Why China should avoid a large-scale trade war with the United States

Why China should avoid a large-scale trade war with the United States

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As in any war, there will be victims on both sides.

In a large-scale trade war between China and the United States, the Asian giant could be badly hurt, not in vain, exports to the North American power are a key element in its growth model.

The trade surplus in favor of China (estimated at around US $ 347,000 million annually) would be directly hit by a protectionist escalation between the two largest economies in the world.

That is why some experts warn that Beijing would have much more to lose than Washington.

“Potentially, China is much more exposed, which is why it will want to negotiate a way out of this escalating tariff confrontation,” says Stephen McDonell, a BBC correspondent in Hong Kong.

Donald Trump and Xi Jinping.
Copyright of the GETTY IMAGES imageImage caption China exports much more to the United States than it imports from that country.

So far, China and the US They seem to be playing the previous cards of a conflict that, if it escalates, can even trigger a global economic recession, according to the director general of the World Trade Organization (WTO), Roberto Azevedo.

China on Monday announced tariffs of between 15% to 25% for 128 US products(including scrap aluminum, pork, nuts, fruits and wine) for a total of US $ 3,000 million, against which the White House said that It was “distorting global markets.”

Wall Street reacted amid fears about an eventual trade war, with the Dow Jones Index down 2.7%.

The Chinese announcement against American products was the answer given by the government of Xi Jinping to Donald Trump after the US president decided to impose controversial tariffs on the import of steel and aluminum, and the subsequent announcement on trade restrictions on Chinese products by some US $ 60,000 million.

“China has more to lose”

According to William Alan Reinsch, an adviser to the Center for Strategic and International Studies, based in Washington and former president of the National Council of Foreign Trade of the United States, China prefers to negotiate because it has “potentially more to lose” in a commercial war, given that “it sells more to the United States than what he buys from him. “

“Trade negotiations with the United States in the past have generally generated agreements that have not required major concessions, they would be happy to repeat them, ” Reinsch said in conversation with BBC Mundo.

Boat with Chinese exports.
Copyright of the GETTY IMAGESImage caption Experts agree that China “has more to lose”.

“China is an economy more dependent on exports and, therefore, fears for the stability of the global trading system,” says BBC World Barry Eichengreen, professor of economics and political science at the University of California.

“China has more to lose than the United States in an eye- to- eye trade war , in which bilateral trade between the two countries stops,” he adds.

This explains the expert the apparent efforts that Beijing is making to convince the other actors to preserve that system.

In a more political terrain, Eichengreen says that it is in China’s interest that the situation does not escalate “as a way to demonstrate global leadership and improve its reputation in the eyes of other countries as a reliable partner.”

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