After nearly five years of economic conflict between the United States and China, which started after former US President Donald Trump announced the imposition of tariffs on Chinese goods in 2018 and the subsequent Chinese retaliatory response, the Financial Times shed light on a dispute over airline routes between the US and China which has emerged as a further sticking point in efforts to improve relations between the countries after US President Joe Biden and Chinese President Xi Jinping agreed stabilizing ties was necessary in November.
The Financial Times quoted informed sources as saying that the US has offered to grant Chinese airlines the same number of weekly flights between both countries as American carriers – but only if they agree not to fly over Russia.
Moscow banned US carriers from flying over the country after Washington prohibited Russian airlines from flying to the US in the wake of Russias war in Ukraine. Chinese airlines are not banned from Russian airspace.
US carriers have 12 weekly flights to China, while Chinese airlines have eight to the US. The American carriers face higher fuel costs than their Chinese rivals whose routes over Russia to the US are much shorter, the paper said.
US airlines have lobbied the Biden administration not to grant China more flights because of the cost gap. The shorter route over Russia also allows Chinese carriers the advantage of flying directly to the US east coast.
The paper quoted one Chinese embassy official as saying that Beijings proposal to equalize weekly flight numbers – to give both sides 12 – was “quite reasonable”. He blamed Washington for the stalemate in the negotiations, saying that China did not accept that its carriers should have to avoid flying over Russia.
The Chinese diplomat added that Xi and Biden had agreed on the need for more people-to-people exchanges between the countries when the leaders met at the G20 summit in Bali in November and stressed that more flights were needed to meet that goal.
But US carriers, with the support of some members of Congress, want the Biden administration to resist granting the Chinese airlines more flights.
American Airlines chief Robert Isom this week told CNBC there could not be an “unlevel playing field”.
“We have to have the ability to fly the same lengths and not burn more fuel and add time on,” he said. But he added that he was hopeful Beijing and Washington would find a solution given there was a “lot of demand”.
The Financial Times said that the National Security Council and Department of State declined to comment on the status of the US-China negotiations. But an NSC spokesperson said they were “aware” of the concerns from the US airlines.
It cannot be business as usual with Moscow in the face of Russias war in Ukraine, the NSC spokesperson said.
According to the Financial Times, the dispute is the latest thorn in the side of US-China relations. After Bali, US Secretary of State Antony Blinken was scheduled to fly to Beijing, but he cancelled his trip after a suspected Chinese spy balloon flew over the US.
The Chinese official said another reason not to accept the US condition about circumventing Russia was that airlines from other countries flew over Russia without facing repercussions in the US.
“We hope the US side can refrain from politicizing the issue and consult with us for a proper solution,” he said.
China wants to increase the number of business visitors as it tries to woo investment from foreign companies after ending its zero-Covid policy. Beijing ultimately wants to see a big increase in the number of flights between the countries but has proposed an increase of four for now.
The World Bank had previously warned that technology decoupling and trade restrictions stemming from US-China tensions are hurting knowledge generation and innovation in both superpowers, posing a long-term threat to growth across Asia.
The World Bank underlined that the deepening division between the worlds two biggest economies now poses “the most immediate challenge,” and that “bilateral restrictions on technology flows and collaboration between large countries could reduce the global availability of knowledge.
Empirical evidence showed the “adverse effects of recent restrictions” on companies in China and the US as well as their top trading partners, it added.
Meanwhile, the DHL Global Connectedness Index earlier indicated that after nearly five years of open economic conflict, the US-China trade relationship is beginning to show a “general pattern” of decoupling even as globalization more broadly remains resilient.
The DHL report dug deep into trade data and found that both the US and China have meaningfully reduced the share of their imports coming from each other – which DHL said is indicative of economic decoupling.
In 2022, the share of imported Chinese goods as a percentage of total US imports fell to 16.6%, down from 21.6% in 2017 – the last year before the decisions made by former President Donald Trump. At the same time, the value of US goods exported to China in 2022 as a percentage of total US exports fell to 7.3%, down from 8.4% in 2017, the report said.
Source: Qatar News Agency