Why China is not afraid of a trade war with Trump

By Mei Xinyu Source:Global Times Published: 2017/2/17 0:13:39

Illustration: Luo Xuan/GT

Illustration: Luo Xuan/GT

Since US President Donald Trump was sworn into office, the pressure of trade disputes between China and the US has grown, but new opportunities are also rising. Even if the disputes escalate into a massive lose-lose trade war, China is confident that it can maintain and improve its position in international trade.

First of all, I don't think the "anti-globalization" label imposed on Trump is totally justified. As a businessman with operations all over the world, Trump must have developed a deeper sense of the benefits of globalization than professional politicians. What he opposes is the current globalization pattern, not globalization itself. With huge budget and trade deficits, which are still expanding, the US has an urgent need to change its economic growth model and a major reshuffle of trade patterns. Sustainable economic growth in the US will contribute to the sustainable and steady development of economic ties with China.       

Although I have been a stalwart supporter of win-win cooperation between China and the US, I am not particularly worried about the potential damage of economic and trade disputes between the two countries. I hope people in the US do not fancy a trade war to coerce China into accepting unreasonable economic claims. Why? Thanks to China's huge economic volume and ascent to a pre-eminent position in the world, China has gone beyond catching up to increasingly defending itself against getting caught up in the race. If an irrevocable economic crisis or trade war occurs worldwide either naturally or artificially as the Smoot-Hawley Tariff Act of 1930 induced a full-scale worldwide depression, China does not have to vainly pursue a higher growth rate to beat its previous record. As long as China makes sure that its growth outperforms other economies, especially its major competitors, its spot in the world economic rankings will continue to rise and its share in the world's economy will expand. China is resilient with a strong ability to withstand risks. As along as domestic stability remains intact and the country stays poised, a global economic crisis will not necessarily hurt China. If China can get through years of austerity during a crisis, it can weed out competitors and stand out from the competition.

I have noted earlier that the ascent of big powers requires good timing and that they should take advantage of crises and chaos to transform themselves. Without the Asian financial crisis in 1997, China may not have emerged so quickly among East Asian economies. Through the subprime crisis, China also significantly raised its share in world economy and trade. In 2007, China's GDP accounted for 10.8 percent of the world total and 24.8 percent of that of the emerging economies while its exports in services and goods accounted for 7.8 percent of the world total and 23.2 percent of that of the emerging economies. In 2015, its GDP took up 17.3 percent of the world output and 30.0 percent of that of the emerging economies, while the share of its exports in goods and services rose to 11.6 percent of the world total and 31.7 percent of that of the emerging economies.

Despite the decline in global trade and China's economic slowdown, China's global trade share has continued to climb. According to WTO statistics, world exports in goods rose 0.3 percent in 2014 in dollar terms while China's exports in goods increased 6.1 percent, compared with 2.6 percent growth in the US, 3.7 percent in the EU and 2.5 percent in India. In 2015, world exports in goods shrank 13.5 percent, while China's exports declined 2.9 percent, compared with a 7.1 percent drop for the US, 12.5 percent for the EU and 17.2 percent for India.

Even in the worst-case scenario for a trade war, China's position in the world would remain intact. China's counterparts in future negotiations over trade disputes should not plan to intimidate China with the threat of a trade war. The best way to handle the issues that arise is through talks in good faith.                

The author is a research fellow with the Chinese Academy of International Trade and Economic Cooperation. bizopinion@globaltimes.com.cn


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