Trump to meet Xi after defiant China slaps U.S. with new tariffs
Quick update to the previous post about the trade war between China and the US.
It is unlikely that China will back down from this fight. Not now, not in this situation. Not without losing face, which is something that matters in China (and to Trump). Trump has made the situation one where no one can back down without losing face.
And therein lies the problem.
Both countries are economic giants, and both have the ability to weather a long-draw trade war. The winner to come away from this war, however, is the one who can better control domestic sentiments, and secure alternate markets. Given China's political system, controlling domestic sentiments is probably easier for China. But in terms of securing alternate markets, the US actually has better potential, given its long history of trade within the current international trade system.
The problem for the US, though, is that under Trump, it is not fully exploiting that potential. Instead, it seems to be walking away from it, even undermining it, by economically targeting countries other than China. The US ends up fighting trade issues on multiple fronts, when it should be focusing on a single opponent: China.
China, on the other hand, is trying to secure alternate markets through its Belt and Road Initiative. Unlike the US, which tends to tie economic aid with political ideals, China is selling a new model: economic assistance as an economic transaction, to be collected upon at a later date. Like a bank lending money to companies; the bank is only looking for monetary profits. This appeals to countries which do not subscribe to the ideals held by the US. If this approach bears fruit, China could potentially open up many more alternate markets to help it survive this trade war.
At the end of the day, the Chinese are long-term strategic thinkers. If they do choose to take up this trade war, it is because their projections have shown that China is likely to win it. And that is the scary part: what happens to the US, and the rest of the current international system, when China wins this trade war?
Quick update to the previous post about the trade war between China and the US.
It is unlikely that China will back down from this fight. Not now, not in this situation. Not without losing face, which is something that matters in China (and to Trump). Trump has made the situation one where no one can back down without losing face.
And therein lies the problem.
Both countries are economic giants, and both have the ability to weather a long-draw trade war. The winner to come away from this war, however, is the one who can better control domestic sentiments, and secure alternate markets. Given China's political system, controlling domestic sentiments is probably easier for China. But in terms of securing alternate markets, the US actually has better potential, given its long history of trade within the current international trade system.
The problem for the US, though, is that under Trump, it is not fully exploiting that potential. Instead, it seems to be walking away from it, even undermining it, by economically targeting countries other than China. The US ends up fighting trade issues on multiple fronts, when it should be focusing on a single opponent: China.
China, on the other hand, is trying to secure alternate markets through its Belt and Road Initiative. Unlike the US, which tends to tie economic aid with political ideals, China is selling a new model: economic assistance as an economic transaction, to be collected upon at a later date. Like a bank lending money to companies; the bank is only looking for monetary profits. This appeals to countries which do not subscribe to the ideals held by the US. If this approach bears fruit, China could potentially open up many more alternate markets to help it survive this trade war.
At the end of the day, the Chinese are long-term strategic thinkers. If they do choose to take up this trade war, it is because their projections have shown that China is likely to win it. And that is the scary part: what happens to the US, and the rest of the current international system, when China wins this trade war?
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