China knows all about trade wars and arrogance: but does Donald Trump?
The US-China trade war has reached fever pitch. But for China, trade wars are nothing new. In 1793, the Qianlong emperor rejected the British trade mission led by Lord Macartney and sowed the seeds of trouble, that is, the 1839 Opium War – over trade with Britain.
Certainly, Qianlong made a serious blunder in choosing not to do business with the British. Because of a trade imbalance with the Chinese, the British started a lucrative opium business. The opium trade caused a flowback of silver and deep-rooted socioeconomic problems in China. You might blame the emperor’s arrogance but he did not have a global view, as his “world” was confined to China and its tributary system. In the end, China was greatly humiliated in the two Opium Wars.
Now, the US president has kicked off a trade war on grounds of “unfair” trade between the US and China. The United States allowed China to enter the World Trade Organisation on the assumption that China would be reshaped in its image. But it gave the People’s Republic an opportunity to be great again. In fact, China has contributed tremendously to the stabilisation of the world economy, especially after the global financial crisis of 2008.
The events after China’s accession to the WTO in 2001 can be divided into three stages. In the first stage, Chinese factory workers took huge orders from foreign companies. But how much did each worker get for making, say, a US$15 Disney cap? Certainly, American consumers benefited from cheap Chinese labour.
The second stage was vividly described by Niall Ferguson as “Chimerica”: “a marriage made in heaven”, seemingly, as the Chinese did the saving and the Americans did the spending. Soon, however, the relationship between the two economies turned sour.
The third stage is what we are now seeing. US President Donald Trump complained about the trade imbalance with China and threatened punitive tariffs on all Chinese imports. As international trade has become more sophisticated, Trump has not only hit the Chinese, he has also hit US companies that rely on Chinese imports. Ultimately, consumer goods will become more expensive.
When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!
— Donald J. Trump (@realDonaldTrump) March 2, 2018
The rise of the US after the second world war had been made possible by leading world bodies it helped set up, such as the United Nations, International Monetary Fund, World Bank, and Asian Development Bank. But, as China becomes stronger, it is launching its own ambitious initiatives, such as the Asian Infrastructure Investment Bank, New Development Bank and African Development Bank.
The two trade wars that China has faced are different in nature: the Opium War was simpler, but the current conflict is more complicated – because it involves not just China but many other countries. The Qianlong emperor was arrogant and made a serious mistake. As for the current trade war, l believe readers would agree that it is Trump who has been arrogant. He may also have to pay the price for it.
Lo Wai Kong, Yau Ma Tei