The US trade war against China is bound to fail: panellists

Keynote speakers at the South China Morning Post’s China Conference remain optimistic the world’s two superpowers will find a resolution, as ‘everybody will feel the pain’ if the tit-for-tat tariffs continue

PUBLISHED : Wednesday, 10 October, 2018, 10:04pm
UPDATED : Friday, 12 October, 2018, 2:41pm

Try as the United States might, efforts to isolate China through trade tariffs are bound to fail because of the world’s closely interconnected national economies.

That was the overwhelming message from keynote speakers on Wednesday at the South China Morning Post’s China Conference in Kuala Lumpur.

Speakers at the forum – the Post’s first-ever event outside its Hong Kong base – said they remained optimistic the world’s two superpowers would find a resolution to the trade war kick-started by US President Donald Trump’s sweeping tariffs on Chinese goods earlier this year.

Still, some, such as Alibaba Group executive vice-chairman Joe Tsai, warned the dispute was veering towards becoming a “cold war or geopolitical war started by the United States”.

US-China tensions: really about trade? Hong Kong’s former leader CY Leung questions motives

“I think what the United States is doing is a reaction to an unfounded fear that China’s rise is somehow going to threaten the national security and well-being of the American people,” said Tsai, who is also the chairman of the Post (which is owned by Alibaba Group).

We are so integrated that the [trade war] pain is going to be felt all over the world
Alibaba executive vice-chairman Joe Tsai

But that belief was misguided because of the tremendous integration of national economies, he told a panel discussion at the forum.

“It is really ill-advised for the United States to launch a war of some sort targeting China thinking that they can treat China like the way they treated Russia by isolating the economy and bringing on pain,” Tsai said. “We are so integrated that the pain is going to be felt all over the world. Everybody is going to feel the pain.”

Alibaba co-founder Jack Ma, appearing via video link, said he failed to see why the US viewed its large trade deficit with China as a major problem given the American economy had in fact benefited from decades of outsourcing low-end jobs to China.

He said he believed the United States would “suffer more” from the dispute – but added he remained optimistic because “as entrepreneurs if you are not optimistic [you shouldn’t be] entrepreneurs”.

Those sentiments were echoed by other speakers too.

Delivering the opening address at the two-day forum, former Hong Kong leader Leung Chun-ying questioned the real motive for Trump’s trade war.

Chinese investment in Malaysia: don’t judge it by controversies with Mahathir

The tariffs are part of Trump’s effort to increase pressure on Beijing to change course on what he believes are unfair policies that are behind the US$335 billion trade deficit his country has with China.

Highlights from the China Conference:

But Leung suggested the root of the tensions may lie elsewhere.

“Much of the trade friction between China and the US has stemmed ostensibly from the need on the part of the US to reduce its trade balance,” Leung said. But “what has not been discussed fully is that the US does not have the capacity to produce all the good it needs”.

He added: “This is where economists have openly questioned whether the root of recent tension is actually trade, and if it is indeed trade, they have also openly asked the US government not to conflate and confuse trade with other issues.”

High-profile Malaysian speakers said they saw some opportunity as the two global economic giants slugged it out over trade.

Abdul Majid Khan, a former Malaysian envoy to Beijing, said in a panel discussion that Malaysia and other Southeast Asian countries may have an advantage navigating the geo-strategic tensions because of the region’s long history of balancing the footprint of major powers.

Online payments still a challenge for Southeast Asia’s tech players

“The Chinese saying may say there can be only be one tiger in the mountain. But I think we [in Southeast Asia] know that there can also be two or three tigers in the mountain,” he said.

Malaysia’s youth and sports minister, Syed Saddiq Syed Abdul Rahman, said the dispute was a learning opportunity for young people in his country and elsewhere, and urged them to engage with their respective governments to come up with solutions instead of being mere bystanders.

“While we look inward, we must never forget to look outward as well,” he said.

The two-day conference continues on Thursday, with speakers including Malaysian economic affairs minister Azmin Ali and top trade bureaucrat Norazman Ayob.