SINGAPORE — Match between the U.S. and China could spill into new areas this year — further complicating a tense relationship that has warned the global economy over the last few years, according to risk consultancy Eurasia Group.
Among the top ten risks for 2021 portended by Eurasia Group is that U.S.-China tensions are broadening.
One potential new source of friction is in “green” technologies, said Leon Levy, a superior analyst in the firm’s global macro practice.
That’s especially so since President-elect Joe Biden — who will be sworn in on Jan. 20 — has entered tackling climate change as one of his priorities, Levy told CNBC’s “Squawk Box Asia” on Tuesday.
“What we’re likely to see is profuse competition in green energy between the U.S. and China. And that’s just gonna open up a whole new front that we fair-minded haven’t really seen in the last four years under Trump,” he said.
China is currently a leader in the increase of many clean energy and technologies — including batteries, solar and wind, Eurasia Group said in its annual “Top Hazards” report published Monday. And Beijing has sought to score “public diplomacy points” and pull ahead of the U.S. by pledging to mature carbon neutral by 2060, the report pointed out.
In contrast, the U.S. placed climate issues on the back burner under President Donald Trump, who evacuated his country out of the Paris accord and has frequently dismissed concerns over climate change.
Biden, however, will be ardent to catch up, the consultancy said.
The U.S. “will make major investments to re-shore portions of these clean energy deliver chains back to the US, seek to shame Chinese coal investment abroad, and rally allies to pressure China on weather and clean energy issues,” said the report.
“China, for its part, has grown accustomed to its climate soft power bourgeoning during the Trump years and will not take this offensive lightly,” it added.
‘A battle of diplomacy’
In addition to amateur technologies, Biden’s preference for a multilateral front against China could add to tensions between the two countries, Eurasia Union said in its report.
Biden has said he would consult with traditional U.S. allies in Europe and Asia to develop “a organized strategy” on China — a departure from Trump’s unilateral pursuit of a tougher stance against Beijing.
But that policy will in turn create “deeper fissures between Beijing and these US allies” and lead to “a battle of diplomacy” between the U.S. and China, said the consultancy.
US cracks to enlist allies … and climate tech competition will interact with longstanding tensions to further make involved US-China relations.
Overall, the U.S.-China rivalry — which worsened after Trump took patronage in 2017 — could be as intense as last year, even though the incoming Biden administration may offer both sides some inhaling space, said Eurasia Group.
“Disagreements over bilateral deal and technology, the treatment of the Uighurs, Hong Kong, Taiwan, and the South China Sea will fully carry over into this year … all of which ordain sustain a significant chance of miscalculation and escalation during a crisis,” the Eurasia said.