By Chris Adams
People in the United States – and around the globe – need only check their Twitter feeds to see what President Donald Trump is thinking about trade and China.
Chinese leaders don’t negotiate by tweet in the same manner. But how are they assessing and responding to this ongoing trade war?
In a session with National Press Foundation fellows on an international trade training, Huiyao (Henry) Wang offered his insights on how the U.S.-Chinese trade relationship developed over the years and how it is splintering now.
Wang (bio, Twitter) is president and founder of the Center for China and Globalization, the leading independent global think tank in China; he is also a top adviser to the Chinese government and international organizations such as the World Bank.
It’s been 40 years since the establishment of U.S.-China diplomatic ties. Those 40 years “witnessed the continued growth of interdependent and mutually beneficial ties between China and the United States,” Wang said, despite some ups and downs. The relationship served as an example for economic cooperation between countries in different development stages and with distinctive social systems.
That relationship is now “at a crossroads,” Wang said – and that’s putting it mildly.
Seen from the vantage point of mid-2018, what might happen in this fracturing relationship? Wang sees three scenarios – best, medium and worst-case.
The best-case scenario would happen if the two sides reach an agreement and subsequently halt the tariff measures they have imposed on each other. The medium scenario is a long-term but still contained trade war. And the worst? Continued escalation into an all-out trade war, one that would harm the economies of both nations, as well as the wider global economic system.
People talk about decoupling the U.S. and Chinese economies – “but decoupling is basically impossible,” Wang said, saying that it would be “catastrophic to the 70,000 U.S. companies that generate $700 billion in revenues in China.”