Vote-hun­gry at­ti­tude to­ward trade war with China can be US’ Achilles’ heel

Global Times US Edition - - BIZCOMMENT - By Yi Xian­rong Page Ed­i­tor: [email protected] glob­al­times.com.cn

The Us-china trade war has lasted more than a year, only to see both sides take ca­su­al­ties. Ac­cord­ing to data re­leased by China’s Gen­eral Ad­min­is­tra­tion of Cus­toms last week, dur­ing the first half of 2019, China’s ex­ports to the US fell by 8.1 per­cent year-on-year to $199.4 bil­lion, while im­ports plunged 29.9 per­cent to $58.92 bil­lion, re­sult­ing in a trade sur­plus of $140.48 bil­lion. In other words, while the first half saw Chi­nese ex­ports to the US de­cline, though not by too much, US ex­ports to China col­lapsed quite sharply. In par­tic­u­lar, US ex­ports of agri­cul­tural prod­ucts to China slumped over the same pe­riod.

Al­though the es­ca­la­tion of the Uschina trade war has had an im­pact on trade be­tween the two coun­tries, from the wider land­scape of China’s to­tal for­eign trade, trade re­mains one of the bright spots for the Chi­nese econ­omy in the first half of this year. Ex­ports of electro­mechan­i­cal prod­ucts, which ac­counted for nearly 60 per­cent of China’s to­tal ex­ports, climbed by 5.3 per­cent dur­ing the first six months of 2019. In par­tic­u­lar, ex­ports of some electro­mechan­i­cal prod­ucts and equip­ment man­u­fac­tur­ing prod­ucts with higher added val­ues main­tained strong mo­men­tum for growth. For in­stance, ex­ports of elec­tric-manned ve­hi­cles soared 91.9 per­cent, with ex­ports of so­lar cells, metal ma­chin­ing tools, and wind tur­bines jump­ing by 57.1 per­cent, 23.8 per­cent, and 190 per­cent, re­spec­tively. Im­ports of con­sumer

goods went up re­mark­ably, with seafood and cos­met­ics sec­tors record­ing growth of 39.1 per­cent and 46.5 per­cent, re­spec­tively, in the first half. That be­ing said, against the back­drop of a huge global mar­ket, the in­ten­si­fied Us-china trade war has af­fected China’s for­eign trade in the first half, but the im­pact is not as big as ex­pected. I be­lieve the Chi­nese gov­ern­ment will be able to ex­tri­cate it­self from the dif­fi­cul­ties in the trade war.

It was at the G20 meet­ing in Ja­pan at the end of June that top lead­ers of the two coun­tries agreed to a truce and to restart trade talks. Af­ter a tele­phone con­ver­sa­tion, US Trade Rep­re­sen­ta­tive Robert Lighthizer and the US Trea­sury Sec­re­tary will soon travel to Bei­jing for a new round of talks. The Us-china trade war has en­tered a “quiet pe­riod,” but there will still be many ob­sta­cles and un­cer­tain­ties fac­ing their trade ne­go­ti­a­tions, and the root of such un­cer­tainty lies in US Pres­i­dent Don­ald Trump.

Dur­ing Trump’s busi­ness ca­reer, he over-cal­cu­lated ev­ery­thing to max­i­mize per­sonal in­ter­ests, and was es­pe­cially good at ex­ert­ing ex­treme pres­sure on his coun­ter­par­ties. If some­one were not fa­mil­iar with Trump’s per­sonal style, they could prob­a­bly be bluffed and taken ad­van­tage of. As the say­ing goes, a leop­ard can’t change its spots. Af­ter Trump be­came US Pres­i­dent, he showed his true colors to the world. The way he took a swing at China by threat­en­ing sweep­ing tar­iffs is one of the best ex­am­ples to show his ex­treme-pres­sure modus operandi. Trump will only call this off once he be­lieves that the tar­iff tool will be un­fa­vor­able to the US.

In this sense, Trump’s weak­ness in the Us-china trade war lies in how US vot­ers feel about the trade dispute, es­pe­cially his hard­core sup­port­ers. Trump has made it clear that he will run for Pres­i­dent in 2020. So by the end of the US pres­i­den­tial elec­tion in Novem­ber 2020, his main pur­pose will be to get as many votes as pos­si­ble. If an es­ca­lated Us-china trade war is fa­vor­able for win­ning more votes, then the trade war will def­i­nitely be­come more and more fierce. But if the trade war has an un­fa­vor­able im­pact on Trump’s votes, then he will im­me­di­ately call it off or at least sus­pend the trade war, dis­re­gard­ing how big the losses are. The per­sonal gain in the elec­tion is Trump’s weak­ness in the cur­rent Us-china trade war.

Then, what could China do with this weak­ness in the ne­go­ti­a­tions? First, the Chi­nese side could re­lax its pace, as it is not in a hurry to con­clude the deal. It is not a bad thing for trade talks to en­ter a “quiet pe­riod.” Sec­ond, we need to truly un­der­stand the con­di­tions of Amer­i­can peo­ple, in­clud­ing but not lim­ited to the im­pact of the trade war on US res­i­dents and the US econ­omy. This in­for­ma­tion should not be based on hearsay alone. We also need to know what Amer­i­can vot­ers are think­ing about Trump, and un­der­stand them not just from the per­spec­tive of Chi­nese peo­ple. Only by truly un­der­stand­ing the pub­lic opin­ion of Amer­i­can peo­ple will China be able to un­der­stand Trump’s weak­ness. Third, we need to rec­og­nize and un­der­stand China’s own prob­lems and short­com­ings through the trade talks.

It should be seen as an op­por­tu­nity for us to re­po­si­tion China’s mar­ket econ­omy and to step up China’s re­form and open­ing-up, so as to de­velop and strengthen our own econ­omy. Re­form and open­ing-up is key for the Chi­nese econ­omy to stand in the world arena. The au­thor is a pro­fes­sor with the School of Eco­nomics at Qing­dao Univer­sity. bi­zopin­[email protected] glob­al­times.com.cn

Il­lus­tra­tion: Xia Qing/gt

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