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US-CHINA TRADE WAR

Trade War

By: Qurat ul Ain Aman

Let Sanity Prevail!

The world has become a global village today. Owing to globalization, especially its economic version, we are getting a number of dividends in the form of free trade, economic agreements and bilateral treaties. It is a well-known reality that the last five decades of the twentieth century were consumed by the tussle between communism and capitalism. However capitalism triumphed, leading our world to a new phase of liberal institutionalism.

Till the end of the first decade of the twenty-first century, the United States remained the world’s sole superpower. But, a fast-rising China has become a colossal threat to American hegemony. Resurgence of Russia and Germany, too, rings an alarm, loud and clear, to the overwhelming influence of the United States on world affairs. It, thus, omens that our world has now become multipolar, particularly in terms of economics.

Considering the fact that there are no permanent friends and enemies in international arena, countries make their economic policies keeping in view their own national interests. China, with its huge Belt and Road Initiative (BRI), is all set to become world’s largest economy within a few years from now. The country is also increasing its influence in different financial institutions of the world so as to challenge the hegemony of America in the financial sector – China has veto power in the Asian Infrastructure and Investment Bank (AIIB), it is increasing its investments and shares in the European Bank for Reconstruction and Development (EBRD), and the New Development Bank. It is also funding many projects of the Inter-American Development Bank (IADB). If we closely analyze Beijing Consensus, we will conclude that China is focusing more on economic reforms than on political ones. Owing to all these factors, China has become the biggest challenge to America.

Amidst such conditions, the notion of Thucydides Trap seems to be the most appropriate theory to understand the full-blown US-China tussle in various realms. Since China is an emerging power and has challenged the hegemony of the United States, the latter is trying to stop it from becoming the world’s largest economy. Being the largest importer of its goods, the United States owes huge amounts in debts to China.

If we dig deep into the current US policies towards China, we will find that all these policies are aimed at hurting China economically. Owing to the US presence in the South China Sea and South Korea, China’s defence spending has increased manifold. Had there been no military threats from the United States, China could have spent more money on economic development that has spurred economic development in the country.

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