Timing Right, Diplomacy Corrected, Still US Will Lose to ChinaPosted: July 29, 2018
Trump has chosen the right timing, though a little too late, in starting his trade war with China in order to stop China’s rise and prevent it from surpassing the US.
China has already begun the reform to switch from export- and investment-geared to innovation- and creation-geared economic growth.
For such a reform, it has been carrying out its Belt and Road plan to move most of its export-oriented labor intensive industries to Silk Road economic belt and Made in China 2025 plan for creation- and creation-geared economic growth.
The US fears that the Made in China 2025 plan, if completed, will eliminate US technology dominance and US hegemony along with it. Therefore, it started a trade war with China to force China to scrap the Made in China 2025 plan.
As China has only moved a few export-oriented enterprises to Silk Road economic belt and as China has only carried out its Made in China 2025 plan for a few years far from achieving its goal, Trump should be regarded as having chosen the right timing to start his trade war to stop China’s rise. If China has moved the industries and completed the Made in China 2025 plan, the US will simply be unable to attain its goal to stop China’s rise.
However, Trump underestimated China strength of resistance until he lost the first round of his tariff battle with China. China’s retaliation of tariff hikes hits hard at his stronghold, the farmers in several states whose votes enabled him to win the presidential election and become the president now. China, however, seems intact in spite of the tariff hikes on its exports.
China even has the humor to broadcast in the US a cartoon with soyabean as its protagonist to laugh at Trump.
Trump, though furious, realizes that his weapons are limited. He threatens to impose tariff hikes on all China’s $500 billion exports to the US, but US Congress opposes that. It has already adopted a bill to cut or eliminate tariffs on toasters, chemicals and roughly 1,660 other items made outside the United States, of which nearly half are produced in China according to a Reuters analysis of government records.
Trump now realizes that since it is hard to win the trade war with China, it will be utterly impossible for the US to win the worldwide trade war he plans to start with EU, Japan, South Korea, Canada, Mexico and other countries.
He was wise to have changed his mind and reached a truce with EU. He will perhaps not be too harsh in dealing with Japan, South Korea and other countries.
The problems for him are that those countries are all America’s competitors. They certainly will not join the US in its trade war with China. On the contrary, they will exploit the trade war to take over America’s share in their most profitable Chinese market.
In addition, if Trump strikes too hard at China with tariff hikes in the trade war, he will make American people suffer and thus become unpopular. As a result, he may be unable to be reelected in the 2020 election.
Chinese President Xi Jinping, however, has no such worry. Chinese people will not hate him even if the trade war gives rise to some hardship in their livelihood as they are very clear that the trade war has been started by the US and that Xi refuses to be subdued as Xi cherishes their China Dream.
Lack of popular support and ability determines that the US has no chance to win the trade war.
The above has made very clear that Trump is unable to have popular support in his trade war.
His withdraw from TPP that Obama established to contain China shows his lack of vision, understanding and skill to deal with the contradiction between his goals to protect US interests and stop China’s rise.
Article by Chan Kai Yee.