Macroscope | Discretion may be the better part of valour in a trade war with worldwide economic implications
- China is right in arguing that as a ‘developing country,’ it is entitled under WTO rules to levy protective tariffs on vehicles and other imports from the US and elsewhere
The US-China trade war could be called a Comedy of Errors, to borrow a phrase from Shakespeare, except for the fact that it is isn’t funny, and it could turn into tragicomedy if, as some fear, the confrontation over trade should develop into something more serious such as security incidents.
What is grimly amusing is that US President Donald Trump, who launched the war, does not seem to understand where China is “coming from”, while China’s President Xi Jinping does not seem to understand that his retaliation against Trump’s opening salvo is going nowhere with Washington.
On the one hand, Trump has not grasped the fact that China is perfectly within its rights to claim at the World Trade Organisation that it is a “developing country,” that qualifies for protective tariffs. On the other hand, Xi has not grasped the fact that this claim is doing China more harm than good.
One solution being canvassed is for China to open the car import market to the US via a bilateral trade agreement, and to abolish its requirement that foreign investors set up ventures with Chinese partners. This would let Trump declare victory and Xi to get on with making China great again.
Remarkably, this idea from Xing Yuqing, a prominent Chinese academic whose writings are published quite widely in China, does not seem to have created any fear there of “loss of face” on China’s part, and it even appears to have garnered quite extensive support among Chinese government officials.