Ep. 304: Zongyuan Zoe Liu on Calculated China vs Unpredictable US
Apr 17, 2025
auto_awesome
Zongyuan Zoe Liu is a Senior Fellow for China studies at the Council on Foreign Relations, focusing on international political economy and global markets. In this conversation, she delves into the complexities of US-China relations, tracing their evolution from the Obama era to now. Liu discusses Xi Jinping's worldview shaped by generational trauma and explains China's strategic response to tensions. She also examines the push for de-dollarization among BRICS nations and reflects on the broader geopolitical implications for international trade and finance.
The podcast emphasizes the ongoing US-China tensions driven by a blend of historical narratives and contemporary economic policies impacting international relations.
Zongyuan Zoe Liu highlights China's calculated yet restrained response to US tariffs, showcasing a dual strategy of defending interests while promoting dialogue.
Liu discusses China's evolving economic partnerships with developing nations, reflecting a pragmatic approach to maintain influence amidst rising global protectionism.
Deep dives
Zhong Yuan Liu's Background and Academic Journey
Zhong Yuan Zoe Liu, a Senior Fellow for China Studies at the Council on Foreign Relations, has a diverse educational background that led her to a career focused on international political economy. Initially studying history as an undergraduate, she transitioned to work in education in China before pursuing her PhD in the U.S. Liu was compelled by the rise of China and sought to understand the implications for global dynamics, particularly how policies in Washington, D.C., affect international relations. This curiosity about economic issues led her to acquire a CFA to better understand the market language and enhance her analytical skills within the financial sector.
Evolving US-China Relations Over the Years
The podcast discusses the trajectory of US-China relations, highlighting a consistent trend of rising tensions over the past decade. Starting with the Obama administration's Asia pivot to Trump's trade tariffs and Biden's industrial policies, these shifts reflect a growing public discontent in the U.S. regarding China's economic practices. Liu notes that negative perceptions of China among Americans began to rise significantly around 2013, contributing to political campaigns that blamed China for job losses in the U.S. This evolving narrative has fostered a climate of competition and mistrust, framing China as a strategic rival.
China's Strategic Response to U.S. Tariffs
China's response to U.S. tariffs has been characterized as calculated yet restrained, aiming to leave room for negotiation while articulating its stance. Following the implementation of tariffs, the Chinese government issued a white paper emphasizing the potential for resolution through mutual respect and dialogue. This reflects a dual approach where China is prepared to defend its interests while also signaling a willingness to engage. Acknowledging historical grievances, Liu asserts that while face-saving measures play a role in China's response, there is a deeper cultural readiness to endure economic pain for long-term strategic goals.
China's Position on Global Alliances
Despite historically asserting a non-alliance approach, China is increasingly recognizing the need to forge collaborative relationships, especially with developing nations. While countries like Japan and South Korea maintain complex, wary ties with China, recent dialogues between China, Japan, and Korea suggest a shared interest in addressing rising protectionism. Liu discusses how China's economic partnerships are evolving, with emphasis on maintaining trade relations while navigating territorial disputes. This shift indicates a pragmatic approach to bolster China's economic influence despite existing tensions with larger economies.
The Broader Implications of De-dollarization
The conversation on de-dollarization reflects a complex reality—while the dollar's dominance is being challenged, its dethronement is unlikely in the near future. Liu points out that global trends reflect a gradual move towards settling transactions in non-dollar currencies, driven by geopolitical tensions and economic needs. However, despite a decline in the dollar's share of international transactions, it remains the most significant currency in global markets. This landscape indicates that while some countries may seek alternative currencies, the reliance on the U.S. dollar for stability continues to dominate international trade dynamics.
Zongyuan Zoe Liu is a senior fellow for China studies at the Council on Foreign Relations (CFR). Her work focuses on international political economy, global financial markets, sovereign wealth funds, supply chains of critical minerals, development finance, emerging markets, energy and climate change policy, and East Asia-Middle East relations. Dr. Liu is the author of ‘Can BRICS De-dollarize the Global Financial System?’ and ‘Sovereign Funds: How the Communist Party of China Finances its Global Ambitions’. In this podcast we discuss US-China tensions in run-up to Trump 2.0, Xi Jinping’s worldview and generational trauma, the strategic logic behind China’s limited retaliation, and much more.
