Commentary: US-China trade war to continue on for years, not months

Commentary: US-China trade war to continue on for years, not months

Don't expect Chinese President Xi Jinping or US President Donald Trump to back down anytime soon in this trade war, says one observer.

China's economic growth has slowed as the country's leaders face a trade war with the US
China's economic growth has slowed as the country's leaders face a trade war with the US while also battling a debt mountain and pollution. (Photo: AFP/Johannes Eisele)

BEIJING: By reading prevailing media reports on China-US trade talks, one could conclude that negotiations should be wrapped up in a matter of months.

You hear dire warnings about the global economy standing on the precipice of collapse if Beijing and Washington choose to march ahead on trade wars.

The argument given: Higher trade tariffs result in surging inflation while China’s demise as the world’s leading manufacturer and exporter will drag down our closely inter-connected international economy.

Yet gloomy forecasts fail to reflect current financial trends.

The United States economy has just announced a 4.1 per cent GDP (gross domestic product) growth rate for second quarter this year. China’s GDP for the same period had risen 6.7 per cent.

There's further confusion when taking a closer look at monthly China-US trade figures, since you would expect trade numbers to trend downwards, but that's not the case here.

United States President Donald Trump declared trade actions against Beijing starting in March, but monthly US trade deficits with China keep rising.

US trade deficits with China stood at US$25.8 billion in March; US$27.9 billion in April; US$33.1 billion in May and US$33.4 billion in June, according to US Census Bureau statistics.

WHY BOTH CHINA AND THE US WILL PROLONG TRADE TALKS

What happened to those scary predictions that Trump in the White House would spark a world-wide recession? Well, President Trump will not change course on his America First agenda.

Donad Trump
US President Donald Trump speaks at a rally at Olentangy Orange High School in Lewis Centre, Ohio, on Aug 4, 2018. (Photo: AP/Carolyn Kaster)

Additionally, Chinese President Xi Jinping has no intention of backing down from an upcoming collision course over China-US trade talks either. Trump and Xi both recognise they have a brighter political future by prolonging trade talks for a few more years.

READ: We may be in the early stages of a new Cold war, a commentary

READ: Fork in the road as brewing trade war hints at revision of US-China relations, a commentary

Xi must show strength, especially since at the annual two sessions in March which China’s Congress and party leadership had convened, Beijing had scrapped term limits for the Chinese President and that would imply Xi wishes to stay in power for at least a third term, five years later.

One should also note that no country can avoid fluctuations in their economy.

China has enjoyed remarkable GDP growth rates for many years and that’s not sustainable. Beijing is also transitioning from a reliance on low-cost manufacturing and exporting cheap products, and moving forward with a nation-wide strategy to support high-tech innovations and a consumption-driven domestic economy.

The measures can improve the livelihoods of all its citizens but that would require tougher supervision on food and drugs safety, reducing pollution and rooting out corruption. Such actions would inevitably cause a slowdown in China’s economy.

China's President Xi Jinping takes his seat at the first closed session of the leaders of the
China's President Xi Jinping takes his seat at the first closed session of the leaders of the BRICS summit meeting in Johannesburg, South Africa, July 26, 2018. (Photo: REUTERS/Mike Hutchings)

The Xi-Trump trade wars can provide cover for Beijing to implement its sweeping reforms. And when the China’s economy faces challenges, expect the Chinese government and its state-owned media to blame Trump, not themselves, for the nation’s ills.

READ: China could easily win Trump’s trade war, a commentary

LOOKING LIKE A HEROIC FIGURE

With regards to Trump’s political prospects, he fears nothing more than Xi suddenly appearing at the White House to beg for surrender terms on trade negotiations.

Trump is relying on Xi to stay stubborn because both a majority of Republican and Democrats voters favour tougher trade measures against Beijing.

By fighting China, Trump casts himself as an heroic figure.

Trump wants the Republican Party to win the mid-term elections. At the moment, Republicans remain poised to keep control of US Congress and Senate, which gives momentum for Trump to launch his re-election bid for the White House in 2020.

Trump’s chances of winning in a landslide can be assured if he sways labour union voters to his side. The American Federation of Labour and Congress of Industrial Organisations’ boss Richard Trumka has already signaled his “qualified support” for Trump’s trade policies.

DON'T EXPECT A SURRENDER

Yet as the trade war heats up, the Chinese media has issued scathing attacks on Trump, but that demonstrates desperation, because the Chinese are brilliant negotiators.

The Chinese and its media rarely get emotional unless it’s about territorial sovereignty issues.

Most instances they do not want their rivals to know they are angry, because it demonstrates a lack of control over their emotions. When negotiating, they are at their best when deal-making with a poker face.

US President Donald Trump (R) said that he and China's President Xi Jinping "will always
US President Donald Trump (R) said that he and China's President Xi Jinping "will always be friends, no matter what happens with our dispute on trade" (Photo: AFP/NICOLAS ASFOURI)

But don’t expect President Xi to surrender on trade negotiations soon and that’s what Trump prefers. Both leaders are expected to “fight with fire and fury that the world has never seen before” to defend the interests of their respective nations for the years ahead.

So don’t feel disappointed if six months from this date, the US-China trade war has not reached a final agreement.

Tom McGregor is a commentator on Asia-Pacific affairs.

Source: CNA/nr(sl)

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