Benefits of the US-China Trade War

Compared with many world powers, including Russia, China still needs to learn and accumulate experience in dealing with global issues. In this sense, this trade war also teaches the Chinese a very good lesson.

When the Office of the United States Trade Representative (USTR) formally announced that it will impose additional tariffs on $200 billion worth of Chinese imports, the US-China trade war, which has lasted a few months, seems to enter a new cycle. 

Thе trade war launched by the United States does not have any effects on China’s economy or even other areas. The recent surging pressure among Chinese exporters, the stock market fluctuation, and even ubiquitous heated debates on the internet, all of them are the latest responses from China, the world’s largest trading country, under maximum American pressure. 

Probably the trade war will also bear bitter fruit in other fields. For instance, will the fight in trade be further extended to the financial sector? The unmatched US dominance in the international financial sector will inevitably continue to make trouble for China, while China, as the US’s biggest creditor country, will surely not surrender as well. With regards to security issues, it’s more worrying whether there will be an unexpected incident. After all, the US defense spending worth 700-odd billion US dollars is bound to find a way out. The US Navy’s frequent presence in the South China Sea or its actions on Taiwan affairs suggest that the US is accelerating its shift from “tolerance” to “containment” of China. 

As a result, the “benefits” of the trade war are manifold. First, it enables us to see that during the unprecedented era of international transition, the United States, as the No. 1 hegemony, still has the capacity to exert maximum pressure and deterrence on catch-up countries. Immanuel Wallerstein once said that the decline of international hegemony is far from a straight downward trend. Often the country will maintain its hegemony for quite a long time and still retain dominance over other countries in many ways. Wallerstein’s judgment, at least in the US-China trade war, has been verified. This tells those radicals, who could hardly wait to change dynasties, that various predictions such as, so-called “No. 2” to replace the “No. 1” is far from the reality in the near future. 

The “benefits” of this trade war, in particular, lie in rendering the Chinese better aware of their country’s development status quo and its role on the world stage. On the one hand, please don’t have any illusions that China will recoil in this trade war. “Fighting to the end” is probably most Chinese unswerving attitude. Objectively speaking, China’s total economic volume is 82 trillion RMB and the foreign trade just accounts for about one-tenth. For the 8 trillion foreign trade, Sino-US trade only accounts for about one-third. The impact of this war for China’s overall national economic growth rate is about 0.2% to 0.5%. The Chinese are able to manage this zheteng, which means “much ado about nothing”. 

On the other hand, the Chinese are better aware that first, China’s economy is still “developing”, leaving a big gap with the international cutting-edge technology. For the core industry, there is still much to do as well. In addition, there are many tasks, including poverty alleviation, to accomplish. To tell the truth, China cannot have the slightest sense of complacency. Second, only when China remains steadfast and more determined to push forward with the reform and opening up policy, can Chinese economy stand a greater test. For example, China’s macro-taxation burden has reached a level which needs to be changed. The expansion and opening-up of the domestic market is urgently required. The reform and internationalization of China’s financial system has already become the world’s big concern. Third, among all the emerging countries, China may be the most distant country away from the mainstream of world civilizations for several hundred years. In a pluralistic era, it is imperative both to give full play to its advantages among diverse civilizations, and to strive with other emerging and old industrial countries to reach the forefront of the world’s civilized progress. This, for China, is especially a rather tough test, which cannot be neglected. 

Compared with many world powers, including Russia, China still needs to learn and accumulate experience in dealing with global issues. In this sense, this trade war also teaches the Chinese a very good lesson. Our Chairman Mr. Mao Zedong once said, “China has made so many efforts to learn from the West, but unfortunately we have been beaten by the teacher again and again.” The trade war obviously cannot stand for the whole relationship between China and the West, and Trump cannot represent the entire West either. But this time, the Chinese already get a very clear picture, that is, even the most sophisticated, the most advanced and the most powerful Western country inevitably has some intermittent disorder. Maybe this will be the prelude to a long historical process. Because we know very well that the Sino-US trade, as a rational exchange process, which has naturally formed for years between the world’s most developed country and the biggest developing economy, cannot be dealt with in such a way as intimidation, deception and repression. 

At this critical moment, the Chinese also think about the fate of those who have also been hit by the sanction stick, especially Russia. Therefore, the deepening of Sino-Russian cooperation is indeed not the product of any whim, or could just be interpreted by such inexact terminology as “authoritarian alliance”. As a matter of fact, this is and will be an irreplaceable bilateral relationship in the long history. Here, it not only refers to the fact that there is a long way for China and Russia to co-develop, but also means that the decline of the West will also be a long and unpredictable process. Therefore, besides the trade war, we really do not know what calamity will befall tomorrow.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.