Dialogue on US-China Trade War

Lingchuan Xu ’21 | Features Editor

As China establishes itself as a global superpower, it began to have much more interaction with the global economy. After the United States changed its administration, this became much more of an issue.

President Trump declared a trade war against China in response to the United States’ massive trade deficit. In response to this, Smith’s Chinese Students Association (CSA) held a panel, facilitated by the CSA’s president, International Trade and Commercial Policy professor Charles Staelin, Chinese Politics professor Sara Newland and the rest of the CSA discussed how the trade deficit emerged, how the trade war began and the impact it has on both the United States and China.

At the beginning of the panel, Kuang asked about the historical context of this trade war. Professor Staelin answered that the trade deficit was not China’s fault.

“The US trade deficit is largely because it spends more than it earns,” he said. “Consumers consume more goods and services than the US produces. If those don’t come from China, they have to come from somewhere else.”

Professor Newland also pointed out that the Chinese government’s intervention in the Chinese economy was by no means playing an unfair card on international trade: “‘State Capitalism’ is not unique to China. China should not be the only country that [is] blamed for [it].”

When asked why the United States intended to start such a trade war, Staelin responded that it was “a change in the US’s administration.” Newland resonated with this opinion: “Trump is an interesting president.”

She said that, historically, both Democrat and Republican candidates claimed to be tough on China, but once elected, they never followed through with their claims due to “the vague, broad consensus that ‘trade is good.’” However, Trump did not come to power due to this consensus. His popularity came from his hard stance against foreign trade. By readily cutting off relations with China, Trump is actually keeping his promise to the people.

But does it really help to ease the United States’ domestic economic issues? Not really. According to Staelin, the trade war will hurt consumers, but not necessarily get Americans more jobs. Though less imports should mean more jobs, due to the relatively low unemployment rate, there is not a huge demand for businesses to create more jobs.

Newland discussed the influence on China more in the political sphere, saying that the Chinese government is worried about the instability brought by the trade war. “If there are a lot of goods not going to be bought by American consumers, then factories may potentially be closed, [there may be] lay-out workers — this is a situation that the Chinese Communist Party leadership feels very concerned about.”

Kuang then asked specifically how the trade war will impact China. Staelin said in the short run, China will be greatly impacted, since China exports much more to the United States than the United States exports to China. But China is also increasingly selling goods to other countries.

“China is transforming its economy,” Staelin said. Newland added that “They want to move up the value chain; they are not only producing T-shirts, they are also producing high-tech goods. So China will be less dependent on exporting to the US.”

It is hard to deduct where this trade war will go and what impacts it will have on both the United States and China, , but this trade war did provide some insights to people watching this economically political game closely.