China won't be deterred by Trump's "reality show"
By Bian Yongzu
The three major stock indexes in New York all closed with falls of over two percent on Friday. The Dow Jones industrial average plummeted more than 700 points in mid-day trading. The U.S. capital market was cast in storm clouds, as money evaporated into thin air. It's no wonder that one New York Stock Exchange trader was complaining in an interview with CNN about Trump threatening tariffs on 100 billion U.S. dollars of imports from China.
President Donald Trump listens to a question during a meeting with Swedish Prime Minister Stefan Lofven in the Oval Office of the White House, Tuesday, March 6, 2018, in Washington. [Photo: IC]
The Trump administration is picking fights around the world. Shortly after he took office, the U.S. Department of Commerce launched a Section 232 investigation on imported steel and aluminum products, and attempted to revise its free trade agreements with its allies. Of course, obedient allies such as South Korea agreed to his demands to avoid greater losses. But the European Union, Japan, and even Argentina and Mexico have been resisting his pressure. So the Trump administration quickly revised the terms of its Section 232 investigation, and gifted some countries exemptions.
As it turns out, this was only a prelude. The real climax was the launch of a Section 301 investigation against China. In this investigation, the Trump administration hasn't even tried to hide its real target, China's "Made in China 2025" program. Naturally, China has reacted strongly to this provocation, saying repeatedly that it's not afraid of a trade war and vowing to "fight to the end". This has come as a surprise to the Trump administration.
It seems that President Trump's "reality show" is failing to convince its viewers. In the year since he took office, investigation into the "Russiagate" scandal has been like a shadow he cannot shake off. Without his tough statements about the world beyond America's borders, what does he have to tell his supporters during the upcoming midterm elections? Due to his administration's tax cuts, U.S. debt has surpassed 21 trillion U.S. dollars, and may continue to grow at an increasing speed. It seems unrealistic to expect that the United States can pay off all its debt. What's more important is that an increasing amount of debt will certainly influence the value of the U.S. dollar: Instability or a loss of the leading status of its currency will certainly be an unacceptable outcome for the United States.
At present, the best strategy for the United States is to keep a low profile and be diligent and thrifty in running its national household. For instance, it can stop being lavish with its spending, make better use of its competitive advantages, and work hard to improve its production efficiency. It can also guarantee the kind of fair competition that would benefit not just its own people, but people around the world. This is the essence of the world's efforts to promote globalization and oppose trade conservatism.
Unfortunately, the United States has strayed off the right track. Instead of seeking cooperation with China, the United States is attempting to take advantage of its position as a global hegemon to obstruct China's development through trade frictions or even a trade war. But the world's center of innovation will continue its move eastward towards China. China has laid a solid economic foundation. Its government and its people continue to invest heavily in scientific research. It has a comprehensive manufacturing industry. There are millions of bright young university graduates entering the workforce each year. And China is shaping up to be home to the world's biggest domestic market.
Chinese people believe in their hearts that to see their country thrive requires good solid work, which is why China has been the world leader in patent applications several years in a row.
The Trump administration may not give up easily on its efforts to obstruct China's economic development. There are more acts to play in their performance. But China will not be deterred by the American president's "reality show" trade war.
(Bian Yongzu, a researcher at the Chongyang Institute for Financial Studies at Renmin University of China)