August 24, 2018

Intensifying U.S.-China strategic competition not transitory

By Dr. Patrick M. Cronin

The escalating U.S.-China trade war reflects a hardening strategic competition between two major powers, not merely tense negotiations for short-term political gains.

While few analysts doubted that China would meet American pressure with counter pressure, many analysts questioned whether the Trump administration was serious about leveling the playing field with its largest trading partner.

But on Thursday Washington began imposing a 25 percent tariff on $16 billion of Chinese imports, while threatening to enact duties on an additional $200 billion worth of goods.

China responded in kind, ratcheting up trade tensions that, absent an unexpected diplomatic breakthrough, will inject more uncertainty into the global economy.

Officials in Beijing may have underestimated President Donald Trump.

They hoped that a transactional deal maker in the White House would settle for a token agreement.

However, the president has made clear he is not simply a day trader when it comes to China and is in no rush to compromise.

As long as the trade spat confines itself to tens or even a couple of hundred billions (and not trillions) of dollars, the White House has maneuvering room. Americans see pushback -- if not necessarily more and more tariffs -- as a long, overdue correction to China's exploitation of an open trading system.

China is more likely to blink first.

Ongoing trade talks in Washington are treading water, and they are occurring at all because Chinese President Xi Jinping's concern about a slowing economy and mounting debt is more urgent than Trump's need for a mediocre trade deal.


Read the Full Article at Kyodo News

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