Will China-U.S. trade conflicts intensify in the Trump era? How will the China-U.S. trade war play out? Soon after the results of the U.S. election were announced on Nov. 9 of last year, this became a hot topic for the international community.
Ever since Trump took office, U.S. trade representatives have announced several decisions on China-U.S. trade disputes that will place China at a disadvantage. As a result, discussions surrounding this topic are likely to become increasingly heated. But if we remain objective and assess the situation dispassionately, it is not difficult to see that the Trump administration will bring, despite the risk of potentially more trade disputes, new opportunities for trade development. Even if China-U.S. trade disputes led to a full-scale trade war that cost both countries, we are confident that this would maintain, even enhance, China’s position in the international trade order.
First, the “anti-globalization” label slapped on Trump by the media is not entirely a reflection of reality. In fact, as a businessman with business interests across the globe, Trump has a much deeper understanding of the benefits of globalization than professional politicians. He is targeting the existing, unsustainable model of globalization, not globalization itself.
Second, the Trump administration cannot be entirely blamed for its recent series of decisions on trade disputes with China. Indeed, the U.S. has been mounting pressure through trade disputes with China. According to China’s Ministry of Commerce, the United States initiated a total of 20 trade remedy probes in 2016, which is an increase of 81.1 percent compared to the previous year, and involved a sum total of $3.7 billion, which is an increase of 131 percent from the previous year. After its recent anti-dumping and anti-subsidy investigation of stainless steel sheets and strips from China, the U.S. Department of Commerce made a final determination to impose higher duties; how “abnormal.” But the problem is, these disputes were initiated during the Obama administration. It usually takes a few years after each trade dispute to initiate a ruling, so it will take some time before the Trump administration will have to deal with this trade dispute with China.
Third, since the election, Trump has made a series of aggressive claims concerning trade with China, and they are not much worse than those of politicians such as Bill Clinton, who had greatly improved trade relationships with China. Trump’s remarks essentially signal the contraction of an over-expanded empire. He is making a strategic retreat by carrying out aggressive, offensive tactics, because his fundamental goal is to revive the U.S.’s real economy by strengthening the country’s economic foundation. From this angle, Trump’s coming to power will bring vast business potential to China’s trade, in spite of the uncertainty due to a rising risk of disputes.
With China’s current economic volume and “ranking in the arena,” if a global economic decline is inevitable, we do not need to arrogantly compare our country’s growth rate with historical longitudinal data. So long as we can ensure the growth performance of other countries — especially of our main competitors, for the purposes of horizontal growth — our position in the international economic system will rise and our market share will grow, which will thus help us avoid being surpassed. To put it bluntly, as long as we maintain our composure, even if one or two more global economic crises were to happen, they would help us get rid of a few competitors.
Think about this: How could China, if Soros had not provoked the East Asian financial crisis in 1997, have turned around so fast and stood out among the region’s emerging economies? In addition, the subprime mortgage crisis substantially increased the proportion of China’s economic volume in the world economy. In 2007, China’s real gross domestic product accounted for 10.8 percent of the world economy and 24.8 percent of the emerging market economy, and China’s exports accounted for 7.8 percent of the world’s total and 23.2 percent among emerging markets; in 2015, China’s real GDP accounted for 17.3 percent of the world economy and 30.0 percent of the emerging market economy, and China’s exports accounted for 11.6 percent of the world’s total and 31.7 percent among emerging markets.
Although global trade has declined in the last two years and China’s economy has slowed down, China’s share of global trade is still on the rise. According to World Trade Organization statistics, in USD, global trade in exports grew 0.3 percent in 2014, China’s exports grew 6.1 percent, the U.S.’s exports grew 2.6 percent, the EU’s exports grew 3.7 percent (of which Germany’s grew 3.4 percent) and Japan’s exports shrank 3.5 percent. India, which the Western media thought was a hopeful candidate to surpass China, saw an increase of 2.5 percent in exports. In 2015, global trade in exports shrank by 13.5 percent, China’s exports shrank by 2.9 percent, the U.S.’s shrank by 7.1 percent, the EU’s by 12.5 percent (of which Germany’s shrank by 11.0 percent), Japan’s shrank by 9.5 percent and India’s shrank by 17.2 percent.
Therefore, China’s rivals in trade dispute negotiations better not think that the threat of a full-scale trade war will intimidate China. Constructive dialogue will achieve better results.
The author is a researcher at the Ministry of Commerce in China.