China turns to ‘The Art of War’ as Donald Trump signals battle on trade

Having backed off some other campaign pledges, it’s unclear if Trump will end up slapping punitive tariffs on China – and Beijing has signalled some optimism he will be more pragmatic in office. Still, the message from China is that any move to tax Chinese imports would bring retaliation. The US economy would take a hit and America would damage its longstanding ties with Asia.

“China wouldn’t like to see that happen,” Fu Ying, who chairs the foreign affairs committee of the legislature and was a vice-foreign minister until 2013, said of the US imposing punitive tariffs. “But if so happens, it won’t be one-way traffic,” she said last week in Beijing.

That’s where I think the former vice-foreign minister is wrong. China has rigged the game so that trade with the US is largely one-way traffic.

Container imports and exports at the Port of Los Angeles (FY 2016) highlight the problem. More than 57% of outbound containers are empty. Container shipping represents mainly manufactured goods, rather than bulk imports or exports, and the dearth of manufactured exports reflects the trade imbalance with Asia. Even the container statistic understates the problem as many outbound containers contained scrap metal and paper for processing in Asia, rather than manufactured goods.

Port of Los Angeles (FY 2016) Container Traffic

Source: China turns to ‘The Art of War’ as Donald Trump signals battle on trade

4 Replies to “China turns to ‘The Art of War’ as Donald Trump signals battle on trade”

  1. It’ll be interesting to see if Aaron Sorkin (The West Wing TV series) was right when his character Toby Zeigler says to the protesters arguing against free trade,”Free trade stops wars; and we’ll fix the rest.”

    1. Strong trade does discourage wars. Free trade, or more accurately, unregulated trade, however, may lead to abuses. Currency manipulation is just the start.

      “Free markets” are similar. Compare the level of abuse that was rife in “free” stock markets of the early 1900s to the highly-regulated markets of today. Insider trading and market manipulation were rife in a no-holds-barred “free market”.

  2. As long as they export their capital along with manufactured goods to the US things are going to be fine. The day they stop…

    1. “The day they stop…” Yes indeed, Fabian.
      But I’m not too concerned. Trump seems to have made his way through life by bullying, but he’s now up against the greatest bullies of all time – the men who run the US intelligence machine, who can make mincemeat of him anytime it suits. I think he’ll fall into line. As long as he tells his worshipers what they want to hear, it won’t matter that he does very little. Excellent article about self-delusion in New Scientist this week (Dec 3).

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