Will US-China Trade War Grows into a World Trade War?

US President is putting pressures on almost all rich countries including all developed European countries, Canada, Japan and South Korea for reduction of US trade deficits with them. China is the first facing a trade war with the US but I pointed out in my post “Lucky! Thucydides Trap Leads to Trade instead of Military War” yesterday, Trump’s trade war aims first of all at stopping China’s rise so as to maintain US world hegemony. It is thus typically a war caused by Thucydides Trap.

The war may spread to other countries as China’s tariff increase on US goods may hurt other countries’ companies that produce goods for export to China from the US.

Reuters says in its report “German carmakers join American farmers on front line of U.S.-China trade war” yesterday, “Daimler on Wednesday cut its 2018 profit forecast while BMW, whose Spartanburg, South Carolina plant is the largest single exporter of vehicles in the United States, said it was looking at “strategic options” because of the threatened trade war.”

Chinese Communist Party (CCP) has three magic weapons, one of which is the United Front. US pressure on the above-mentioned countries provides China with the golden opportunity to form a united front in China’s trade war with the US.

The trick is to reduce the enemy and united with friends as much as possible so that China’s strength will be enhanced to the maximum while that of its enemy will be reduced to the minimum.

Chinese President Xi Jinping knows and can apply the trick well. While threatening the US with retaliation of tariff increase, he promises to carry on China’s reform to open wider to the outside world including reduction of tariffs on imports from countries other than the US.

Reuters says in its report “China’s Xi says has honored word on opening up economy” yesterday, “Chinese President Xi Jinping said on Thursday he had honored his word by taking action on steps to open up the country’s economy”.

If by so doing Xi is able to form a united front with the above-mentioned countries, the trade war will become a world war between the united front of China and those countries and the United State alone.

Comment by Chan Kai Yee on Reuters’ reports, full text of which can be respectively be viewed at https://www.reuters.com/article/us-usa-trade-china-xi/chinas-xi-says-has-honored-word-on-opening-up-economy-idUSKBN1JH1CD and https://www.reuters.com/article/us-usa-trade-china/german-carmakers-join-american-farmers-on-front-line-of-u-s-china-trade-war-idUSKBN1JH072.


China’s Busy Diplomacy to Grab World Leadership from the US

The US has to pursue isolation as world leadership is too heavy a burden and it has to boost its economic growth to maintain its number one status in world economy. That is certainly a correct move, but it gives China opportunity to grab world leadership from the US.

I have repeatedly warned China not to try to replace the US as world leader as it has not been strong enough yet, but China’s Xi seems precisely doing the opposite – making great efforts to grab from the US world leadership at least in economy and diplomacy.

Is Xi stupid in doing so? China’s gifted strategist Sun Tzu teaches us to maintain invincible position while not miss the opportunity to win. One relies on oneself to be invincible but cannot make one’s enemy lose the war, if there are no factors for the enemy to lose the war. That is why Sun Tzu says that one can know victory but cannot make victory.

Indeed one can play tricks to make one’s enemy commit mistakes and lose the war like what China’s gifted strategist Sun Bin did in his famous Battle of Maling. But what if the enemy would not be duped?

At the beginning of the Korean War, China’ talented general Peng Dehuai copied Sun Bin’s trick. His troops encountered South Korean troops first but retreated instead of winning an easy first battle as he had to avoid giving his enemy the impression that his troops were capable to fight.

On the contrary, he told his troops to throw things away while retreating to give General McArthur the false impression that his troops were in panic as they were afraid of well-equipped US troops. As a result, McArthur advanced rashly and had his troops encircled by Chinese troops. Peng’s surprise offensive caused US troops to collapse and retreat as fast as they could to the south of Seoul. The victory was brilliant, but what if General McArthur had not been arrogant but had stopped his rash advance and, instead, built fortifications along the frontline to keep the large part of North Korea he had occupied. With poor weapons, General Peng simply could not break US troops’ defense.

McArthur gave Peng the opportunity to win and Peng did not miss the opportunity to win though his troops were much weaker.

Now, China is not strong enough to win, but the US is giving China the opportunity to win. Shall China miss the opportunity? I pointed out in my post earlier that Chinese President Xi Jinping is a man of quick decision and quick actions. I now realize that Xi is taking the opportunity to win. That is why China has suddenly taken the initiative to improve relations with Japan, India and Indonesia, the most important nation of ASEAN. (See Reuters’ reports “China’s Xi, India’s Modi seek new relationship after summit” on April 28 at https://www.reuters.com/article/us-china-india/chinas-xi-indias-modi-seek-new-relationship-after-summit-idUSKBN1HZ019, “China Premier Li says open to increasing Indonesia palm oil import quota” on May 7 at “https://www.reuters.com/article/us-indonesia-china/china-premier-li-says-open-to-increasing-indonesia-palm-oil-import-quota-idUSKBN1I80RH and
“Japan, China hail warming ties amid troubled history” on May 9 at https://www.reuters.com/article/us-japan-china/japan-china-hail-warming-ties-amid-troubled-history-idUSKBN1IA1GF.

The busy diplomacy shows Xi’s efforts to grab world leadership from the US as US retreat in the world is giving China the opportunity to win. Japanese PM Abe in particular has failed sadly to persuade Trump to return to the Trans-Pacific Partnership (TPP) and has now to focus on ASEAN + three (China, Japan and South Korea), where China will certainly be the leader.

Under such circumstances, China may not allow the US to defeat it in trade war or how can China make others believe that it is a real rival to the US?

Comment by Chan Kai Yee on Reuters’ reports

India and China Have Eased Border Tension

Friendly meeting between Indian and Chinese border troops
Times of India’s photo

China and the US both have tried hard to win India to its side.

The US has been exploiting India’s border disputes with China to draw India into its quad to confront China. It promised to provide India with high weapon technology to attract India to participate in its quad, especially to play a major role in containing China.

Indian Prime Minister is very shrewd. He certainly wants to get US weapon technology, but refuses to be in the forefront of quad to confront China; therefore he refused Australia’s requests to join India’s naval drill with the US and Japan.

Sorry there can be no quad to contain China as a part of it Australia is missing. The US is now playing quad as sadly as playing bridge with only three people! Moreover, the other two Japan and India wanted quad to prevent the threat of a rising China while anxious to benefit economically from China’s rise. It seems that only the US sincerely wants the quad.

China has been trying hard to solve its border disputes with India and win over India to participate in its Belt and Road initiative.

Now, according to Times of India report “India, China hold border personnel meet at Chusul in Ladakh”, Chinese and Indian troops have been making efforts to ease border tension since the recent informal summit between Indian Prime Minister Modi and Chinese President Xi Jinping, during which the two leaders agree to ease border tension.

The report says, “Armies of India and China on Tuesday held a Border Personnel Meeting (BPM) during which both sides resolved to maintain peace and tranquillity along the Line of Actual Control, besides agreeing to work on additional confidence building measures.”

The BPM was held at Wacha border post in Kibithu, Arunachal Pradesh on Labor Day where the two sides celebrated the festival and exchanged gifts.

The report says, “The two sides hold BPM at five points — Daulat Beg Oldie in northern Ladakh, Kibithu in Arunachal Pradesh, Chusul in Ladakh, Bum-La near Tawang in Arunachal Pradesh and Nathu-La in Sikkim.

In fact, the border disputes are easy to resolve as the disputed area are poor barren areas with few natural resources. Sandwiched between China and its iron brother Pakistan, India will find itself lucky if the two iron brothers earnestly want peace with it. In fact, India is very clear that the other three of the quad will not join India in resisting the two iron brothers if they attack it.

Xi and Modi are successful in their efforts to ease border tension.

On the other hand, China’s Belt and Road initiative is very attractive. Can India keep on opposing it when the initiative has brought prosperity to its neighbors Pakistan, Sri Lanka, Bangladesh and Maldives?

The US wants to make others believe that China’s Belt and Road is predatory to make its neighbors heavily in debts in order to control them. What will China benefit from such an outcome? It will suffer huge financial losses but get nothing but the troubles to deal with the political instability caused by their insolvency. Only the US wants such control but has ended up in financial difficulties in both itself and the countries under its control.

China wants the countries that have joined its Belt and Road to prosper so that they will provide huge markets for Chinese goods. Moreover, Chinese investments there will bring China windfall returns if they become prosperous.

India will finally join the Belt and Road when it sees with envy the prosperity brought to its neighbors by China’s Belt and Road initiative.

Comment by Chan Kai Yee on Times of India’s report, full text of which can be viewed at https://timesofindia.indiatimes.com/india/india-china-hold-border-personnel-meet-at-chusul-in-ladakh/articleshow/63990171.cms.

Determined to Fight Trade War with US China Is Forming United Front

United front is one of Chinese Communist Party’s three magic weapons in its war of resistance against Japan and civil war against KMT. China’s busy diplomatic activities to form a united front against US protectionism now raises the questions: Is China determined to fight the trade war with the US so that it is forming an international united front against US protectionism?

Reuters says in its report “China fans trade dispute with hefty deposit on U.S. sorghum imports” yesterday that China slaps 178.6 percent deposit on imports of U.S. sorghum in retaliation of US tariff increase on Chinese exports. China justified its move by the finding of its investigation on US dumping of sorghum, but media regards the move as an obvious counter measure against US sharp increase in tariffs on China’s solar panels and washing machines.

Chinese President Xi Jinping promised reform measures that may ease US complaints and thus gave rise to hope that there would not be a trade war between China and the US as Xi is making concessions to satisfy the US. The sorghum move proves that Xi’s policies aim at pleasing EU and Japan for the establishment of an anti-protectionism united front against the US. That perhaps will be China’s way to subdue the enemy with diplomacy.

Reuters says in its report “Exclusive: China seeks trade firewall with U.S. allies in rush of ambassador meetings – sources” on April 17, 2018, “China’s international trade representative held a series of meetings with the ambassadors from major European nations last week to ask them to stand together with Beijing against U.S. protectionism, according to four sources familiar with the discussions.” Xi’s promise at Boao Forum on further opening obviously aimed at winning over EU to join China’s united front against the US.

On the other hand, China’s sudden warming up of its relations with Japan is obviously China’s such diplomacy too. Chinese Foreign Minister Wang Yi’s sudden visit to Japan and his joint statements with his Japanese counterpart on opposition to protectionism proves that China has won over Japan as Japan is also US President Trump’s target of protectionism. Reuters covers Wang’s visit in its report “Japan and China’s foreign ministers pledge to pursue improved ties” on April 15, 2018 and “Japan, China agree trade war will harm global economy” on April 16, 2018.

Comment by Chan Kai Yee on Reuters’ reports.

Peace through toilets and soy — Japan and India smile at China

Hard times ahead for “The Quad.”

Jeremy Goldkorn April 16, 2018

“The Quad,” or Quadrilateral Security Dialogue, a meeting of officials from India, Japan, Australia, and the U.S., was initiated in 2007, accompanied by joint military exercises. The unspoken target: China. The Quad members did not meet again as a foursome until last November, but not much of substance happened.

Judging from the news this weekend, it’s going to be very hard to make the Quad an effective grouping, at least when it comes to trade:
•The Chinese foreign ministry said on Monday that “China wants to stick to the ‘right path’ of bilateral ties with India, explore new areas for cooperation and ensure sound and steady development of the relationship,” according to First Post of India. The article notes that after last year’s stand-off in the border area of Doklam, “India and China have stepped up dialogue at various levels to reset the ties.”
•On the weekend, “India offered to export soybean and other agriculture products to China,” according to NDTV. The soy would replace imports from the U.S. that Beijing says it will tax in response to Trump’s proposed tariffs.
•“Japanese Foreign Minister Taro Kono said Sunday he and Chinese counterpart Wang Yi agreed to go forward with mutual visits by Prime Minister Shinzo Abe and Chinese President Xi Jinping,” reports Kyodo News.
•Japan and China have held their first high-level economic dialogue since 2010. Bloomberg says that neither side “is publicly linking the talks in Tokyo between Chinese Foreign Minister Wang Yi 王毅 and his Japanese counterpart Taro Kono” to Trump’s protectionist rhetoric, but “the meeting is a timely reminder of how much they both rely on the American market, as well as how interdependent the two Asian nations have become.”
•Can Japan fix China’s toilets? The Nikkei Asian Review reports that Japan has offered to lend China a hand with President Xi Jinping’s “toilet revolution,” a campaign to modernize the country’s notoriously disgusting public toilets and lack of modern sanitation in the countryside. The offer is of “technological help to improve facilities in rural areas and educate locals about sanitation.”

Source: SubChina “Peace through toilets and soy — Japan and India smile at China

Note: This is SubChina’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

Japan and China’s foreign ministers pledge to pursue improved ties

Chinese State Councilor and Foreign Minister Wang Yi (L) and Japan’s Foreign Minister Taro Kono gesture at their meeting in Tokyo, Japan April 15, 2018. Behrouz Mehri/Pool via Reuters

Reuters Staff April 15, 2018

TOKYO (Reuters) – Japanese Foreign Affairs Minister Taro Kono and his Chinese counterpart have pledged to improve ties between their nations and affirmed a commitment to stick with U.N. resolutions aimed at forcing North Korea to abandon nuclear weapons.
Kono met the Chinese government’s top diplomat, State Councillor Wang YiWang Yi, in Tokyo on Sunday, having made his own official visit to Beijing earlier this year.

Wang is the first Chinese foreign minister to visit Japan in a bilateral context in the nine years since Japanese Prime Minister Shinzo Abe and Chinese President Xi Jinping promised to reset the sometimes fraught relations between Asia’s two largest economies.

“Through mutual visits between our two leaders we agreed to pursue wide-reaching cooperation and improved ties,” Kono said after Sunday’s meeting.

Economic ties between Japan and China are close, led by corporate investment. The neighbors remain at odds, however, over China’s growing military presence in the South China Sea, through which much of the region’s sea-borne trade sails, and a dispute over ownership of uninhabited islets in the East China Sea, known as the Senkaku in Tokyo and the Diaoyu in Beijing.

Wang said his visit was in response to Japan’s positive attitude towards China.

“Since last year Japan has, in relations with China, displayed a positive message and friendly attitude,” he said.

The talks came ahead of a summit between the two Koreas this month and a meeting between North Korean leader Kim Jon Un and U.S. President Donald Trump. The U.S-North Korea talks are aimed at ending a stand-off over Pyongyang’s development of nuclear weapons and ballistic missiles.

“To establish a complete, irreversible and verifiable decentralization of North Korea we agreed to continue to fully implement all relevant U.N. resolutions and to work closely together,” Kono said.

Wang, who spent eight years in Japan as a diplomat, including three as China’s ambassador, is scheduled to hold further talks with Kono and other Japanese Cabinet ministers on Monday.

On Tuesday Japanese Self Defense Force officers will meet counterparts from China’s People’s Liberation Army at a reception hosted by the Sasakawa Peace Foundation in an effort to build trust between the military rivals.

Reporting by Nobuhiro Kubo; Writing by Tim Kelly and Ritsuko Ando; Editing by Sam Holmes and David Goodman

Source: Reuters “Japan and China’s foreign ministers pledge to pursue improved ties”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

Japan, China to hold high-level economic talks on April 16: Asahi

Reuters Staff April 10, 2018

TOKYO (Reuters) – Officials from Japan and China will hold high-level economic talks for the first time in eight years next week amid growing concern over an escalating trade row between China and the United States, the Asahi Newspaper reported on Tuesday.

Japanese Finance Minister Taro Aso, commenting on the reported meeting on April 16, said he was aware that China had suddenly proposed talks but did not have any other details.

The United States and China have threatened each other with tariffs amid the U.S. government’s growing frustration with China’s policies on trade and intellectual property.

Financial markets have been roiled in the past week on fears a full-blown U.S-China trade war could shatter global trade and economic growth.

Trump has made comments critical of Japan’s trade deficit with the United States and Japan’s low level of U.S. auto imports.

Trump has so far refrained from threatening Japan with tariffs, but officials in Tokyo have expressed their desire to avoid trade friction with the United States.

Japanese Prime Minister Shinzo Abe is scheduled to meet Trump for a summit later this month. Japanese officials worry that Trump could target Abe’s weak-yen policies, which reduce the price of Japan’s exports.

Reporting by Stanley White; Editing by Shri Navaratnam

Source: Reuters “Japan, China to hold high-level economic talks on April 16: Asahi”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.