Research US-China: Long-term tensions are here to stay no matter the election result

Danske Research Team Danske Bank A/S

The tensions between US and China are likely to remain high in the years to come. In the US the negative view on China is bi-partisan and shared in the population. And to some extent Democrats and Republicans compete on who is the toughest on China. On the Chinese side, it is also unlikely that it will give in to US demands for changes. China believes its' system is more effective in solving problems and meeting challenges and it comes from a collectivist origin that goes thousands of years back, which China is increasingly proud of. It sees the capitalist model of the US as failing in solving key problems in society.

While we don't expect the Biden administration to take any disruptive measures, such as a new trade war, the path of gradual decoupling measures such as rising tech restrictions on China and self-sufficency measures in new sectors (such as biotech) is set to continue. Human rights related sanctions may also increase. China will work on decoupling by seeking more self-reliance and invest heavily in tech and increasing energy and food security. Tensions are also likely to stay elevated around Taiwan where a new status quo with a very high level of tension is the new normal.

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Danske Research Team

Danske Bank A/S

Research is part of Danske Bank Markets and operate as Danske Bank's research department. The department monitors financial markets and economic trends of relevance to Danske Bank Markets and its clients.

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