Niall Ferguson Says US And China Locked In A 'Cold War' — Larry Summers Calls It 'Hostile Codependence'

Despite the years of escalating trade, technology, and geopolitical tensions, historian and economist Niall Ferguson says that the United States and China remain entangled.

What Happened: Appearing on Bloomberg’s Wall Street Week on Saturday, alongside former Treasury Secretary Lawrence Summers, Ferguson used a term that he says he hasn’t used in a while, “Chimerica,” referring to the symbiotic relationship between the U.S. and China.

Ferguson, however, highlights the deeply asymmetrical nature of this relationship, which he had referred to as being “unsustainable” all the way back in 2007.

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“The U.S. does the importing, China does the exporting, the U.S. does the consuming, and China does the saving,” he says, referring to the argument he had made several decades ago, stating that “Chimerica” would eventually turn into Chimaera, a mythical fire-breathing monster that causes destruction.

“The interesting thing” about this, Ferguson notes, is that despite the increasing hostility between the two nations, the economic relationship between the two countries has been “extraordinarily persistent,” with the U.S. still importing enormous amounts from China.

“Somehow Chimerica and Cold War II seem capable of coexisting,” he says, at which point Summers weighs in to say that he likes to call this phenomenon “hostile codependence.”

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Ferguson’s comments underscore a key challenge facing the Trump Administration, that even in the event of deglobalization, it’s hard to vie for a clean break.

Why It Matters: The idea that the U.S. and China are economically bound to each other is gaining traction fast, with leading China analysts such as Jeremy Chan saying last week that “Xi has bowed to reality,” and is thus looking for direct negotiations with President Donald Trump.

Chris Pereira of the American Ecosystem Institute echoed similar views when he told Benzinga last month that “the U.S. and China remain deeply economically intertwined,” and any forced disengagement would be “mutually damaging.”

Photo Courtesy: Tomas Ragina On Shutterstock.com

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