Stephen Roach. Photo: Zhao Juecheng/GT

Biden's win marks a more transparent, predictable and disciplined way of dealing with China as opposed to the shotgun approach to threaten or address bilateral concerns, said US economist Stephen Roach, a senior fellow at Yale University's Jackson Institute for Global Affairs and an expert on China-US economic ties, in a recent exclusive interview with the Global Times. But Roach added that an incoming US administration would not be a turning point for strained US-China relations, but rather an opportunity to draw a different approach in engaging with China.

The US will continue to pressure China on issues including intellectual property rights, technology transfer, cyber security, and China's compliance with the terms of WTO, Roach predicted. 

Roach calls Trump-initiated trade war with China "a big mistake," and suggests Biden to find a more workable approach to deal with the trade imbalances between the two countries.

Biden has railed against Trump's trade war - which studies estimate has trimmed 0.7 percent from US GDP - and would likely roll back many tariffs.

Roach anticipated an eventual reduction in tariffs, saying that "if left unchecked, the tariffs could lead to damage to both nations on both sides of the conflict." He instead touts an alternative approach of "bilateral investment treaty," which requires mutual opening of markets between the two countries.

"It could open up China's market to US companies, as well as open up US market to Chinese companies. And it would be based on enforceable and transparent rules governing mutual market access. We were close to reaching agreement on a bilateral investment treaty during the Obama administration but unfortunately those negotiations came to a halt as soon as President Trump took office in 2017," said Roach.

As COVID-19 cases in the US were recorded at more than 10 million, Roach pointed out that the adverse economic consequences of Trump administration's approach to the coronavirus "could not contrast more sharply with the robust recovery in China."

"Just as China led the world in economic recovery in the aftermath of the global financial crisis of 2008, it is playing a similar role today," Roach said in a recent commentary. 

He said China is playing a much stronger role in driving global economic growth than the US is.

Moreover, he is concerned about the "faster and harder crash" of the US dollar, which he called "remains the most overvalued major currency in the world."

There will be a sharp deterioration of our domestic savings brought about by very large, government budget deficits that are going to be just as large under the Biden administration, if not larger, than they were likely to be under President Trump, according to Roach.

The US has not done a good job in containing the virus, and it has used aggressive monetary and fiscal policy to try to compensate for its shortcomings in public health measures. "My fear is that will not work because we're now having a huge surge of infections in the United States," he told the Global Times." If America is successful in controlling the virus, it will be better positioned to resume its role as an engine of global growth, he said.

Under the impact of anti-globalization trends like populism and trade protectionism, multilateral mechanism promoting regional economic integration has become a popular alternative for countries seeking more cooperation. 

Roach expects new leadership in the US may bring a chance for the US to get back in the Trans-Pacific Partnership (TPP) framework negotiated during the Obama-Biden administration.

Calling for China to join the partnership is also becoming more popular. Roach called the mechanism "a constructive, rules based, high-standard multilateral framework."  

"Ultimately, it will work best if it eventually does include China. That should be viewed as an important long-term goal of trade liberalization and economic integration," he suggested.