China is preparing for an everlasting trade war with the US

China is preparing for an everlasting trade war with the US


After Eighteen months of a trade battle, China has realized that the conflicts are now beyond trade. Thus, China is preparing for a battle that is for going to last forever. This battle may last as long as a trade war between the US and Japan in 1980s. The US-Japan trade war lasted for a decade. The current strategy of China has a long period horizon entrenched in it. This time horizon might go beyond the current US. administration’s life cycle. China may not make concessions while remaining open for negotiations. To reduce the dependence on the US., China is increasing its efforts in other countries. Various magazines and newspapers published articles about enhancing cooperation of China with other countries. These countries are Japan, Latin America, Thailand, and South Korea.

China is also focusing on strengthening its local market. According to the editor of People’s Daily, it is getting harder for the US to press China for making concessions. Earlier this month, Trump announced 10% tariff on $300 billion of Chinese goods. This move terminated the trade truce gruffly. China reacted with reduced taxes ranging from 5% to 10% on $75 billion in the US goods. The purpose of this move was not to exploit damage but to decrease incentives for additional US. tariffs.

In the previous year, the trade battle has transformed into a technology battle. Tariffs seem to have developed as a tool for the US to spread influence on other issues which includes agriculture buying and currency manipulation. The conflict between China and the US are now beyond trade. China’s potential gains have been reduced due to a trade deal. The hope of improving relations with the US are long gone for China. At the beginning of the year, the US administration banned Chinese Huawei, a telecom giant under the name of national security issues. This move halted Huawei ability to buy chips made in the US. Given the circumstances, any significant trade deal between China and US is not expected this year.

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