China-US Trade War: the worst case scenario?



Ties between Beijing and Washington may enter a “dark period” of five to ten years, as the escalating trade war may “decouple” the world’s two largest economies, a prominent Chinese analyst warned.

This is possibly “the worst case scenario” the trade war may bring, and it may have profound impact on the world order. Economic cooperation has long been considered the pillar of China-US relations.


“Decoupling has already begun,” said Pang Zhongying, a renowned international relations analyst and professor of Ocean University of China, in a recent opinion piece on China Times.

Such “decoupling” is a core part of the Trump administration’s efforts to push forward “de-globalisation”, said Pang, noting it’s unprecedented that the tariffs are charged to all of the goods in Sino-US trade.

ALSO READ: Why China will win the trade war?

US President Donald Trump has said he’s ready to erect tariffs on all $506 billion worth of Chinese imports to the US. So far, Washington has slapped duties on $50 billion worth of Chinese goods, and a fresh $200 billion more is threatened this month. China can’t match the tariff threats because of the mismatch in trade.

China’s response would be to quickly re-route goods to other countries, former People’s Bank of China governor Zhou Xiaochuan, told CNBC Friday in a forum in Italy.

The trade war between Washington and Beijing won’t have a huge effect on the Chinese economy, Zhou also said.

“The worst case scenario is that China is no longer going to export $500 billion of goods to the US market and then its dependent how quickly you can diversify those export goods to the other countries. Actually I think China could act quickly,” Zhou added.

“Other countries” obviously mean the Belt and Road region, Pang said, adding the “re-route” would be a process of re-globalisation.

Other major economies are eyeing on emerging opportunities in the Chinese market.

Japan and Germany jump at the chance to gain market share in China’s booming auto industry and boost their capacity in China, the world’s fastest-growing passenger car market, according to Asia Times.

But it’s a question whether other economies could fill the gap left by the US.

Also, does China’s re-routing mean the world is once again split into “two parallel markets”, as the late USSR leader Joseph Stalin has famously put at the onset of the Cold War?

The future looks gloomy for the Chinese analyst.

Escalation of the trade war means it’s little possible for both countries to address the issue through negotiations. Both are preparing for the worst case scenarios, Pang said.

China and the US is now in an age of “comprehensive strategic rivalry”, which is not limited to trade war, but is marked by the decoupling of all aspects of the ties, he said, quoting Professor Chen Dingding of Jinan University.

“We don’t know, in the foreseeable future, whether the ever deepest economic interdependence in human history will decouple, and its impact on world peace and order,” Pang noted.

The writer is a foreign affairs analyst


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