US-China Trade War Talking Points:
- Was the US-China trade war inevitable?
- What is the most likely outcome of this global trade war?
- What will be the impact to US and China’s trade and economies respectively?
- How will the US-China trade war impact equities, Yuan, Dollar & safe-haven currencies?
China vs USA: The Rising Competitor to the US economy
The United States’ trade deficit to China no longer seems the top issue in the trade war: A deal for an additional $70 billion in Chinese purchases[1] of US goods was reached after rounds of bilateral negations in May and June. Yet, that didn’t stop US President Trump from abandoning the deal.
What perhaps matters more is the competition in technology, specifically high-tech industries. The United States’ complaints regarding China’s intellectual property rights and “Made in China 2025” industry policy are all about this. Most of these disputes have existed since the US and China began their trade [2]relationship in earnest. However, US-China relations have changed over the past three years, and this led to the inevitable eruption of the trade war.
In 2015, the United States’ national strategy towards China was cooperation, and “the scope of [such] cooperation was unprecedented”. This is noted in the National Security Strategy of that year. In the 2017 report, however, China had been moved to the competitor category: “the US must compete” against it and “compete with all tools”.
For China, it can no longer rely on high growth rates that it enjoyed for decades; the need
