U.S.-China relations are going downhill with ‘no trust’ on either side, Stephen Roach says

Relations between the U.S. and China are on a “dangerous” path with “no trust” on either side, political observers told CNBC.

Beijing regards Washington as “its primary adversary” and “believes the U.S. is intent on closing off the path of China,” said Stephen Roach, senior fellow at Yale University’s Paul Tsai China Center.

“Right now, there is no trust,” he told “Squawk Box Asia” on Tuesday, who is currently attending the China Development Forum in Beijing.

William Cohen, former secretary of defense under the Clinton administration, underlined a similar sentiment and said the contentious back and forth between both sides has reached a “dangerous” level.

“I think it’s very dangerous whenever you have two competing powers, and nuclear weapons in the hands of both powers — that’s a very dangerous place to be,” Cohen, now chairman and CEO of the Cohen Group, told CNBC’s “Squawk Box Asia” on Monday.

In early March, China’s new foreign minister Qin Gang, said relations with the U.S. have left a “rational path” and warned of conflict if Washington doesn’t “hit the brake.”

More recently, things escalated again after the U.S. shot down an alleged Chinese spy balloon. This triggered Secretary of State Antony Blinken to cancel his trip to Beijing over the incident last month.

“The balloon was a spark that really put us on a swift downhill descent,” Roach added. “If a balloon can derail this relationship the way it did so swiftly, it just tells you how damaged and distrustful the two nations are of this relationship.”

China and the U.S. have also been sparring over other contentious issues.

Washington was “very concerned that China’s considering providing lethal support” to Russia in its war against Ukraine. Issues over Taiwan have also drawn China’s anger, with Beijing consistently warning that Taiwan is the “first red line” that must not be crossed.

“I just have been in China now for five days and the story here is the mirror image of what you pick up in the U.S.,” Roach said. “China is absolutely convinced they have an American problem.”

He added: “I’ll go back tonight to the U.S. and I’ll hear the exact opposite — that America has a China problem.”

Last week, the CEO of China-owned social media app TikTok, spent hours testifying to U.S. lawmakers, who wanted to know if American data could fall into the hands of the Chinese government.

There was “a lot of discussion” around the issue at the China Development Forum, said Roach. 

“The videos of that appearance really went viral,” he noted. “It really is something that I would say the Chinese experts, officials, and business people that I spoke with at the [forum] found very offensive and made them very worried.”

Historically, when you have two competing powers rising, it often leads to conflict “on a majority of occasions,” Cohen warned.

Beijing is fast becoming a global economic power that is closely competing with Washington on several fronts, according to him.

China has amassed an “amazing amount of weaponry that they developed in a very short period of time. Their economy, I think, is quite solid throughout the world,” Cohen said.

The relationship is “going to get harder,” he noted, who stressed that both sides need to engage to avoid misunderstanding or miscalculation. 

There is potential for tensions to flare up again after Taiwan’s office of the president confirmed last week that Tsai Ing-wen is scheduled to transit through New York and Los Angeles at the end of March during her visit to Guatemala and Belize. The office did not provide details of her itinerary while in the U.S.

On Taiwan, China has repeatedly said the issue is an internal affair. Beijing claims that the self-governed island is part of its territory, and maintains that Taiwan should have no right to conduct foreign relations.

The Biden administration has been keen to downplay the Taiwan president’s transit, calling it “not uncommon.” 

“President Tsai has done it six times. Every single Taiwan president in recent memory has done this,” White House National Security Council spokesman John Kirby, said at a press briefing last week.

“There’s no reason for China to overreact. Heck, there’s no reason for them to react. I mean, this is something that … is commonplace and has happened before, will likely happen again. It’s personal.  It’s unofficial,” he added.  

Both countries are “equally guilty and mismanaging their relationship,” said Roach. Washington needs to figure out its intentions toward Beijing, he added.

“How far are we prepared to go?” he asked. “If there’s ever been a time to focus on resolving a dysfunctional relationship that time is right now,” said Roach.