Face-Off : The World's Sole Super Power vs The World's 2nd Largest Economy
The U.S.-China trade war that escalated Thursday with fresh tariffs on both sides is rooted in a battle for supremacy that encompasses national security as well as trade, leaving slim odds of an easy resolution. And no matter who wins, the conflict will sow the seeds of future trouble.
Boasting the world's largest economy and military, as well as control of the main international reserve currency, the U.S. has looked every inch the superpower in its clash with China. Even the world's second-largest economy cannot help but be forced on the defensive when in the crosshairs of this behemoth.
Logically, a game of chicken between the two should work in Washington's favor. America's annual exports to China total just $130 billion, less than a third of the $500 billion in goods going the other way. High tariffs on both sides thus hurt China more.
Beijing will probably offer some sort of concession, but it is unlikely to play its real trump card. Weakening the "Made in China 2025" high-tech manufacturing initiative is not an option for President Xi Jinping, who seeks to make China a superpower surpassing the U.S. by midcentury.
The 1996 Taiwan Strait crisis and its aftermath may be illustrative. In the run-up to Taiwan's first direct presidential election, Beijing launched missiles near the island to quash any ambitions of independence in what it considers a renegade province. The U.S. responded by deploying aircraft carrier battle groups near Taiwan, forcing the mainland to back down.
Since then, China has worked furiously to develop its economy and bulk up its military. Its publicly disclosed defense spending alone has swelled roughly 12-fold over the past two decades, and the country's first homegrown aircraft carrier set sail last year.
The trade war is likely to produce a similar outcome. Even before this, China was already expected to surpass the U.S. in terms of gross domestic product in the 2030s.
After suffering a crushing defeat in the battle over telecommunications equipment maker ZTE, which nearly went under after U.S. sanctions that blocked it from buying crucial parts, China is racing to switch to domestic semiconductor production. Beijing will undoubtedly be smarter about its approach to cutting-edge technology such as artificial intelligence and electric vehicles, avoiding moves that would open it up to further accusations of theft.
There are problems with China's strategy. The country has enjoyed the benefits of free trade while letting its state-owned enterprises grow bloated, and it has trampled on intellectual property rights. But trying to force the country to submit without regard for its sovereignty or dignity, as Trump is doing, will only earn its enmity for a century to come.
The best way to nudge China in a more favorable direction while allowing it to save face would have been through the Trans-Pacific Partnership. But Trump pulled the U.S. out of the Pacific Rim trade agreement and is unlikely to return to it.
The trade war looks set to drag on with no sign of a resolution. Even after one is eventually found, there is little reason for optimism about Washington-Beijing relations.
Boasting the world's largest economy and military, as well as control of the main international reserve currency, the U.S. has looked every inch the superpower in its clash with China. Even the world's second-largest economy cannot help but be forced on the defensive when in the crosshairs of this behemoth.
Logically, a game of chicken between the two should work in Washington's favor. America's annual exports to China total just $130 billion, less than a third of the $500 billion in goods going the other way. High tariffs on both sides thus hurt China more.
Beijing will probably offer some sort of concession, but it is unlikely to play its real trump card. Weakening the "Made in China 2025" high-tech manufacturing initiative is not an option for President Xi Jinping, who seeks to make China a superpower surpassing the U.S. by midcentury.
The 1996 Taiwan Strait crisis and its aftermath may be illustrative. In the run-up to Taiwan's first direct presidential election, Beijing launched missiles near the island to quash any ambitions of independence in what it considers a renegade province. The U.S. responded by deploying aircraft carrier battle groups near Taiwan, forcing the mainland to back down.
Since then, China has worked furiously to develop its economy and bulk up its military. Its publicly disclosed defense spending alone has swelled roughly 12-fold over the past two decades, and the country's first homegrown aircraft carrier set sail last year.
The trade war is likely to produce a similar outcome. Even before this, China was already expected to surpass the U.S. in terms of gross domestic product in the 2030s.
After suffering a crushing defeat in the battle over telecommunications equipment maker ZTE, which nearly went under after U.S. sanctions that blocked it from buying crucial parts, China is racing to switch to domestic semiconductor production. Beijing will undoubtedly be smarter about its approach to cutting-edge technology such as artificial intelligence and electric vehicles, avoiding moves that would open it up to further accusations of theft.
There are problems with China's strategy. The country has enjoyed the benefits of free trade while letting its state-owned enterprises grow bloated, and it has trampled on intellectual property rights. But trying to force the country to submit without regard for its sovereignty or dignity, as Trump is doing, will only earn its enmity for a century to come.
The best way to nudge China in a more favorable direction while allowing it to save face would have been through the Trans-Pacific Partnership. But Trump pulled the U.S. out of the Pacific Rim trade agreement and is unlikely to return to it.
The trade war looks set to drag on with no sign of a resolution. Even after one is eventually found, there is little reason for optimism about Washington-Beijing relations.
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