Sino-US trade war: Short-term gain vs long-term loss

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Editor's note: With a doctoral degree in communications from the Communication University of China, the author has been working in the field of international journalism for 30 years. The article reflects the author's opinion, and not necessarily the view of CGTN.

After months of high-level and tense negotiations between Washington and Beijing, US President Donald Trump has chosen to launch a trade war to solve the trade deficit problem with China.

Starting from last Friday, the United States would impose 25 percent tariffs on Chinese imports worth 34 billion dollars. In return, China announced countermeasures for goods imported from the United States on the same day.

Although experts around the world have come up with various opinions on the outcomes of the largest trade war in economic history, the basic conclusions are no matter who wins or loses, the unilateral action by the US violates the WTO rules and the trade friction between the world’s two largest economies will certainly result in a heavy blow to the already sluggish global economy.

Here, I’d like to share with you two of my humble observations.

First, who wins in a US-China trade war

It’s obvious that the US is still the world’s number one in terms of political, economic, cultural and military powers while China is one of the world’s fastest growing emerging economic countries.

The US importers can get supplies from other countries rather than China. Washington can even take measures to pull the US businesses out of China.

So, the trade war will definitely reduce China’s exports and hurt the relevant sectors and companies as well as slow down the country’s economic growth.

China's currency symbol./ VCG Photo

If the purpose of Trump’s trade war against China is to cut down the trade deficit, he is an easy winner because there will be no more trade deficit when the two countries stop trading with each other.

But if China can expand its trade and cooperation with other countries, it can recover from the setbacks brought by the US trade war.

Second, who loses in a US-China trade war

Although the US might be the winner in the sense that the two countries stop trading with each other and China could suffer from huge economic loses, it’s rather tricky to determine who will be the real loser of the trade war as I can think of three possible scenarios.

A. China is the loser, which is what Trump has hoped for: to defeat or contain China so to maintain the US’ global dominance.

But it would not be easy to achieve as globalization has made countries around the world more connected with one another economically – one country’s economic problem can affect the economy in other countries, one example of which is the worldwide financial crisis resulted from the sub-prime mortgage crisis in the United States. Even if China loses, the world suffers the consequences.

B. The US and China are both losers. As the world’s largest developed country and the largest developing country, the United States and China can benefit more by working with each other than fighting against each other.

Sino-US trade conflict./ VCG Photo

The existing problems such as the trade deficit and security concerns can be solved through dialogue and negotiation. After all, the exchange of words is much better than the exchange of fire. Fights between the US and China may lead to the rise of a third country, making both countries losers.

C. The United States is the loser. If the United States stops trading with China, it can solve its trade deficit problem. Trump can relocate manufacturing companies back in the US and create more jobs at home, but where on earth can he find a replacement for the huge market created by the 1.3 plus billion people in China for American goods and services?

Some experts are saying that Washington has been trying to set up new international trade mechanisms to exclude China, but chances are that China can also enter into bilateral and multilateral trade agreements with other countries. In the end, the US might find itself a loser of the trade war it has started.