Sino-US Trade War (Review)

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Sino-US Trade War (Review)
Sino-US Trade War (Review)

It is a clear understanding at this point that within the present Geopolitical Scenario, United States of America and Peoples Republic of China are the two major opposite powers. There is no hesitation on the fact that after the collapse of Soviet Union and within the span of next 28 to 29 years, China has not only steadied its position but developed to such an extent that they can look directly in the eyes of United States of America. USA, to its credit, was not sitting idle for the last decade or so, and they have developed the goods, whether it is the development of the more sophisticated Military Technology, stamping their position in the various Geopolitical Skirmishes or using the superior financial reserves to project their goals into reality. China, on the other hand has been jumping leaps and bounds in every field instead of solidifying their position. It is a classic case of when “An unstoppable force (China) meets an Immovable Object (USA)”, & one can argue that China still is lagging behind due its working structure where their working fundamentals are revolving around disassembling every tangible and intangible product possible & perfecting it to highest level hence, leaving a case of “Originality. “The primary factor that revolves around and where USA is trying its utmost to keep their punch is the ever so important “Trade Wars.”

A glance into history shows that United States of America and Peoples Republic of China developed their trade relations very rapidly after the development of their bilateral relations in 1979, although meetings had started back in 1972 backed by Pakistan. In 1980, both the countries gave the status of Most Favored Nation to each other. China developed very strong ties with America by becoming the 16th largest export market and 24th trading partners a few years ago. However, coming into the modern times, especially into the reign of Donald J. Trump, the situation took a turn for the worst in terms for their trade relations. Donald Trump (true to his words) implemented an “American First Policy” where strong tariffs are being warranted unnerving the whole global structure because of the significance of Sino-US Trade volume & impact. In 2018, According to USTR (United States Trade Representatives) there was concerns showed about China’s industrial policies (especially regarding 2025 “Made in China” initiative), technological & cyber security. As a result, Trump announced a memorandum imposing:

1) Restrictions of Equipment for Sensitive US Departments

2) Increased 25% tariffs on various Chinese products

3) A WTO case of “Intellectual Property Rights Licensing Regulations” in China.

China, in retaliation, made its own policies against USA making its terms stricter and targeted multiple products of USA and interestingly, started a dispute case on US and Trump for purposing 100 billion tariffs on Chinese commodities. Thus, began a series of “trade war exchanges” for the next few days where additional tariffs were imposed by both the parties and it resulted in a series of exchange of additional tariff blows and whose impact lasted until the meeting of Donald Trump with Xi-Jinping. The trade war implications were not just bilateral. It involved several high stakes Western countries and East Asia disrupting the supply chain. Japan got involved & true to their policies; China was referred to have excess capacity with huge government backing thus resulting in unfair advantages. This could have exceeded further but luckily, after the meeting of the head of states in April 2017 things improved for the better in respect to a trade war. This only marks the uprising of China as a global giant and the type of market it is feared to become.

Whether or not the dive in the 2017 “trade war” could have further implications or not. It has resulted in demonstrating the Western concern of China’s might prowess and rightly so. According to global financial service Credit Sussie, China has overtaken USA in terms of the largest middle class. Brooking Institute claims Chinese spending trend will grow from 4.2 trillion (2015) to 14.3 trillion (2030). Major USA companies have projected their trend to be under the Chinese favors. BOEING has claimed that in the next 20 years, China will be the largest commercial airplane customer along with USA and its demand will be projected around 7000+ airplane estimating over 1 trillion dollars. Similarly, General Motors (A USA based Multinational Company.) shows their sales of cars and trucks to be higher in China than in the United States which will increase by 5 million units around 2020.

It is clear at this point that all the indictors are projecting the upward trajectory of Peoples Republic of China. Ironically, where the US & Trump could have hindered the progress was the Trans-Pacific Partnership (TPP) and it could have been beneficial. But Trump’s execution has been surrounding around tariffs where he has even warned of 45% tariffs on Chinese exports due to manipulation by Chinese firms. Overall, the possible trajectories can be estimated & their results can be calculated based on numbers & factors. However, there are difficulties due to the notion of steps that can affect the whole trade game. But, considering the bigger picture, the Sino-US trade war should be ideal enough to such extent, that it does portray dire effects on the rest of the world especially the underdeveloped countries that might take the biggest negative out of this whole Sino-US “Trade War.”

Article by: Muhammad Amin & Dr Amir Ahmed Khuhro

URL: Margalla Papers, Volume. XXIII, Issue I, 2019

Review by: Muhammad Fahad

About Author: Muhammad Fahad is student of bachelor’s in computer sciences from University of Central Punjab. His areas of Interest include AI, Quantum Development, Space & Defense Technology, History & Geopolitics.

Note: The views expressed in this article are the author’s own and do not necessarily reflect the editorial policy of Pakistan Strategic Forum.

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