The Aggravating Preparations of the China-U.S. Trade War

The U.S. and China, who hold the G2 title, have announced that they have launched a massive trade offensive. We do not know the severity of the impact on us; thus, all we can do is watch it closely and with anxiety. At the 11th annual conference of the Export-Import Bank of the United States, President Barack Obama said that various export plans could lead to job creation. The possibilities include plans like organizing government agencies under the Export Promotion Cabinet; setting up The President’s Export Council, an export committee under the direct control of the president, with specialists of small- and medium-sized companies in the agricultural sector promising to find export items; and trade financing through the Export-Import Bank.

President Obama announced the addition of the “Export Promotion Cabinet” last month. However, resetting the President’s Export Council, established under President Nixon in 1973, can be only viewed as unusual. The fact that President Obama is strongly involved in exports has attracted the public’s attention.

“China moving to a more market-oriented exchange rate will make an essential contribution to that global rebalancing effort,” said Obama, addressing the Yuan currency problem. At this point, it can be viewed that the U.S. strategy of direct expression and compromise with the Chinese could be better than an indirect expression of pressurizing them on Yuan appreciation.

China is also preparing a response. China, like the United States Trade Representative (USTR), said that they would tackle the international trade issue by establishing a body that will be under the charge of the Ministry of Commerce. To sum up this issue, China has changed its low profile into one of aggressiveness. This signals that China is willing to confront the issue seriously.

The two countries’ decisions would not go as far as antagonism, but in any case, the global trade environment can become very turbulent, and we must pay close attention to it. More than anything else, if global economic recovery slows down, there is a possibility that it will create trade pressure for our country. Therefore, we cannot be anything but nervous. In addition, the fact that both countries are the nation’s first and second trading partners adds more to our anxiety.

In this regard, the government, through the Korea-U.S. Free Trade Agreement (KORUS FTA), must check the trade issues with the U.S. and China. If it is necessary to resolve these issues, we must be active diplomatically. For our benefit, when Obama plans to ratify the FTA agreement at the appropriate time, we should be well prepared. In particular, we have to persuade the U.S. that our trade barrier is not the reason why the exports have been brought to a halt. In addition, if China creates a trade representative, our exports will suffer immensely. Therefore, all we can do is prepare ourselves for our own protection. We cannot stand too close to the “big men fighting” but rather stand far away from them.