Changing trade and economic policy of the US and rising risks of Sino-US trade war

LU Feng1 LI Shuangshuang2

(1.Professor, at National School of Development, Peking University)
(2.Assistant Researcher, at National Academy of Economic Strategy, Chinese Academy of Social Sciences)

【Abstract】During the first year of the Donald Trump administration, the Sino-US economic and trade relations had been maintained relatively stable. However, the policy has been adjusted toward putting more emphasis on strategic competition with China in the area of trade and economy. As a result, bilateral economic and trade relations have become more strained. The new round of hawkish reorientation of the US economic and trade relationship toward Chin has been largely completed by the end of 2017. The number of China-US trade dispute initiated by the US also reached a new high in history last year. Based on observations from various perspectives, the article argues that the Sino-US economic and trade relations ma face a more difficult and complex situation.

【Keywords】 Changing Trade and Economic Policy of the US toward China; Sino-US economic and trade relations; Sino-US trade war;

【DOI】

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(Translated by ZUO Weiwei)

    Footnote

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    [14]. [1] “For 70 years, the United States has embraced a strategy premised on the belief that leadership of a stable international economic system rooted in American principles of reciprocity, free markets, and free trade served our economic and security interests. Working with our allies and partners, the United States led the creation of a group of financial institutions and other economic forums that established equitable rules and built instruments to stabilize the international economy and remove the points of friction that had contributed to two world wars.” [^Back]

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    [19]. [1] In the second step, China’s manufacturing industry as a whole will reach the middle level of the world’s manufacturing power camp by 2035. In the third step, China’s manufacturing industry will make its status as a manufacturing power more consolidated and the comprehensive strength becomes among the forefront of the world’s manufacturing power. The main manufacturing fields are leading in innovation ability and have an obvious competitive advantage, and a world-leading technology system and industrial system has been completed. [^Back]

    [20]. [1] According to Bannon’s analysis of China’s five strategies. These five areas (Made in China 2025, “Belt and Road” Initiative in the commercial field, 5G in the information field, financial and technological innovation, RMB internationalization), together with the economic development plan, are the roads that Chinese leaders think they should follow. By 2030 or 2035, China will become the world’s first economy. After 15 years, China will achieve world hegemony. How did the West respond to this? The response of the West was . . . until Trump was elected president, the West’s response to China was quite chaotic. ” [^Back]

    [21]. [2] For example, in 2010, just after the most critical phase of the financial crisis, the American think tank began to reflect on China’s policy, and put forward “does basic judgments still hold” to reevaluate China’s economic and trade and strategic relations, explaining the Sino-US relations from “emerging power” and “established power” in the game framework. Before Chinese President Xi Jinping visited the United States in September 2015, the American academic community launched the debate on “what we should do with China.” In February 2015, Michael Pillsbury, a policy research consultant at the U.S. Defence Secretary’s office, published The Hundred year Marathon: China’s Secret strategy to replace America as the global Superpower, claiming that the Chinese hawks have been plotting to replace the United States as the global hegemon in 2049 when the People’s Republic of China was founded 100 years, and the United States has been fooled for the past 40 years to foolishly help China rise. In March 2015, the American Council on Foreign Relations published Revising US Grand Strategy Toward China, stressing that the United States needs a new grand strategy aimed at balancing China’s rise rather than helping China rise, criticizing the current policy toward China at the expense of America’s dominance and long-term strategic interests, and believing the Sino-US strategic competition as the future norm. In the debate, the view of John J. Mearsheimer, professor of political science at the University of Chicago, got heated discussion, as he published many years ago in his writings, Tragedy of Politics for Big Country, to see China as America’s top strategic competitor, and even think that China and the United States may eventually wage a war. In May 2015, David M. Lampton, an expert on Chinese issues at Johns Hopkins University, published a speech titled A Tipping point in U.S.-China Relations Is Upon Us, expressing worries on the respective escalating domestic deterrence rhetoric, and the shift of focus towards extremity among the two countries’ elites and masses, and raising the need for a “fourth joint communiqué” to resolve the problem. [^Back]

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    [23]. [2] Robin Brooks et al., “Why Are Red State Labor Markets Lagging?”, Institute of International Finance (IIF) Global Macro Views, Nov. 21, 2017. [^Back]

    [24]. [1] Anti-dumping procedures: application-initiation- investigation- preliminary damage ruling-preliminary dumping ruling-final dumping ruling-final damage ruling-issuing anti-dumping order-administration review. Countervailing procedures: application-initiation-investigation-preliminary damage ruling-preliminary dumping ruling-final dumping ruling-final damage ruling-issuing countervailing order-administration review. Safeguards procedures: application-initiation-investigation and notification-implementation-review. Specific safeguard procedures: the same as safeguards procedures. Section 201 investigation procedures: application-initiation-investigation-trade commission decision-presidential ruling-enforcement. Section 232 investigation procedures: application-initiation-investigation-trade commission decision-presidential ruling-implementation. Section 301 investigation procedure: initiation-consultation after initiation-trade representative ruling-implementation of measures-supervision of foreign countries-correction and termination of measures-request for information-enforcement. Section 337 investigation procedures: application-initiation-defence-counterclaim-issuing a protection order-notifying local rules and target date-pre-conference-facts investigation-hearing-preliminary ruling-committee review-review decision-issue exclusion order-presidential review-judicial review-enforcement. [^Back]

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    [32]. [1] Lu, F. International Economic Review (国际经济评论), (1): 87–101 (2017). [^Back]

This Article

ISSN:1007-0974

CN: 11-3799/F

Vol , No. 03, Pages 64-86+6

May 2018

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Article Outline

Abstract

  • 1 The features and causes of Trump’s economic and trade policy towards China
  • 2 Reasons for rising risk of Sino-US trade friction
  • 3 Conclusion and China’s countermeasures
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