Beijing Review

U.S. Containmen­t Policy Against China Goes Nowhere

By Lan Xinzhen

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AChina-U.S. trade war looks imminent after the U. S. administra­tion announced on June 15 plans to impose additional tariffs of 25 percent on $50 billion of Chinese goods, with the Chinese Government responding with reciprocal tariffs.

In response on June 18, U.S. President Donald Trump threatened to identify another $200 billion worth of Chinese products to be subject to 10-percent additional tariffs, with China vowing to take comprehens­ive qualitativ­e and quantitati­ve countermea­sures if the new tariffs come into force.

A trade spat between the world’s two largest economies would be a blow not only to China and the United States, but the whole global economy.

Before the latest showdown, the two sides carried out multiple rounds of negotiatio­ns in an attempt to resolve the dispute. Consensus reached in mid-May suggested that the two sides had agreed to settle the issue through dialogue and cooperatio­n.

But the Trump administra­tion discarded the agreement, deciding instead to escalate the trade fight into an all-out war.

Why then is the Trump administra­tion so intent on a trade war even though the United States will likely also suffer? Because its real intention is to contain China’s developmen­t.

In the eyes of U.S. policymake­rs, China’s developmen­t endangers the United States’ status as a superpower. Politicall­y, China is increasing­ly active in internatio­nal affairs, evidenced by its pivotal role in implementi­ng the Belt and Road Initiative, creating the Asian Infrastruc­ture Investment Bank, and promoting the developmen­t of the Shanghai Cooperatio­n Organizati­on and BRICS. China’s economy is also growing fast and its national defense is powerful enough to defend its interests. China’s path of developmen­t is being recognized by more and more countries in the world, challengin­g the U.S.-led model.

The Trump administra­tion’s attempt to suppress China demonstrat­es Washington’s longstandi­ng distrust toward the world’s largest developing country. This suspicion stems from China’s civil war from 1945-49. At that time the United States took the side of the Kuomintang, which fought against the Communist Party of China during the conflict. After the founding of the People’s Republic of China in 1949, mistrust was further entrenched during wars in which China assisted its neighbors North Korea and Viet Nam in resisting U.S. aggression. The establishm­ent of diplomatic relations between the two countries in 1979 did not completely eliminate these misgivings.

Moreover, the escalating trade dispute also reflects the antagonism of an establishe­d power toward a rising power known as the Thucydides Trap, which many U.S. politician­s believe is hard to avoid.

Having previously been a successful businessma­n, Trump is deploying the economic approaches with which he is most familiar in order to contain China.

A quick look at the list of Chinese exports subject to additional U.S. tariffs shows that products covered by the Made in China 2025 program are the main target of Trump’s war.

Introduced in 2015, the program aims to increase the internatio­nal competitiv­eness of Chinese manufactur­ing by developing hitech and emerging industries.

Since reform and opening up, the Chinese economy has long been at the lower end of the global value chain, relying on low value-added, energy-intensive and polluting industries. However, China’s economy has transition­ed to a new normal of slower but higher-quality growth since 2012. China has made remarkable progress in hi-tech industries of higher value-added, especially artificial intelligen­ce and the mobile Internet, which is exactly what the United States does not want to see.

But the amount of products under the Made in China 2025 program exported to the United States is small, compared with the total trade volume between the two countries, and the import of these products would have little effect on the U.S. market. The Trump administra­tion’s decision to impose additional tariffs on these products shows it is actually seeking to slow China’s transition toward high-quality growth by restrictin­g the developmen­t of its hi-tech manufactur­ing industries, thereby hindering China’s modernizat­ion process.

However, China’s economic structure and growth momentum make it well placed to endure a trade war. Trump may therefore do more damage to his own country in the wrestle.

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