Initially sparked by tariffs imposed by both nations, the dispute has evolved beyond trade into an ideological confrontation. Despite efforts to ease tensions, the conflict persists, with President Biden continuing previous policies and strengthening anti-China alliances. Chinese perspectives suggest that the trade war benefits China, as it exposes weaknesses in US technology and fosters domestic economic growth.
In 2018-19, a major trade conflict started between the US and China. The US imposed tariffs on about $350 billion worth of Chinese imports, and China retaliated by levying tariffs on an additional $100 billion worth of imports, a retaliatory action allowed by WTO rules (Bown 2018). Despite an agreement in January 2020 to halt further tariff hikes, the existing ones remain. The scale of this trade dispute is substantial. US tariffs affected around 18% of its imports, equivalent to 2.6% of its GDP, while China’s retaliation impacted 11% of its imports, equivalent to 3.6% of its GDP.
What began as a trade war over China’s unfair economic policies has now evolved into a so-called cold war propelled by differing ideologies. The tariffs were followed by restrictions on both China’s access to high-tech U.S. products and foreign investments involving security concerns and by allegations of unfair Chinese commercial practices.
Despite pleas from the U.S. business community to ease tensions, U.S. President Joe Biden so far has amplified his predecessor’s policies by strengthening anti-China alliances and implementing additional sanctions
As per reports, for the Chinese, the China-US trade war seems to be a very big fuss for the US side only, but for the Chinese, it is no big deal. It is insignificant to them. The trade war is actually good for China because they know the true face of the Americans as well as the problematic areas that they have to work on such as microprocessor design and fabrication. In the end, China will become stronger with less reliance on US technologies.
To most Chinese, the trade war exists predominantly in the press. The Chinese domestic economy appears to be very robust however with the Chinese Retail Market overtaking the USA in nominal dollar terms, a century-long first.
As per analysts, believing that the U.S. is winning this trade war is false; it is false information from a falsifying president and there is no objective evidence that this is true. Moreover, the Chinese believe in playing the long game, whereas the Americans play the short game. The way they are leapfrogging in technology and expansion into Asia, Africa, South America, etc, it looks as if they will win in the long term. Investing seems to work out better than bombing in the long term.
Why would the Chinese feel the impact when they compensated the USA soy, gas, petrol, meat, etc. commodities with imports from Russia, Brazil, Turkey, Israel, etc. USA’s existing and progressing sanctions and threats against Iran, China, Turkey, Germany, Austria, Russia, etc. had undesired counter effects. The most evident one is the rise of bilateral domestic currency balance of payments between countries thus avoiding the dollar. Replacing the dollar as a world currency is not an easy task and it might take 3–5 years but it is happening right here right now. No one can stop China.
China will win in an “all-out trade war.” The U.S. corporate structure is built on their factories. China owns a huge amount of US landmass as well. If China shuts down all factories for one week the US would crumble.
This trade war is a US problem, not a Chinese one. US customers and companies are paying tariffs, not the Chinese people. The incomes of China’s middle class are below that of the US middle class, but they are growing. So, it is no wonder that industries & companies in the US & everywhere else are intensely interested in involvement in the China economy. In the US, middle-class incomes have stagnated for several decades while increased wealth has gone to the top few. The only way to increase the size of the middle class is to do something about the 40 million or so below the poverty line.
US infrastructure is crumbling fast, but there is no plan to prioritize money to fix that. In China the infrastructure projects are impressive – high-speed rail & roads & bridges. The top ten longest bridges in the world are in China. In China & HK these projects, as well as high-rise apartment & office towers, are built four times faster and at a quarter of the cost of projects in the US.
No world or national economy, stock market, individual company, or currency, moves in a straight line. There are always pullbacks for complex reasons – recessions, saturation points (especially in the technology industries), pauses in auto buying, etc., – which are opportunities to rethink or restructure, to clear out failed companies, or to improve products or productivity. Then things recover & continue to grow. China is currently slowing down for more reasons than the ‘trade war’. But it has so much room to grow that its managed economy will quickly recover.
In technology, it is clear that China is catching up fast with the US. But it is still too dependent on key components from the US. This is where the US thinks that it can slow down, even stop, China’s rise by cutting off the supply of these components. But that just hurts US companies, & gives a huge incentive to China to quickly develop its components or to source them from other countries.
China is moving ahead and investing in robotics/AI and hardware and software development at rates that would make your eyes water. Under President Biden, Washington has taken the most serious steps yet toward weakening China’s play for economic dominance. He has retained some $360 billion worth of tariffs as well as many sanctions applied by Trump on Chinese individuals associated with human rights abuses in Xinjiang and Hong Kong, introduced unprecedented export controls that restrict Beijing’s ability to obtain advanced technology, and banned some U.S. investment in sensitive technologies that lawmakers fear could be used to aid China’s growing military. Meanwhile, several U.S. governors have signed laws preventing state pensions from investing in equities controlled by the Chinese state.
Biden’s willingness to continue economic escalation against China has raised questions about the future of the trade relationship. Neither U.S. tariffs on Chinese goods (and retaliatory Chinese tariffs on U.S. exports) nor U.S. export controls has shown signs of being rolled back. To further escalate the trade conflict, U.S. policymakers could seek domestic means of countering China. Some legislators have introduced bills that would expand Biden’s investment restrictions to include more Chinese industries; other proposed legislation would require federal government investment plans to divest from Chinese companies
