a major TikTok facility, adding another layer to the concerns.
In a wider political context, the Democrats and Republicans in the US Congress came to a mutual agreement last December, epitomised by a pivotal report developed by the House select committee. The report, addressing the strategic competition between the US and the Chinese Communist Party, demanded an essential reassessment of the US’s stance towards China. The report noted that the US has never before contended with a geopolitical opponent with whom it shares such profound economic ties.
This cross-party report holds major significance, comments Henry Farrell, an Irish academic at Johns Hopkins University in Baltimore. Farrell, who has extensively penned thoughts on “weaponised interdependence” – the utilisation of economic influence in a globally connected world – illustrates the sentiment of the report as one that currently applauds any actions the US can take to hinder China’s economic growth. The atmosphere in Washington exudes a sense of competition between both parties to surpass each other on this topic.
Ireland’s economic relationship with China has rapidly advanced in recent times, not only in terms of trade but also with significant Chinese investment. In light of this, President Biden, although more strategic in his approach, is aware of the need to remain competitive on the China issue. His discussion with Chinese president Xi Jinping in the US last year may have momentarily quietened tensions but the congressional report is likely to form the basis of the presidential election debate on China.
The report’s call for termination of standard trade relations with China, extensive restrains on US investment in the country, and for boosting American industry, will all have implications for American businesses. While Emily Benson from the Centre for Strategic and International Studies warns that disrupting normal trade relations and implementing new tariffs on imports from China would be detrimental to the US economy, it appears the US is prepared to shoulder these costs. This could have ramifications for countries like Ireland that view themselves as US allies. The prevalent sentiment in Washington at present, Farrell asserts, is that one is either an ally or an adversary. Top-level Irish officials were made aware of this during their recent trips to Washington, including the annual St Patrick’s Day event.
China has seen its economic ties with Ireland significantly expand in recent years, including key Chinese investments made in the nation. However, the previous year witnessed a downturn in Irish exports to China, dropping to €9.5 billion from nearly €14 billion the preceding year, primarily due to a decrease in computer chip exports. Analyses by the Central Bank link this to US prohibitions on certain advanced chip sales to China, imposed in late 2022. Reports indicate that the US continues to coax its “allies” to cease exporting technology and skilled labour to aid China’s advanced chip industry, notably Huawei.
This shift manifests how political dynamics can influence Ireland, which has largely specialised in sectors like high-tech and pharmaceuticals, sectors that are central in the global economic supremacy battle. In this wrestling match, US and China, the top two contenders globally, play crucial roles. The rapid shifts in globalisation, as nations streamline their supply chains and rely more on security, control, and associations with “friends”, is rewriting the rules of the game that Ireland has benefitted from. Ireland is set to face both challenges and opportunities.
However, the impact on globally influential US firms like Apple, a firm that organises global manufacture of its mobile phones from its base in Ireland, remains uncertain. The path ahead is laden with novel and profound questions for Ireland, a nation that has thrived by being multifaceted. These questions will persist whether Donald Trump regains presidency or if Joe Biden remains in the office. On St Patrick’s Day, while the Irish Prime Minister visited the White House, the Finance Minister made a trip to Beijing. However, the future may force Ireland to make a critical choice between the US, a major inward investment source, and China, a massive potential growth provider.