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China-US Trade War: Global Political Power Change?

The China-US Trade War has finally come to a new phase that both parties reached the negotiation table. The long-run trade war has raised studies and analyses not only on the Asia-Pacific regional economy but also the reshaping of global political power change structure.


China-US Trade War initiative

The US initiated the trade war against China is based on the ground that China’s joining WTO and increasing patent on technologies. It brought the global attention to China’s economic rising power as Chinese advanced development of technologies is now threatening the US. While most studies and analyses focus on the potential influence to stakeholders, this article focuses more on the issue of China’s technology practices in global context use.

It is undoubted for the US to fear of China’s rising power as the US has always been the biggest and the most avant-garde technologies providers. Huawei, 5G, big data, AI…such terms may be found on China’s economic rising. Whether Huawei can really overtake the biggest share of technology market, research has shown that in telecom equipment market Huawei is 28% in the global 75% and even 10% ahead of the second biggest – Nokia. Although Samsung remains the top seller on the smartphone market, Huawei surpassing Apple and growing in such short time cannot be ignored of its power.

As the US used to be thought of as the greatest technology head with Google, Apple such big names, big proportion of technology development being transferred is certainly a big issue to the US. While the US feeling threatened, what is really to be paying attention to is China’s technology practices in the global context.

China’s advancing technology development

With China’s reputation of untrustworthiness in financial market, China’s government has since 2014 putting effort on initiating a technological social management system – Social Credit System, in order to steer citizenry, monitor social behaviour and control the society’s economic market.

China’s use of technology has developed to such level that has attracted the world’s attention to its governmental use on digital technologies, big data and Artificial Intelligence. With more doubts and worries to China’s data localisation and Golden Shield Protection, foreign technology firms find difficulties and are bounded by Chinese law. The US claimed that China has been stealing confidentiality, ignoring the legality of intellectual property rights, which not only harmed the American firms on China’s market but also the US authorities.

Herein, it levels up the problem to the potential practice of technology combining with law and governance. Although studies have been on the state-level, it really brings attention to the international level.

The US tariffs policy on China

Setting tariffs is a common policy to protect a nation’s market, while the US tariffs on China is not only flagging as protecting the US market but also a punitive move to China for the reasons that China has violated the intellectual property. Since President Trump took the seat, both the US and China has been raising tariffs on this battle until recently the cease of tariffs allowed both parties to talk.

The US tariffs action is believed to be a successful strategy to bring China to the negotiation table. However, the sticking point of the negotiation is the different conceptions on technology development and practices. The US intends to see China’s commitment to legislation of intellectual property right and limited governmental involvement in technology practices in order to prevent from ‘Forced Technology Transfer,’ while China has been broadening governmental practices on technology with now the development of social credit system.

The roles that are affected in this tariffs war are actually the US consumers who used to benefit from the cheaper products from China, the US exporters and US manufactures whose biggest market is China, as analysis showed. This made the US stand on a sensitive ground to make negotiation table work. However, the US definitely needs to hold a principal and bottom line at the negotiation table so to take its stakes and to protect its ground.

Standing for a fair trade environment

The result and future development of the tariffs war are yet to be assured but both parties will certainly be confronted with a certain degree of concessions. Within the scenario, Huawei’s development seems to be brought to the core. Whether it continues posing threat to the US, the real consideration is the fair trade environment for both Chinese and American consumers, exporters and manufacturers. As we see that the roles that are affected are mostly farmers produce, automobile, aircrafts, which these have been victim to the international technology competition battlefields. If the ceasefire of tariffs war enables both parties’ conversation, both governments should really figure clearly the potential stake at this trade environment and really come up with a win-win situation for both countries’ consumers, exporters and manufacturers.


ICRD verdicts

ICRD holds that both China and the US government should take the negotiation carefully in protection of the consumers, exporters and manufacturers in both countries; furthermore, both countries should configure a better, safe and stable trade environment.

International Monetary Fund chief, Christine Lagarde, at the World Economic Forum in Davos, claimed that the global economy is threatened by trade tensions between the United States and China. “A slowdown of China is fine. It’s legitimate. But if the slowdown was fast, it would constitute a real issue. Policymakers have to really take the right course of action when it comes to fiscal policies, when it comes to completing the reforms .”

It is not just a two-great-power economic conflict but a setting stone paving for a long-term diplomatic relation.

Myron Brilliant, the executive vice president and head of international affairs at the U.S. Chamber of Commerce said “We oppose the use of tariffs, period but we are at the same time supportive of this administration trying to get a deal that is not just consequential for today but will have lasting impact on the relationship and put the U.S.-China relationship on a better track.”

The China-US trade war is not merely a dispute of economic conflict but indicates a strategic point of political order. Namely, analysis reveals that the trade war negotiation is just a temporary conciliation of economic conflict. The US should deem China as a revisionist power that would challenge the US’s world order.


Author: Yung Lin, Researcher at ICRD


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