Much has been written about the growing polarization between East and West, embodied by two diametrically opposed leadership styles: Donald Trump, the figure of American unpredictability, and Xi Jinping, the methodical strategist at the head of China. However, this rivalry goes beyond personalities and is part of a multifaceted battle on the financial, commercial and technological levels. These clashes, which already define the contours of the new world order, will determine the global balance of the decades to come. While Trump seems to be preparing for a return to the White House in January 2025 and China is consolidating its unique model, it is imperative to decipher the deep dynamics of this global duel.
Mutual dependence: a forced alliance
Despite their rivalry, the two nations are linked by deep financial interdependencies. China holds around $3.2 trillion in foreign exchange reserves, including $860 billion in US Treasury bonds (data as of August 2024). These assets, essential for stabilizing the yuan and financing domestic infrastructure, underline Beijing's dependence on the American financial system. But this dependence is a two-way street. The American government relies on these purchases to finance its colossal debt, now estimated at more than $33,000 billion. A massive sale of these bonds by China could cause major instability in financial markets, but at the cost of a collapse in the value of Chinese reserves. So, like two poker players, Washington and Beijing hesitate to draw their weapons.
However, signals indicate a desire on both sides to reduce these mutual dependencies. Beijing is seeking to diversify its reserves by increasing its gold holdings (which exceeded 2,000 tonnes in 2024, a historic record) and investing in non-dollar assets. For its part, the United States is putting in place incentives to repatriate its strategic value chains and limit its exposure to Chinese influence.
This struggle for financial sovereignty is also accompanied by an ideological battle. The United States continues to promote the dollar as the global reserve currency, while China advances on the international stage with the digital yuan, used in a growing proportion of bilateral trade, notably in Asia, Africa and Latin America.
Control of financial flows: a global battlefield
Beyond reserves, control of financial flows is becoming a key battleground. The United States, through economic sanctions, continues to block Chinese companies' access to Western financial markets. In 2023, Washington imposed new restrictions on US investments in Chinese technology companies, limiting their ability to raise funds.
For their part, the Chinese authorities are strengthening their control over capital outflows. According to the People's Bank of China, outward foreign investment fell 12% in 2023, a trend expected to continue due to strict measures imposed by Beijing to prevent a weakening of the yuan. This policy reflects a centralized vision of economic control, in direct opposition to the American philosophy of free movement of capital.
At the same time, the two nations use international institutions as strategic leverage. China supports the expansion of the New Development Bank, led by the BRICS, as an alternative to the IMF and the World Bank, institutions perceived as dominated by Washington. Conversely, the United States is seeking to reform the IMF to limit Beijing's growing influence.
The Trump effect on tariffs
Donald Trump announced that he would double customs duties on several categories of Chinese products upon his return to power. These taxes, which had already cost the American economy around $245 billion according to a study by Columbia University, could further worsen the situation.
However, these measures do not only affect China. Many American companies, which rely on Chinese supply chains, are also feeling the consequences. Paradoxically, while Trump hopes to repatriate jobs, some companies prefer to invest in third countries like Vietnam or India, exacerbating American deindustrialization.
Despite tensions, Chinese companies continue to invest in the United States. In 2023, these investments were estimated at $38 billion, with stakes in strategic sectors such as real estate and green technology. However, the multiplication of American restrictions, particularly on semiconductors, has reduced these flows compared to the peak of 50 billion in 2016.
The main danger of this trade war lies in its global repercussions. A prolonged protectionist spiral could trigger a global recession, seriously affecting emerging markets that depend on these two giants for their exports.
GAFAM vs BATX: the duel of the titans
The technological terrain is undoubtedly the most determining. As innovation accelerates in areas such as artificial intelligence, quantum computing and 5G networks, the Sino-US rivalry is taking on unprecedented proportions.
On the one hand, American giants such as Google, Apple and Amazon dominate global markets. On the other hand, the Chinese giants – Baidu, Alibaba, Tencent and Xiaomi (BATX) – are expanding their influence, particularly in Asia and Africa.
In 2023, China invested 21% of its GDP in research and development, compared to 3.2% for the United States. This strategy has allowed Beijing to overtake Washington in certain areas, notably 5G, where Huawei remains world leader despite American sanctions.
In the field of artificial intelligence, the United States maintains a slight lead thanks to players like OpenAI. But China is quickly catching up, having announced investments of $100 billion in AI-related projects by 2030.
Another key arena is quantum computing, which could disrupt cryptography and global communications. In 2024, the University of Science and Technology of China announced a major breakthrough in the field of quantum networks, surpassing the current capabilities of American laboratories.
Defense technologies, notably hypersonics, and new infrastructures such as low-orbit satellites, also accentuate the rivalry. In 2024, SpaceX and Chinese company CASIC have both successfully launched massive satellite launches, strengthening their surveillance and communications capabilities.
And Europe in all this?
As the East-West confrontation intensifies, Europe seems to be struggling to position itself. Trump's appointment this week of Charles Kushner, father of Jared Kushner, to the post of United States ambassador in Paris, underlines the strategic importance that Washington attaches to France. Known as a “hawk” and close to Trump's inner circle, Kushner could be a key player in strengthening transatlantic relations, particularly amid global rivalries.
The question remains whether Europe will be able to play the role of arbiter or whether it will be forced to align itself with one of the two superpowers. In a fragmented world, the European Union could paradoxically become the centerpiece of the new world order – if it manages to overcome its internal divisions…
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