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The US-China Trade War


In January of this year, US President Donald Trump began to implement his long-standing promises to implement a wide range of economic restrictive measures against China.
Experts have been offering their assessments of the parties’ chances for more than half a year in the event of a full-scale financial and economic confrontation. In favor of the US, there are at least three macro-factors
First, international trade still provides up to 40% of China’s GDP and tens of millions of jobs in the Middle Kingdom. While the share of trade in US GDP does not exceed 30%.
The second problem of China is a huge public debt. The slowdown in the economy, which has been going on for several years, is forcing Beijing to pump up the economy with state loans. According to the estimates of the Washington Institute of International Finance, released in June 2017, China’s total debt already exceeds 304% of GDP – an “unprecedented” magnitude for the country, even with such economic growth.
Finally, China is rapidly losing the advantages that it was previously provided by cheap labor. According to the consulting firm Oxford Economics, the cost price of one unit of products produced in the PRC is now only 4% less than in the US .
On the other hand, America has never measured its strength in a trade clash with an opponent like China in terms of the scale of the economy, industrial capacities and world ambitions, says The Wall Street Journal. China is not too open for American companies. As a result, firms heavily dependent on sales in China (most commonly referred to as Apple, Boeing and General Motors) will be held hostage to the conflict. Trump will have to constantly seek approval in Congress. While China has a detailed tactic for the trade war and full flexibility for its implementation. Finally, Time magazine believes, China can deliver targeted retaliatory strikes against companies located in those US states that are Trump’s key electoral base. In this case, Beijing can seriously undermine the prospects for the re-election of the current head of the White House in 2020.
And are American sanctions likely to significantly influence the change in Beijing’s policy? Sociological research shows that in a country subject to sanctions (trade restrictions), public discussion on this issue inevitably begins to focus on the causes of sanctions rather than the consequences. The discourse “for what?” Is replaced by the discourse “what will happen now?”. This effect of “forgetting” the reasons for the adoption of such measures can partly explain the low effectiveness of sanctions noted by many researchers as a way of changing state policy. If, after some time, the reasons for imposing sanctions cease to be discussed, and the current situation begins to be perceived by itself, without any connection with the decisions that provoked it, what changes can there be? In such circumstances, it is more likely that actions will be taken to adapt to new conditions, rather than to eliminate their cause .

In addition, issues related to international relations and the world economy are quite complex for citizens, therefore the media will play an important role in shaping public opinion on these topics. And in China they are under the direct control of the authorities. The Wall Street Journal quotes “anonymous Chinese officials” who believe that “a sense of American oppression will rally the population around the Communist Party, while American public opinion will split into supporters and opponents of the trade war.”

Finally, in confronting the United States (and even the united “West” as a whole), China will be able to rely on a number of institutional and regulatory international structures for financial, economic and political cooperation that can become a full-fledged alternative to current leading international institutions like the IMF or WTO, global influence of the West. “China-centric system of economic ties” already includes the Euro-Asian initiative “One belt – one way”, the Asian Bank for Infrastructure Investment, according to Western observers, “openly positioning itself as an alternative to the World Bank”, as well as the Comprehensive Regional Economic Partnership.

The aggravation of relations between the PRC and the US will certainly have serious geopolitical consequences. In particular, such a development of events is able to bring Beijing and Moscow closer together. On January 22, the military attaché of the Chinese embassy in Russia, Major-General Kui Yanwei, stated that the two countries must together withstand pressure from Washington [vii]. In the economic sphere, China, faced with growing obstacles to its investments in the US, could show greater interest in projects in Russia. At the same time, the qualitative expansion of financial and economic ties with the Middle Kingdom will require large-scale structural reforms from the Russian side.

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