Truce in US-China trade war?

Truce in US-China trade war?

FPJ BureauUpdated: Wednesday, May 29, 2019, 04:16 AM IST
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At one level, President Donald Trump is proving to be a success. His hectoring, bullying style might have set a cat among the pigeons of a hitherto sane and sober world of global diplomacy, but it seems to have, at least in the short run, notched up quite a few successes. His constituency of white, male Americans who feel left behind in the economic sphere will be mighty pleased with him, even though Trump is prone to vastly exaggerate whatever success he achieves through his unconventional way of conducting foreign relations.

The latest is the 90-day truce in the US-China trade war. On the sidelines of the G-20 summit in Buenos Aires, Argentina, the meeting between Trump and the Chinese strongman, President Xi Jinping, produced a welcome thaw in the on-going tussle between the world’s number one and number two economic powers. Neither side would try and escalate the situation by raising tariffs on each other’s exports, while the status quo would be maintained only by the US.

It seems, that is, in case you trust the claims made by Trump, the Chinese would reduce import duty on the US auto exports substantially and would also increase their imports of various food grains from the US. At the start of the trade hostilities, the Chinese had responded by slapping tariffs on the import of soybeans, causing discomfiture in the rural communities in the Midwest America. (Rural voters had overwhelmingly supported Trump while urban areas had mostly favoured the Democrats in the last presidential poll.) Trump could not alienate this solid constituency and had announced a huge subsidy package for the farmers affected by the Chinese tit-for-tat tariffs.

Though a spokesman of the Chinese foreign office did not touch upon the concessions that Trump tweeted about, and which his media department went to town with, it was claimed that the threat of the US hiking the current tariff of ten percent on another $200 billion of Chinese exports to 25 per cent from January one had done the trick. The imbalance between the US-China trade is to the tune of well over $300 billion in favour of the Chinese. The US has for long complained about the predatory practices followed by the Chinese and their hidden and not-so-hidden subsidies to exporters which make it hard for local manufacturers in the importing countries to survive.

Trump has railed against the unfair and one-sided trade practices of the Chinese all through, but his unconventional method to address the grievance had taken everyone by surprise. Experts, however, are of the firm opinion that the Chinese are tough customers; they will yield on minor things, such as opening the door a bit more for auto imports and on easing restrictions on the American companies to manufacture in their country, but when it comes to stopping the theft of intellectual property or stealing trademark technologies they will stand their ground on relaxing controls on foreign companies to set up hassle-free operations.

It is in the Chinese mission to steal, cheat and copy and emerge the number one global power economically and militarily. And they seem to be well on their way. In artificial intelligence, in robotics, in autonomous or self-driving vehicles, the Chinese may have already left the US behind. It is in this context alone that one can admire the rough and ready methods of Trump in conducting foreign relations. He has also succeeded in re-visiting the North America Free Trade Agreement between the US, Canada and Mexico. With each country now, he has negotiated a separate bilateral agreement, which offers some concessions to his local constituents.

For instance, he had berated Mexico for exporting a huge number of automobiles to the US, unmindful that auto-makers were bound to exploit cheaper labour and other inputs by setting up their factories in Mexico. Despite Trump’s best effort to boost the US auto industry, the recent decision by the General Motors to shut down five of its domestic production facilities underlines the complexities in the sector which is being disrupted by the increasing number of electric and autonomous cars.

However, undeterred Trump renegotiated a fresh trade deal with Canada, which, too, produces a lot of automobiles of various US-registered auto corporations. In sum, despite the terrible optics and his earthy or rather crude style of conducting himself, be it in domestic or global affairs, Trump’s disruptive ways have done some good to America. It is the Chinese, cool, inscrutable and always determined, who refuse to be deflected from their single-minded goal of replacing the US to emerge as the global hegemony, a prospect too dangerous to contemplate for the stability of the world order. Trump’s tough act might postpone that day but the rise of China seems unstoppable.

Editorial

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