America-China Trade War

The penultimate casualty shall be the people

by Anwar A. Khan

Because of the US’s unlawful posture, China clashed again over the weekend on trade and security. Both are accusing each other of destabilising the Far-East region and potentially the world.

Trump's trade policy is self-defeating. The process of boosting American economic and military might at the expense of competing national powers has resulted in blurring the lines between national security and trade policy. It is on-key that despite its stated commitment to liberalising the international trade system, US policy has on many occasions violated its pro-free trade rhetoric and turned to the protectionist direction.

Both Republican and Democratic administrations of America launched long and costly destructive war-mongering stance against almost all other sovereign and independent nations across the world. Perchance the greatest long-term threat to the vital interests of states across Asian region comes from the American actors who seek to undermine, rather than uphold, the rules-based international order.

It is because of America’s repeated chestyscuttlebutts, the mutual tie between the two countries (China and America) has come under increasing pains due to anacerbic trade war. Moreover, the US’s au naturel support for Taiwan and China's brawny military posture in the South China Sea have further added up fire to the fuel. It speaks of something that wherefrom the United States also conducts freedom-of-navigation patrols at its own free-will.

China has been particularly outraged by recent moves by the US President Trump's administration to heighten support for self-ruled and democratic Taiwan, including US Navy sailings through the Taiwan Strait that separates the island from China.

Naturally China’s Gen Wei took a more combative approach. He, dressed in his uniform of a general in the People's Liberation Army, said China would "fight to the end" if anyone tried to interfere in its relationship with Taiwan, which Beijing considers a sacred territory to be taken by force if necessary.

"If anyone dares to split Taiwan from China, the Chinese military has no choice but to fight at all costs ... The US is indivisible, and so is China. China must be, and will be, reunified," he further sounded out. The United States, like most countries, has no formal ties with Taiwan, but is its strongest backer and main source of weapons.

Meanwhile, Taiwan's government has expressed strong disapproval of the Chinese general's remarks, saying Taiwan has never belonged to the PR China that Taiwan would never accept Beijing's threats and that China's claim of its peaceful development is the "lie of the century".

Taiwan also vows to continue to strengthen its self-defence capabilities, defend the country's sovereignty and democratic system, and uphold the right of the 23 million people of Taiwan to freely choose their future. It is gearing up for presidential elections in January, and Taiwan President Tsai Ing-wen has repeatedly accused Beijing of seeking to undermine Taiwan's democracy and has vowed to defend the island and its freedoms.

Gen Wei, in a clear oblique reference to the United States, also said, "Some countries from outside the region come to the South China Sea to flex muscles in the name of freedom of navigation."

China has recently marked 30 years since a bloody Chinese military crackdown on protesters around Beijing's Tiananmen Square, refocusing scrutiny on China's approach to security threats.Taking questions from the floor, Gen Wei defended the Chinese government's handling of the Tiananmen incident, a rare official acknowledgement of the events of June 4, 1989. "The government was decisive in stopping the turbulence," he said of the Tiananmen Square crackdown. He also said, "Due to this, China has enjoyed stability, and if you visit China you can understand that part of history."

On the ongoing trade war, which has shaken financial markets around the world, Gen Wei said China would fight to the end if the United States wanted a fight. But if Washington wanted to talk, “we will keep the door open".

Trade tensions stepped up precipitously last month after the Trump administration incriminatedChina without justice or fairness of having reneged on its previous promises to make structural changes to its economic practices.

The United States began collecting higher, 25 per cent tariffs on many Chinese goods arriving in US seaports in an intensification of the trade war between the world's two largest economies. Thus Americahas slapped additional tariffs of up to US$200 billion of Chinese goods, inciting Beijing to strike back.The tariff increase affects a broad range of consumer goods, and intermediate components from China including internet modems and routers, printed circuit boards, furniture, vacuum cleaners and lighting products.

Beijing has grown more strident in recent weeks, accusing Washington of lacking sincerity and vowing that it will not cave to the Trump administration's demands. In retaliation, China began collecting higher retaliatory tariffs on much of a US$60 billion target list of US goods.Its rhetoric has hardened particularly since Washington put Chinese company Huawei Technologies Co on a blacklist that effectively bans the firm from doing business with US companies.

The trade war is also turning the US into a significantly protectionist country, with weighted-average tariffs possibly soon higher than India's. A paper from the Peterson Institute for International Economics states, that "Trump is . . . threatening tariffs on China that are not far from the average level of duties the United States imposed with the Smoot-Hawley Tariff Act of 1930". Tariffs may even stay this high, because the US's negotiating demands are too humiliating for China to accept. These levies will also lead to diversion to other suppliers. Tariffs may then spread to the latter, too: bilateralism is often a contagious disease. Contrary to Trump's protestations, the costs are also being borne by Americans, especially consumers and farm exporters. Ironically, many of the worst hit counties are in Republican control.

Some might conclude that the high costs mean that the conflict cannot be sustained, particularly if stock markets are disrupted. An alternative and more plausible outcome is that Mr Trump and China's Xi Jinping are strongmen leaders who cannot be seen to yield. The conflict will then either remain frozen or, more likely, worsen as relations between the two superpowers become increasingly poisoned.

Where does this leave US allies? They should not support American attempts to thwart China's rise: that would be unconscionable. They should indicate where they agree with US objectives on trade and technology and, if possible, sustain a common position on these issues, notably between the EU and Japan. They should uphold the principles of a multilateral trading system, under the auspices of the World Trade Organization. If the US succeeds in rendering the dispute system inquorate, the other members could agree to abide by an informal mechanism instead.

Most significantly, it should be possible to sustain liberal trade, at the expense of the US and China. Anne Krueger, former first deputy managing director of the IMF, notes in a column that, by its own foolish decision to reject the Trans-Pacific Partnership, the US suffers from WTO legal discrimination against its exports to members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which replaced TPP. The EU also has free trade agreements with Canada and Japan.

But this is not always relevant to trade. It is a canard that the trading system was based on the notion that international institutions should supplant nation states. The system was built on the twin ideas that states should make multilateral agreements with one another and that confidence in such agreements should be reinforced by a binding dispute settlement system. This would bring stability to the conditions of trade, on which international businesses rely.

This is good. But they can go further. Countries that see the benefits of a strong trading order should turn such FTAs into a "global FTA of the willing", in which any country willing to accept the commitments could participate. One might even envisage a future in which participants in such a global FTA would defend its members against illegal trade assaults from non-members, via coordinated retaliation.

Hostility between the US and China is a threat to global peace and prosperity. Outsiders cannot halt this conflict. But they are not helpless. If the big powers stand outside the multilateral trading system, others can step in. They are, in aggregate, huge players. They should dare to act as such.

In an insincerely false manner, America believes in 21st Century power politics where the strong must dictate to the weak. The US-China conflict has now become a global challenge. The penultimate casualty shall be the people. So, both sides shouldactualisethat any war under any form between the two would bring disaster only to both countries and the world.

-The End –

The writer is a senior citizen, writes on politics, political and human-centred figures, current and international affairs.

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