The trade war between China and the US has been a hot topic in recent days, and stock markets of many countries even crashed because of the dispute.
However, what’s behind the trade war? How will China respond? Here are eight facts that both Chinese and Americans should know.
1. The trade war was started by the US.
US President Donald Trump signed a memorandum that could impose tariffs on up to $60 billion of imports from China and restrictions on Chinese investment in the US on Mar. 22. The trade war has erupted as a result of the violations of international rules on the behalf of the Trump administration, and it was forced upon China.
There might be multiple reasons behind the trade war, but one thing is clear that China has no other option. Compromising will never bring peace.
2. China has confidence and is fully prepared.
Through the responses by China’s Foreign Ministry, embassies, and Ministry of Commerce, it is easy to see that the country is well prepared for the trade war diplomatically and economically, even politically and militarily.
The Foreign Ministry spokesperson Hua Chunying said during a regular press conference on March 23, 2018 that China will fight to the end. It is not at all talk, it is supported by China’s true capability. The Ministry of Commerce announced on the same day that it was considering higher tariffs for imported US products worth about $3 billion, and the country is currently planning to increase tariffs on a wider range of imports from the US including aircrafts and computer chips.
3. What’s behind the trade war is a fear the US has regarding the rise of China.
The intention of the US is clear: to contain the rising of China, which conforms to its mentality as an established power.
China’s nonmilitary approach to handle relations with major countries is a rational choice, and also an unavoidable process for a developing country. China should brace itself for this process.
4. To urge its allies to escalate pressure on China is merely a case of wishful thinking on the US side.
In order to seek for help from its allies, Trump on March 22 granted tariff exemptions on steel and aluminum to Australia, Canada, the European Union (EU), and South Korea until May 1, 2018 as discussions continue.
However, German newspaper Die Welt warned that if the EU compromises this time, Trump might become more irrational and even aim at the EU in the future.
Most countries in the world lack strategic confidence in the US, yet at the same time they are maintaining good trade relations with China. They will never be puppets of the US for the maximization of their national interests.
5. The trade war is not only unfairly aimed at China, it also violates global trade rules.
On Mar. 8, Trump signed a tariff order to impose tariffs on imported steel and aluminum but offered relief to some U.S. allies including Mexico and Canada.
This action is a violation of the international trade rules, which will bring damages to its own image and reputation.
6. The trade war will only hurt others without necessarily benefiting the US itself.
According to US media, the trade war will increase the living cost of US consumers and cause negative impacts on major enterprises. The countermeasures to be taken by China will further worsen the situation, especially in the fields of manufacturing, employment, and imports and exports.
Australian scholars predict that the GDP of the US will drop by 5.2 percent if countermeasures are taken by every country, leading to a loss of $933.2 billion.
7. Starting the trade war, the US goes against the whole world.
If Trump insists on starting the trade war, the whole international society will suffer a loss from it. Research by the Brookings Institution indicated that if the US increases tariffs by 10 percent, the GDP of most economies will drop between 1 and 4.5 percent. The research further pointed out that a 40-percent increase in the tariffs would trigger a global economic crisis.
8. The victory belongs to China.
China will take targeted measures to counter the unilateral move of the US and safeguard its interests through legal approaches.
Large trade war will hurt both the Chinese and the US economies, but it also spurs China to transform its economy in a better direction. China has nothing to be afraid of. As long as the Chinese are united, the victory will belong to China.