A China-U.S. trade war looks imminent after the U.S. administration announced on June 15 plans to impose additional tariffs of 25 percent on $50 billion of Chinese goods, with the Chinese Government responding with reciprocal tariffs.
In response on June 18, U.S. President Donald Trump threatened to identify another $200 billion worth of Chinese products to be subject to 10-percent additional tariffs, with China vowing to take comprehensive qualitative and quantitative countermeasures if the new tariffs come into force.
A trade spat between the world's two largest economies would be a blow not only to China and the United States, but the whole global economy.
Before the latest showdown, the two sides carried out multiple rounds of negotiations in an attempt to resolve the dispute. Consensus reached in mid-May suggested that the two sides had agreed to settle the issue through dialogue and cooperation.
But the Trump administration discarded the agreement, deciding instead to escalate the trade fight into an all-out war.
Why then is the Trump administration so intent on a trade war even though the United States will likely also suffer? Because its real intention is to contain China's development.
In the eyes of U.S. policymakers, China's development endangers the United States' status as a superpower. Politically, China is increasingly active in international affairs, evidenced by its pivotal role in implementing the Belt and Road Initiative, creating the Asian Infrastructure Investment Bank, and promoting the development of the Shanghai Cooperation Organization and BRICS. China's economy is also growing fast and its national defense is powerful enough to defend its interests. China's path of development is being recognized by more and more countries in the world, challenging the U.S.-led model.
The Trump administration's attempt to suppress China demonstrates Washington's longstanding distrust toward the world's largest developing country. This suspicion stems from China's civil war from 1945-49. At that time the United States took the side of the Kuomintang, which fought against the Communist Party of China during the conflict. After the founding of the People's Republic of China in 1949, mistrust was further entrenched during wars in which China assisted its neighbors North Korea and Viet Nam in resisting U.S. aggression. The establishment of diplomatic relations between the two countries in 1979 did not completely eliminate these misgivings.
Moreover, the escalating trade dispute also reflects the antagonism of an established power toward a rising power known as the Thucydides Trap, which many U.S. politicians believe is hard to avoid.
Having previously been a successful businessman, Trump is deploying the economic approaches with which he is most familiar in order to contain China.
A quick look at the list of Chinese exports subject to additional U.S. tariffs shows that products covered by the Made in China 2025 program are the main target of Trump's war.
Introduced in 2015, the program aims to increase the international competitiveness of Chinese manufacturing by developing hi-tech and emerging industries.
Since reform and opening up, the Chinese economy has long been at the lower end of the global value chain, relying on low value-added, energy-intensive and polluting industries. However, China's economy has transitioned to a new normal of slower but higher-quality growth since 2012. China has made remarkable progress in hi-tech industries of higher value-added, especially artificial intelligence and the mobile Internet, which is exactly what the United States does not want to see.
But the amount of products under the Made in China 2025 program exported to the United States is small, compared with the total trade volume between the two countries, and the import of these products would have little effect on the U.S. market. The Trump administration's decision to impose additional tariffs on these products shows it is actually seeking to slow China's transition toward high-quality growth by restricting the development of its hi-tech manufacturing industries, thereby hindering China's modernization process.
However, China's economic structure and growth momentum make it well placed to endure a trade war. Trump may therefore do more damage to his own country in the wrestle.
