ButhastheUnitedStatesreallywon?Infact,thetradewarhasonlyjustbegunandthetwopartieshavethusfaronlytouchedglovesasboxersdobeforethefighttrulygetsunderway.Thefinalwinnerremainstobeseen.
SowhatabouttheimpactofU.S.tariffsonChina’seconomy?StatisticsreleasedbyChina’sMinistryofCommerceshowthatthecountry’sactualutilizationofforeigncapitalinthefirsthalfof2018increasedsteadily.Duringthatperiod,newlyestablishedforeign-investedenterprisesacrossChinagrewby29,591,anincreaseof96.6percentyearonyear.Theactualutilizationofforeigninvestmentwas$68.32billion,increasingby4.1percentyearonyear.
China’sforeigntradelookssimilar.OnJuly6,theUnitedStatesstartedimposingtariffsonselectedChineseexports,whilestatisticsfromChina’sGeneralAdministrationofCustomsshowthatthetotalvalueofChineseimportsandexportsreached2.6trillionyuan($376.8billion),withanincreaseof12.5percentinJuly.China’simportshit1.39trillionyuan($201.4billion)andincreasedby6percent,whileexportsreached1.21trillionyuan($175.4billion),withanincreaseof20.9percent.Inviewofthestatistics,thereisnothingtosuggestthatChina’sexportsandimportshavebeenadverselyinfluencedbythetradewar.
AsfortradebetweenChinaandtheUnitedStates,China’sexportstothelatterreached267.66billionyuan($38.79billion)withanincreaseof5.6percent,whileimportsfromtheUnitedStatesstoodat87.06billionyuan($12.62billion),increasingby4.3percent.NeitherdothesestatisticsshowanysignofTrump’ssupposedvictory.
TheTrumpadministrationhasalwaysimposedhightariffsamidtradefrictionswithothereconomiesinahighway-robberyapproach,beforelongannouncingtheconcessionofitsrivalsandthevictoryoftheUnitedStatesitself.Hethenreturnstonegotiationsandforcesrivalstoacceptanofferfavorabletohim.ItseemsthatTrumpintendstorepeatthisstrategyintheSino-U.S.tradewar.
China’sresponseisinstarkcontrasttotheillegalactionoftheTrumpadministration,havingfiledacom-plaintwiththeWorldTradeOrganizationtodefusethetensionundertheframeworkofinternationalrulesandwinningthesupportoftheinternationalcommunity.
Moreimportantly,thetradewarhasnotmateriallyinjuredtheChineseeconomyandtheChineseGovernmentiswellpreparedforanattritionalcampaign.
ThisiswhatTrumpisnotwillingtosee.AlthoughtheChineseeconomywillsurelybeaffectedifbilateraleconomicandtradeexchangesstallduetothetradewar,thedamagetotheUnitedStateswillbetoomuchforittobear.
In2017,thevalueoftradebetweenChinaandtheUnitedStatesreached$580billion,accountingfornearly15percentofthetotalforeigntradeoftheUnitedStates.Oncebilateraltradestagnates,U.S.foreigntradecouldbehurtasmuchasthatofChina.Itshouldalsobenotedthatin2017theUnitedStatesimported$430billionofgoodsfromChinaandChinabought$150billionofU.S.products.Ifthetradetensionsescalate,Chinaneedstoseek$150billionofimportselsewheretosubstitutethosefromtheUnitedStates,whiletheUnitedStateswillhavetoreplace$430billionofChineseexports.
WhethertheUnitedStatescanfullysubstitutesomanyChineseexportswithgoodsfromothercountriesstillremainstobeseen.TrumphasprobablyalsoconsideredthepossiblereactionoftheU.S.publiconcethetradewarsettlesinforthelonghaul,especiallywithallexportsfromChinacoveredontheU.S.tarifflist.
Chinawillnotyieldandispreparedforalong-lastingbattle,withTrumpmorelikelytoblinkfirstinthisparticularstandoff.Inclaimingthat“theU.S.iswinningthetradewarwithChina,”Trumpisrevealinghisintentiontonegotiate.
Aftersizingeachotherupandlearningeachother’sstrengths,thetwosidescanhopefullynowapproachthenegotiatingtablewithmorerespectforoneanother.
Sureenough,uponinvitation,ViceMinisterofCommerceWangShouwenvisitedtheUnitedStatesinlateAugustandtalkedwithhisU.S.counterpartaboutbilateraleconomicandtradeissues.
ItthusmakessenseforTrumptoportrayareturntothenegotiatingtableastheresultofhisvictorysoastoretainhisprideandfindawayoutoftheunwinnablesituationhehasgottenhimselfinto.
CopyeditedbyLaurenceCoultonCommentsto
AlthoughtheChineseeconomywillsurelybeaffectedifbilateraleconomicandtradeexchangesstallduetothetradewar,thedamagetotheUnitedStateswillbetoomuchforittobear