China must prepare for ongoing trade war with US, and companies must adjust
It’s possible that the trade conflict between the US and China will evolve into a “long-lasting war,” in which the two sides will be more accustomed to trade disputes and have to draw up long-term plans to maximize their national interests.
The US has announced investment restrictions and a list of protectionist tariffs on Chinese imports, forcing China to take countermeasures. If the tit-for-tat trade fight gets out of control, it will eventually lead to disastrous consequences. We believe China and the US, the world’s two largest economic powers, don’t want to perish together. However, there is also little chance that the trade conflict will end soon.
People must be prepared for the possibility that China and the US may be in disputes with one another over economic issues for a long time. The US trade deficit with China is a sign of global economic imbalances. Such chronic issues cannot be solved immediately. With China’s rise, the two countries have to reshape their economic relations. For the next several years, Sino-US economic ties are likely to be locked into a cycle of rising and falling tensions. People should be neither too optimistic nor too pessimistic. We must prepare mentally to face ongoing conflicts over economic issues.
China is likely to prepare for long battle against the US in a bid to protect the legitimate interests of Chinese companies. For instance, the government may need to draw up a longterm plan to train experts in international trade rules. The country will also diversify its trade partners and foster a highstandard free trade network.
Some Chinese enterprises have now recognized that the trade conflict won’t immediately end. The possibility of a long-lasting trade war is forcing them to adjust their internationalization strategies.
If US President Donald Trump starts a trade war, China will fight to the end and make no concessions. China is better at defense than attack, but a prolonged trade war will change this, and Beijing will become good at launching offensives to safeguard China’s interests.