Looming Economic War
Nothing is agreed until everything is agreed!
The tariff war with China unleashed more than a year back by the Trump administration in the United States threatens to turn into full-fledged economic war. The US claims that China is engaging in unfair trade practices and adopting coercive measures against US firms, undermining US economic interests. China not only denies US allegations, but in a White Paper released in early June dismisses US claims that it reneged on agreements arrived at in the negotiations to end the war. In the press conference held to release the paper, China’s Vice Minister of Commerce Wang Shouwen noted that it is not uncommon for both sides to propose changes to the text of an agreement in the course of consultations. “Nothing is agreed until everything is agreed,” he reportedly said.
It is now increasingly clear that while the initial tariff spat was clothed by the US in the rhetoric of generalised protectionism, which included a rewrite of the North American Free Trade Agreement (NAFTA) and exit from the Trans-Pacific Partnership, the war with China is special. It is aimed at forcing China to step back in its drive to become another economic superpower. The rhetoric against China is not just that it runs large trade and current account surpluses with the US or that it is stealing technological secrets to bolster its competitiveness, but that the activities of its firms pose a national security threat to America. The issues go beyond the purely economic.
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