What's behind the US trade war against China? It's not about trade deficits

China Plus Published: 2018-04-07 21:30:56
Share this with Close
Messenger Messenger Pinterest LinkedIn

By Xu Qinduo

The Trump administration wants to fix the problem of America's trade deficit with China, which they say is costing the United States hundreds of billions of dollars a year. That's why President Trump is leading his country towards a costly and disruptive trade war with its largest trading partner and the world's second largest economy.

National flags of China and the U.S. [Photo: VCG]

National flags of China and the U.S. [Photo: VCG]

That's what they've been telling everyone, at least. But as the dispute has progressed, it has become clearer and clearer that what America really thinks is the problem is China's growing competitiveness, and the challenge it poses to the United States status as the world's only superpower.

The proposed tariffs on $50 billion worth of Chinese goods are almost all targeted at the industries associated with "Made in China 2025," an initiative seeking to comprehensively upgrade China's industrial base.

There's nothing unusual about a country mapping out a development plan. Just as China has "Made in China 2025", and Germany has its "Industry 4.0" plan. The United States even had its own plan under President Barack Obama to revitalize American manufacturing.

But the Trump Administration seems intent on picking a bone with China. Why? Because, if well implemented, China could beat the United States in the race to dominate major emerging industries, such as artificial intelligence (AI) and robotics.

The Trump Administration is filled with China hawks, such as Peter Navarro, the author of "Death by China: Confronting the Dragon - A Global Call to Action". Navarro has tried to highlight what he sees as danger in China's economic and military rise. Despite most economists dismissing Navarro's fringe and oddball views, including, according to Reuters, "that Chinese goods are literally poisoning Americans," President Trump has hailed him as a "visionary".

Before Navarro came along, Steve Bannon, arguably the brains of the Trump team well before the presidential election, was an enthusiastic supporter of confrontation with China. Before his firing last year, he said "we're at economic war with China... One of us is going to be a hegemon in 25 or 30 years and it's gonna be them if we go down this path." Back in September Bannon said the United States would use Section 301 of the 1974 Trade Act against China, and followed up with complaints against steel and aluminum dumping. Given the events that have since transpired, it's clear that the Trump administration game plan of today is the one that was written by Bannon.

China's economy has been growing at a dazzling speed for four decades. That growth shows no signs of stopping. China is the world's largest exporter of goods, and the biggest trading partner for some 130 countries, including the United States. It is building world-leading infrastructure of which its massive high-speed rail network is one high-profile example. And it's investing heavily in science and technology as part of its "Made in China 2025" plan.

Could China overtake the United States as the world's largest economy? Many economists think so. And that moment might only be 10 years away. But that doesn't spell anything close to doom for America. China's population is more than four times that of the United States, so why shouldn't its economy be bigger as well?

In the eyes of President Trump, and the likes of Peter Navarro and Steve Bannon, China's continuing economic development is a threat to be countered. This view was made plain in the administration's first National Security Strategy, which described China as a rival and a strategic competitor. The Trump administration appears determined to prevent China from continuing along its path of peaceful development by sabotaging its economic expansion. The question is: can they do it?

It's unlikely. China already has the world's largest reserves of foreign currency. The size of China's middle class surpassed that of the United States to become the world's largest in 2015. China has been predicted to overtake the United States as the largest retail market this year. And in Shanghai in November, China will host the first ever International Import Expo – a strong symbol of the country's resolution to continue along the path of reform and opening up, and strengthen its relationships with countries around the world.

Given its size, its population, and the sophistication of its economy, China is well placed to ride out the storms blowing across the Pacific from the United States. Despite the Trump administration pushing forward its policies of unilateral protectionism and isolationism, China will continue to forge ahead with its development, including "Made in China 2025." 

(Xu Qinduo is CRI's former chief correspondent to Washington DC, the United States and a senior fellow of the Pangoal Institution.)

Related stories

Share this story on


LU Xiankun Professor LU Xiankun is Managing Director of LEDECO Geneva and Associate Partner of IDEAS Centre Geneva. He is Emeritus Professor of China Institute for WTO Studies of the University of International Business and Economics (UIBE) and Wuhan University (WHU) of China and visiting professor or senior research fellow of some other universities and think tanks in China and Europe. He also sits in management of some international business associations and companies, including as Senior Vice President of Shenzhen UEB Technology LTD., a leading e-commerce company of China. Previously, Mr. LU was senior official of Chinese Ministry of Commerce and senior diplomat posted in Europe, including in Geneva as Counsellor and Head of Division of the Permanent Mission of China to the WTO and in Brussels as Commercial Secretary of the Permanent Mission of China to the EU. Benjamin Cavender Benjamin Cavender is a Shanghai based consultant with more than 11 years of experience helping companies understand consumer behavior and develop go to market strategies for China. He is a frequent speaker on economic and consumer trends in China and is often featured on CNBC, Bloomberg, and Channel News Asia. Sara Hsu Sara Hsu is an associate professor from the State University of New York at New Paltz. She is a regular commentator on Chinese economy. Xu Qinduo Xu Qinduo is CRI's former chief correspondent to Washington DC, the United States. He works as the producer, host and commentator for TODAY, a flagship talk show on current affairs. Mr. Xu contributes regularly to English-language newspapers including Shenzhen Daily and Global Times as well as Chinese-language radio and TV services. Lin Shaowen A radio person, Mr. Lin Shaowen is strongly interested in international relations and Chinese politics. As China is quite often misunderstood in the rest of the world, he feels the need to better present the true picture of the country, the policies and meanings. So he talks a lot and is often seen debating. Then friends find a critical Lin Shaowen criticizing and criticized. George N. Tzogopoulos Dr George N. Tzogopoulos is an expert in media and politics/international relations as well as Chinese affairs. He is Senior Research Fellow at the Centre International de Européenne (CIFE) and Visiting Lecturer at the European Institute affiliated with it and is teaching international relations at the Department of Law of the Democritus University of Thrace. George is the author of two books: US Foreign Policy in the European Media: Framing the Rise and Fall of Neoconservatism (IB TAURIS) and The Greek Crisis in the Media: Stereotyping in the International Press (Ashgate) as well as the founder of chinaandgreece.com, an institutional partner of CRI Greek. David Morris David Morris is the Pacific Islands Trade and Investment Commissioner in China, a former Australian diplomat and senior political adviser. Harvey Dzodin After a distinguished career in the US government and American media Dr. Harvey Dzodin is now a Beijing-based freelance columnist for several media outlets. While living in Beijing, he has published over 200 columns with an emphasis on arts, culture and the Belt & Road initiative. He is also a sought-after speaker and advisor in China and abroad. He currently serves as Nonresident Research Fellow of the think tank Center for China and Globalization and Senior Advisor of Tsinghua University National Image Research Center specializing in city branding. Dr. Dzodin was a political appointee of President Jimmy Carter and served as lawyer to a presidential commission. Upon the nomination of the White House and the US State Department he served at the United Nations Office in Vienna, Austria. He was Director and Vice President of the ABC Television in New York for more than two decades.