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Economy

Trade War Will Destabilize China-US Relations

Jul 13 , 2018
  • Li Yan

    Deputy Director of Institute of American Studies, CICIR

The trade war has recently become the dominant factor affecting China-US relations. To this day, the rounds of consultations between China and the United States on tariffs and related issues have apparently failed to achieve results, which has caused tremendous damage to the relationship between the two countries.

The United States is the initiator of this trade war, and the analysis of its motives and purposes is the key to analyze the long-term effects. In general, the trade war is the result of the current consensus among strategic communities in the United States. The distinctive personality and behavior of President Trump significantly aggravated the intensity of the trade war.

First of all, the emergence of the trade war is the result of the US strategic community's growing negative perception of China in recent years. In fact, since 2015, the US strategic community's perception on China has begun to change. At the end of 2017, the introduction of the Trump administration's first National Security Strategy marked the full formation of negative perceptions of China. The basic content of this negative cognition is: "China is a revisionist country" and "China is a long-term strategic competitor that challenges the United States." Based on this perception, suppressing and competing against China, rather than engaging China, has become the main consideration of the US’ new China policy. The trade war is the concrete result of this new policy.

Secondly, launching the trade war reflects the core demands of interest groups behind Trump. The most direct reason of the trade war is Trump's fulfillment of his campaign promise. Trump's election benefited from the "anti-globalization" sentiment of quite a few groups in the United States. These interest groups, whether they be white practitioners of traditional industries in the “rust belt” region or high-tech companies with Chinese rivals, are either eager for the redistribution of global wealth or hope to maintain technological leadership. In their view, China, which has a huge trade surplus with the United States and continues to erode its technological superiority, has become the main target that must be dealt with. In addition, the military and the working class, as part of Trump’s base, have always maintained a tough attitude toward China. Therefore, it’s necessary for Trump to launch the trade war against China in order to maintain his own political base.

Thirdly, Trump's unconventional behavior is another important factor contributing to this trade war. From Trump's life experience, two things are particularly prominent. First, as a real estate businessman, Trump's life creed is "profit." In real estate business, it is necessary to make a profit; and trade with other countries must be profitable. Therefore, the primary goal of the trade war against China is to rapidly reduce the trade deficit. Second, Trump believes in a Hobbesian world. His life creed and worldview are based on the idea that human nature is bad, and he is very combative. Trump advocates strong people, dares to act doughtily, and often achieves goals in an arbitrarily way. In trade consultations with China, Trump is unwilling to compromise, and constantly adopts a rude manner, looking at Sino-US trade relations from a zero-sum perspective. As far as Trump’s character is concerned, trade war is also inevitable.

The US trade war against China is actually the result of Trump's character, the appeals of interest groups, and the negative impact of the US strategic community’s perception of China.

What will be the effects of this trade war? First, the trade war will disintegrate the role of economics as the bedrock in China-US relations. Since the normalization of China-US relations, economic ties have long served as a ballast for the relationship between the two countries. Although China and the United States have their differences in the economic field, this has not shaken the foundation of their relations in the past. With the changes in the relative strength of China and the United States, complementarity has given way to competition. The outbreak of this trade war has revealed many deep contradictions in the economic field between China and the United States. The economic issues have changed from being the “ballast” to an "albatross". This huge change is unlikely to be reversed in the foreseeable future. To make matters worse, at present, there are no new areas of cooperation that can replace economic ties and sustain China-US relations in future.

Second, the trade war will disintegrate the good expectations of both China and the United States. "Fight without breaking"(斗而不破)is a distinctive feature of China-US interaction for a long time. China and the United States have always had their disputes. But in the end, both sides can prevent differences on one single issue from damaging the overall relationship and avoid a "showdown". However, this trade war completely broke this model. This trade issue is rapidly damaging the overall relationship between the two countries.

Third, the trade war will disintegrate the role of existing communication and consultation mechanisms in sustaining China-US relations. So far, more than one hundred communication and consultation mechanisms covering many issues have been established between China and the United States. This has maintained the stability of China-US relations. In the past, this mechanism has promoted positive interaction between China and the United States, and played a key role at critical moments in solving thorny problems such as Taiwan, North Korea, cyber security, and maritime issues. However, before the outbreak of the trade war, China and the United States conducted multiple rounds of communication under the existing consultation mechanism, but ultimately failed to solve the problems effectively. This may indicate that the role of traditional consultation mechanisms is declining.

Recently, there’s been talk of a "new Cold War" between China and the United States in both countries. It is true that the deep interdependence between China and the United States makes China-US relations different from US-Soviet relations during the Cold War. However, this trade war may be offsetting that interdependence. This will increase the possibility of a “showdown” between China and the United States.

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