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US/China trade – faulty thinking.

The trade war with China is warming up with a further round of US sanctions coming into effect next week.

It is hard to think of a more contradictory policy. Huawei, deprived of its long standing relations with western suppliers has been forced to go it alone. But of course the reality is that it will do so with the huge support of its own government. The emerging new products will share nothing with the US – they will indeed be “made in China “.

Commentators here have stressed the immediate wins for the US Administration. It is true the next generation of Huawei products may well suffer as its struggles to replace otherwise readily available apps, software, and chips from the west.

But the commentators miss the longer term threat. China, together with its 1.4 billion home market, has lost face. Its further resentment of western relationships is assured. It will focus all the more on building its own industries – on going it alone. It will build its relationships in the world’s fastest growing markets of Eurasia. And it will succeed. Its use of sovereign funds, the growing resentment of the US in Asia, and China’s own massive consumer market will ensure this over time. The while everyone loses. We will lose business in China, and the needed spirit of global collaboration, vital to tackle the manifest global problems we all face now, will have been constrained.

the US may win a limited battle – we are certainly aggravating the conditions for a full scale trade war which we may well not win .

Have a good day, James*

*Go to www.cookeleaders.com to access my new leadership master class.