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Global Perspective: As US, China lock horns, Japan, others must think about ways ahead

The number of people in the United States infected with the new coronavirus is approaching 2 million, and the death toll has exceeded 110,000. In late May, the assault and death of a black man by a police officer in the state of Minnesota led to protests spreading across the country, with some vandalism and looting occurring. President Donald Trump has asked governors to mobilize the National Guard and has taken a hardline stance, saying he will send federal forces to the areas if needed. What's happening in the U.S., particularly around this time of the year, brings to mind the so-called Tiananmen incident in Beijing on June 4, 1989.

In Beijing back then, some generals were disciplined for refusing to obey the order to point guns at the protesters. This time in Washington, it was the current Secretary of Defense, Mark Esper, who spoke out against the deployment of federal troops. Former Defense Secretary James Mattis, in his scathing criticism of Trump, almost likened the president to a Nazi and accused him of not uniting, but dividing the American people during the past three years Trump has been in office. These developments indicate that social fissures have reached the highest levels of the administration.

The current spread of demonstrations in the United States can largely be attributed to widening social disparities amplified by the coronavirus disaster and deep-rooted racism. African Americans earn less than 60% of the annual income of whites, and the number of deaths from the coronavirus per 100,000 black people is 2.4 times that of whites. The unemployment rate showed a slight improvement in May but remains at a high level of 13.3%, and the black unemployment rate even rose to 16.8%.

Despite the global financial crisis triggered by the collapse of Lehman Brothers in 2008 and the Occupy Wall Street movement in 2011, the rich and powerful in the United States have not been willing to work on social reform. Senators Bernie Sanders and Elizabeth Warren, who called for major reforms, have already lost the Democratic presidential nomination. But after the devastating blow of the new coronavirus, what is at stake in November's presidential election will be the balance between freedom and equality and the issue of growth and distribution.

Since the global financial crisis, there has been a heightened debate over immigration, and as some authoritarian states have shown remarkable growth, democracy has faced intensified criticism. But the core of the problem appears to be not in democracy, but rather in post-Cold War capitalism with excessive economic freedom.

It is ironic that a similar problem exists in China, a self-proclaimed socialist state. On May 22, the National People's Congress, which had been postponed for two and a half months due to the new coronavirus, kicked off. President Xi Jinping would have wanted to make the gathering an opportunity to mark his administration's victory over the infectious disease following strong measures such as the lockdown of Wuhan, the city where the outbreak was first reported, despite widespread damage caused by its initial delay in responding to the virus. However, the country had not completed the task of bringing the epidemic under control, as Jilin Province had to keep some cities on lockdown. On the platform in the Great Hall of the People, only those seated in the front two rows, including members of the Standing Committee of the Politburo, wore no masks, while the rest of the participants donned them -- a scene that symbolized the complex psychology of the Chinese leadership.

The annual target for gross domestic product (GDP) was not announced, while the figure for the first quarter is officially minus 6.8%. Premier Li Keqiang said at a press conference that GDP would actually grow this year if employment, people's livelihood and businesses were protected. However, the situation is especially tough on employment. A goal was set to create 9 million new employment opportunities this year, but university graduates alone number 8.74 million. The target unemployment rate was set at 6% in cities, but as of April it was already at 6%.

Even when jobs are available, late or missing wages have been further exacerbated by the new coronavirus, and now almost daily, worker protests are breaking out across China. The problem here is inequality. Premier Li said there are 600 million people in China with an average monthly income of only around 1,000 yuan (about 15,500 yen), and those figures were surprising even to the Chinese themselves. According to one prominent economist, a third of China's personal savings are concentrated in just 1,000 accounts, and those in the bottom 40% of income levels have little or no savings.

According to Premier Li, the central government will cut unnecessary and deferrable spending by more than half to maintain local government operations and protect small- and medium-sized businesses and people's livelihoods. But it is the local governments that will actually spend the funds transferred from the central government. Will the local governments really use the money to provide for the people? Will they pour the money into unreasonable investment projects and increase their debts, as they have in the past? The lack of fiscal discipline in local governments continues to be the Achilles' heel of China's economy.

In this year's budget, revenue will go down by 5.3% over the previous year. Despite these difficult financial circumstances, the defense budget is set to increase by 6.6%. According to the spokesman for the People's Liberation Army and Armed Police delegation to the National People's Congress, in determining the defense budget, the security ledger is more important than the economic books. In his emboldened reference to the current instability of the world China has to consider, the spokesman mentioned what he described as the hegemony and unilateralism of the United States and his observation of the move by the Democratic People's Party government in Taiwan toward national division. I can't shake the impression that China has chosen guns over butter. History makes it clear that it is a dangerous choice.

Taiwan hosted an inauguration ceremony for re-elected President Tsai Ing-wen on May 20, where a congratulatory message from U.S. Secretary of State Mike Pompeo was unveiled. Two days later, the report of government activities conducted at the National People's Congress talked about "promoting reunification" with Taiwan, but the usual words of peace had been dropped from the phrase "promoting peaceful reunification." Moreover, the decision that Beijing promulgate national security legislation applicable to Hong Kong has led to a strong backlash from not only the citizens of Hong Kong, but also the United States and West European nations.

China's hardline stance, which has been derided as "wolf warrior diplomacy," has been prominent, but the Trump administration has also been highly critical of China. It is likely that both sides are aiming to turn their peoples' attention away from the turmoil in domestic politics. Meanwhile, the rest of the world has been deeply troubled by the fierce dispute between the United States and China. There are surprisingly high expectations for Japan to do something about it. Now that the U.S. and China are both on shaky ground, the time has come for us to think deeply with the rest of the world about what can be done.

(By Akio Takahara, Professor, Graduate School of Public Policy, The University of Tokyo)

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