Beijing: New short-term economic deals between the US and China may temporarily ease volatility in financial markets, but experts warn these agreements could lead to severe long-term economic pressures on third-party countries.
According to Anadolu Agency, these deals, reached during US President Donald Trump's recent visit to Beijing, are seen as a temporary measure amidst a broader strategic power struggle between the two nations.
The US-China relationship has evolved from a trade dispute into a complex rivalry involving various global issues, including supply chain restructuring, the Middle East conflict, and competition over critical resources like artificial intelligence. Trump's visit, marking the first time an American president has visited China since 2018, highlighted the ongoing systemic competition between the nations.
Recent years have seen US-China relations harden due to trade wars, tech restrictions, the Taiwan question, and energy security crises. During Trump's visit, limited deals were negotiated with American tech leaders to open China to Western tech through payment systems. These deals may reduce risk perception in global markets, but significant pressures could still emerge.
Arzu Al, an international political economy professor at Marmara University, noted the geopolitical importance of energy, with China securing a cost advantage by purchasing discounted oil from sanctioned countries like Iran, Russia, and Venezuela. This strategy lowers production costs and gives China a competitive edge, while the US aims to slow China's economic rise.
Tensions in vital energy corridors such as the Strait of Hormuz have intensified the energy security competition. The US has expanded sanctions on Iran and restricted Venezuelan oil access, which could disrupt China's alternative energy networks. Despite short-term pressure, China aims to balance this through strategic reserves, renewable energy, and non-dollar payment systems.
The competition between the US and China extends to tech, energy, finance, and supply chains, eroding the post-World War II multilateral trade order. China maintains its global export capacity by shifting production to ASEAN countries and Mexico, despite decreased US imports, creating a new structure of 'trade diversion.'
Al warned that this complexity in global production networks increases shipping costs and geopolitical risks, weakening the World Trade Organization's rules-based system. Nations now view economic relations through a national security lens, leading to friend-shoring, de-risking, and tech embargoes.
In the short term, US-China deals could ease financial market risks, but medium and long-term pressures on third-party economies are likely. Al highlighted the EU's risk from China's industrial production capacity, particularly in electric vehicles and green tech. The Global South faces opportunities and secondary sanction risks, leading to a fragmented, bloc-based economic order shaped by geopolitical risks.