World Treads Warily on U.S.-China Tightrope

Frenchman Philippe Petit became famous in the 1970s for tiptoeing more than 1,300 feet above the ground on a cable between the Twin Towers of the World Trade Center in New York.

Nowadays it’s countries doing the high-wire balancing act as they navigate between two superpowers – the U.S. and China. Just one careless step could spell peril.

You can see it in the language in speeches by officials in smaller states like Singapore. You can hear it in the words of British Foreign Secretary Dominic Raab, who is due to meet U.S. Secretary of State Michael Pompeo this week.

In a private address this month to his diplomats, Raab spoke of the need to “pitch ourselves very carefully” with both the U.S. and China, adding countries like the U.K. are “not really interested in being snared in a new Cold War.”

The fancy footwork was also on display during a call yesterday between China’s Xi Jinping and European Union leaders, including Angela Merkel. The EU sought to keep hopes alive for an investment deal this year, even as it pushed Beijing to open up its markets.

Countries don’t want to be seen as being in a particular camp. But it’s going to get even trickier to navigate no matter who wins the U.S. election in November, because America’s stance on Beijing will keep hardening, even as China’s economy regains momentum.

And it’s not just a dilemma for heads of state. The corporate landscape (watch Nvidia’s deal on Arm) has its own minefields. That has potential consequences across the spectrum for markets, companies, economies and governments alike.