The opening salvos of the trade war between the US and China were deafening, and while the battle is far from over, a rift between the countries may be beneficial to Beijing in the long term, experts say.
T he opening salvos of the trade war between the US and China were deafening, and while the battle is far from over, a rift between the countries may be beneficial to Beijing in the long term, experts say.
Donald Trump, the US President, first warning shots fired earlier this year taxed key Chinese exports including solar panels, steel and aluminium. The most significant escalation rolled in this week with new tariffs affecting $200 billion (£150 billion) worth of items, effectively taxing half of all goods coming into the US from China.
Beijing has retaliated each time in kind, most recently slapping tariffs of five to ten per cent on $60 billion of American goods. China has pledged to match the US shot-for-shot, and the world’s second largest economy is unlikely to blink anytime soon.
Getting Washington to back down means caving into demands, but publicly bowing to the US would be far too embarrassing for Xi Jinping, China’s president. Still, experts say if Beijing can play its cards right, US trade war pressures could positively support China over the long term by lowering the inter-dependence of the two economies.
“The fact that a quick political decision in either Washington or Beijing could create the conditions that start an economic tailspin in either country is actually a lot more dangerous than onlookers have acknowledged before,” said Abigail Grace, a research associate who focuses on Asia at the Center for New American Security, a think tank.
“From both Trump and Xi, you’ve seen a willingness to engage in more head-to-head economic warfare, and that increases risk overall… that degree of leverage for either is not particularly helpful or productive.”
F or instance, the US implemented in April a seven-year ban on exports to Chinese telecom firm ZTE after learning it didn’t abide by a previous settlement agreement for violating trade sanctions.
