What threats does the trade war between China and the United States pose to Russia?
The past week brought another escalation on the fronts of the US-China trade war, unleashed by US President Donald Trump in August 2017. In addition to measures already taken to correct America's trade imbalance, the US government has imposed a new 25% tariff on all Chinese imports, valued at $300 billion. China has promised not to be left behind.
On Monday, the American stock market reacted with a fall in stock prices of such IT industry giants as Apple and Intel.
Shortly before the start of a new phase of the trade war, Washington and Beijing feigned optimism and agreed to negotiate at the upcoming G20 summit in July. Observers, however, unanimously argue that the contradictions between the two economic giants are too strong for agreement to come anytime soon.
Moreover, the global economy is being affected not only by the trade war, but also by the factor of uncertainty itself. Rumor has it that if the situation continues to develop in the same direction, the world may be overwhelmed by a new economic crisis comparable to the crisis of 2008, from which the world has only just emerged.
There is no longer any doubt that Trump is serious about punishing China, driving it into the stall of a global consumer goods factory without great-power ambitions. When the businessman with the funny hair spoke about this in his election speeches, many considered them to be the usual populist chatter. However, Donnie has proven that at least the economic part of his campaign promises will be fulfilled clearly and consistently.
Moreover, people from Trump’s circle who criticize the boss for starting a trade war with China are forced to leave power. Even such powerful figures as the chief assistant to the US president and head of the Federal Reserve System (FRS) Janet Yelen, who failed to convince the boss not to get involved with Beijing.
Businessman Trump estimates that America loses $500 billion annually due to the trade deficit with China and more than $300 billion due to intellectual property rights violations. Based on this, Trump declares that the trade war with Beijing has been going on for a long time, it was lost by “narrow-minded and unprofessional US leaders,” and Donnie himself only intends to restore order in foreign trade, stopping such outrages once and for all.
Actually, the Hegemon's claims against China are not limited to trade deficits and violations of intellectual property rights. The US officially believes that China has achieved its economic dominance through dishonest methods, including: a carefully designed system of export subsidies; deft manipulation of the undervalued yuan; the Chinese leadership's willingness to sacrifice its own environment in exchange for cost advantages; low requirements for worker health and safety at work; illegal tariffs, quotas and other export restrictions on critical raw materials where China has a monopoly (primarily rare earth metals, urgently needed for the electrical and energy industries); unfair pricing policy and dumping; protectionism.
This is not to say that all claims against China are unfair. In the PRC they really save a lot on protecting the health of workers, despite the status of a socialist power. It is a fact that Chinese people injured at work do not receive social assistance and are even forced to work in heavy industries. It is a fact that Chinese production is poisoning the environment. In particular, residents of the Russian Amur region regularly witness poisoning of the great border river by their neighbors. Another thing is that the concern of US officials about Chinese workers and the environment of the Celestial Empire smacks of outright pharisaism.
On a number of points, the United States has its own bullshit. For example, until the 1960s in America they didn’t give a damn about copyright, and they stood up to defend it only when the current situation was no longer beneficial to the World Hegemon. Against the backdrop of the “Jackson-Vanik amendment”, the US demand for China to supply them with as many rare earth metals as they say, and at the price of dirt, looks simply ridiculous.
By the way, there have already been reports in world news that the Central Bank of China has carried out another devaluation of the yuan to help export goods from China.
The world's leading media, especially American mouthpieces, have been blowing into the public's ears about free global trade for decades. It is also declared the main value in the modern world economy. This was so as long as the United States occupied a leading position in the “Free World”, where even such economic monsters as Japan and Germany were just the second creeping up, and even in vassal dependence on America. And while this balance of power remained in the world, the United States benefited from free world trade. Moreover, the United States was its main beneficiaries. Now competition with China within the framework of WTO rules does not allow the Hegemon to divide the pie of the world economy according to its own understanding.
The problem is that China is not one of the US vassals, and it is generally useless to send strike aircraft carrier groups to its shores: “they themselves will have the lieververts.” You can’t go ahead and nod at Beijing, like you do at Berlin or Tokyo, in the hope that the Chinese partyocrats will instantly take the show and make the nook pleasant. Consequently, it is necessary to start an economic war in order to maintain the position of No. 1 in the world while maintaining the usual goodies - the Chinese locomotive will not be able to win through peaceful competition.
It should be noted here that in the economic war, the United States has advantages over China. Yes, the trade imbalance is not in favor of the United States, however, the cost of the flow of American goods to China is 0,7% of the US GDP, and the total value of products supplied from China to America is about 3% of Chinese GDP.
In other words, in the long term, China will have more pain in this war than America, especially since Trump in 2018 dealt a blow with an added 25% duty on high-tech supplies sensitive to China: IT and aerospace products, robotics, new materials, biopharmaceuticals, logistics equipment, nuclear reactors, boilers and mechanical devices, electrical machinery and equipment, land transportation, ships and boats, optical, photographic, measuring instruments and apparatus, etc. These products and industries form an important part of the Made in China 2025 program, which is being developed by leading Chinese companies working closely with foreign technology suppliers.
In the United States, they believe that such protective measures will return at least $50 billion a year to the treasury.
China did not remain in debt, introducing symmetrical duties on American soybeans, automobile and aircraft manufacturing products, and chemical industries in order to level out losses - on 106 types of goods in total.
Regarding the possible consequences of the US-China trade war, opinions are divided into pessimistic and very pessimistic. Thus, Tokyo seriously expects the risk of military conflict to increase. Japan believes that the situation may reach a stage where Beijing will try to challenge American dominance in the ocean.
It is difficult to say to what extent these concerns are justified, but let us remember that Washington openly declared the entire world a sphere of its national interests, even to the point of being ready to defend them through a military presence.
On the other hand, the whole world is such a piece that it is impossible to swallow without choking. As our ancestors said, “He has something to eat, but who will give it to him?”
Less depressive experts, like IMF head Lagarde, who view the problem through the prism of money, believe that the US-China trade war will lead to a sagging of the global economy by a sensitive 0,5%.
For such huge economic systems as China and the United States, any actions in trade confrontation will inevitably lead to mutual damage.
America is the main foreign trade market for China, and China is very important for the United States as a holder of Treasury securities (so far the Chinese have over $1,2 trillion). In addition, large American industrial companies really need China. For example, 20% of Apple Corporation's turnover is sold in the Chinese market. If the customs war between China and the United States intensifies, the Chinese will have to use their main weapon: the sale of United States Treasury bonds. If these measures do not stop the customs confrontation, the future fate of the US dollar will be in question, and the global economy may plunge into a global crisis.
Beijing does not refuse negotiations with Washington and hopes to restore relations. The Chinese leadership is not trying to lead to the loss of a significant part of the country's foreign exchange reserves in a race of confrontations. Beijing realizes that in the event of a global crisis, everyone will suffer.
There is a serious “X-factor” in this war: the PRC leadership is carefully hiding the slowdown in the country’s economic growth, since this factor could cause destabilization if the crisis deepens.
As for Russia, the statements heard “this is not our war” do not answer the main question: how will the showdown between China and the United States affect us?
Judging by last year’s official support for China by a group of countries, which, in addition to Russia, included Norway, Singapore, Turkey, Switzerland, India and Venezuela, this war also concerns us and no one wants a repeat of the global crisis of 2008, which hit our country.
Another thing is that the level of Russia’s integration into the global economy is not as great as our liberal financial and economic decision makers dreamed, so we have a good chance of surviving the next round of the global crisis. The main thing is to consistently implement the program of reindustrialization of Russia and import substitution, increasing our own innovative production. Increase domestic demand and the welfare of citizens. Let’s not forget about the de-dollarization of the economy!
And, as China once did, be on your side, watch from the mountain heights as scraps fly through the back streets from the battle of contenders for the next world leadership. There’s really no need for upheaval in Russia...
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