The logic of US-China trade frictions - EXCLUSIVE | Eurasia Diary -

19 January, Saturday

The logic of US-China trade frictions - EXCLUSIVE

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Trade disputes between China and the U.S. will not affect the stable development of China’s economy, a spokesman for the National Bureau of Statistics of China, Xing Zhihong told a news conference in Beijing on Tuesday. 
Political analyst and commentator Emanuele Scimia explained the logic behind imposing tariff. He stated for Eurasia Diary that politically, there is Trump's intention to accomplish one of his electoral promises - in this case, safeguarding American jobs against China's unfair commercial policies - and consequently revives his political base with a view to the 2020 presidential campaign. 
Korrespondent Emanuele Scimia
Emanuele Scimia
Political analyst, commentator
As far as the business aspect is concerned, the issue is more complex. The US president wants the country's trade deficit with China to be reduced consistently. 
The problem is that the US economy is now centered on the output of software and services, with an evident deficit in the production of innovative hardware, which America is obliged to buy from China and other Asian manufacturers. In trying to fix the trade imbalance with China, Trump's announced tariffs against Chinese products, as heavy as they look, will be useless if the US does not address such a structural problem in its supply chain.
Trade frictions and global economy
Emanuele Scimia said that Trump's tariffs against China have not entered into force yet, as they are going through an internal review process, and that will take some time. Global markets have so far reacted moderately to the US president's move. Oil prices have surged in reaction to the deterioration of the Syrian crisis these days, and not because of a potential trade war between Washington and Beijing.
Despite official denials from Beijing, Chinese President Xi Jinping's overtures to market reforms, rolled out at the recent Boao Forum, could signal China's willingness to negotiate with Washington. Trump basically wants that China to level the playing field for American companies, which are now forced to transfer intellectual property and technology if they want to operate in the Chinese market. 
The EU has leveled the same accusations, but it is moving in the framework of the WTO rules. The US president is filling his administration with China hawks, and that does not look promising for future negotiations. But after mid-term elections in November, a Democrat-led Congress in Washington could block Trump's excesses, including those toward China. This is a delicate issue, given that the US and China are interdependent both economically and financially, and Beijing holds nearly 20% of US foreign debt.
Expert also mentioned that Trump's approach to foreign policy is transactional. He could be leveraging the trade threat to exact China's concessions on other issues, such as North Korea and its nuclear program - a risky bet that could further complicate the scenario, possibly reducing chances of a mutually acceptable trade accord between the two parties.
Farid Hasanov

Eurasia Diary

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