All-out trade war between China and the US leaves no room for optimism
- S. George Marano says disputes over trade practices are only part of the larger power struggle between the two. Despite recent conciliatory remarks, the conflict is unlikely to wind down any time soon. Expect it to drag on, if not escalate
What’s more, winning or losing the trade war has different requirements for each party. From a US perspective, to win, it needs full Chinese capitulation. From a Chinese perspective, winning means the ability to remain standing. It is hard to see the latter submitting.
On the whole, the US is in the unenviable position of being damned if it does and damned if it doesn't, with respect to the rise of China. Fundamentally, the US believes China is stealing from it.
Observers should be careful that their optimism doesn’t turn into a denial of the obvious. With the impending March 1 deadline, meaningful approaches to resolving the trade war are still lacking, with token gestures being presented. Any agreements in the interim can be viewed as mere window dressing.
With the instigation and continuation of the dispute by US President Donald Trump and his administration, and the likelihood of Trump extending his presidency to a second term unless impeached, it appears likely that the trade war will continue into the unforeseen future.
Furthermore, with the US economy beginning to suffer, as is to be expected, such a downturn will be presented as China’s fault. This will provide further ammunition for the Trump administration’s bellicose stance towards China.
These US allies are also major trading partners with China and thus they are at risk from China inflicting severe economic pain in response, which it has done before. These nations are being forced to choose the politics of the US over the economics of China.
Given all these factors, we should expect a continuation, and even an escalation, of the US-China trade war. The only thing that will reverse the US’ current direction is a harsh realisation that it is fighting a losing battle. Nonetheless, with the current pervasive anti-China sentiment, Washington is likely to keep applying pressure.
Overall, any discussion of an agreement to minimise the trade war will only be short-term. We should expect a long and protracted battle as the US doubles down on its approach to China.
While all parties will suffer immensely, it is the US that faces the greatest risks. The implications include a permanent shift in the global order, along with the possibility of global instability for decades.
S. George Marano holds a PhD from the School of Management at RMIT University, Australia, and has an MBA and Master of Commerce from RMIT University