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Recapping The U.S.-China Trade War Lecture

Wenting Ao December 3, 2018

On November 15, the Office of International Affairs continued their lecture series with a presentation on U.S.-China trade policy.

Temple University welcomed two honorable guest speakers, Dr. Guihuo Wang and Dr. Derek Scissors. Dr. Wang is a president in Academy of International Strategy as well as a law professor at Zhejiang University. He is also a member of the International Commercial Expert Committee of the People’s Supreme Court of China. Dr. Scissors is a resident scholar at the American Enterprise Institute and mainly focused on the Chinese economy and U.S.-China economic relations. He also serves as chief economist of the China Beige Book, a private economic data-collection network for investors and CEOs.  As knowledgeable and experienced voices in the debate, both offered their perspectives on the trade war and shed light on what future economic relations might look like.

Although the U.S. and China have never seen eye-to-eye in the globalized economy, tension began to heighten in March 2018 when President Trump signed a memorandum to begin imposing tariffs on Chinese products and filed a WTO case against China for discriminatory licensing. The tariffs followed after spending months on the campaign trail, rallying supporters against the Chinese trade deficit and other Chinese economic practices. It should be noted that although a trade deficit can hurt domestic manufacturing, many wealthy countries are turning to service industries as their main economic driver. The tariffs are meant to raise prices on Chinese imported goods, thus allowing for better business for domestic suppliers; however, tariffs may also raise prices for domestic manufacturers who must now purchase potentially more expensive domestic raw materials. Following Trump’s policy of ‘America First’, he hopes to use protectionism to strengthen the American economy and draw in supporters.

The trade deficit is not the only side to the trade war though. Another point of contention follows from China’s lack of legal action in protecting licensing.President Trump believes China has been stealing intellectual property, harming U.S. manufacturing by using U.S. innovation to create competition.Consequently, President Trump started the trade war as a punishment, invoking tariffs on China through Section 301 of WTO policy by citing China’s “economic aggression”. In April,  the Office of the United States Trade Representative (USTR) placed 25% tariffs on $50 billion worth of Chinese goods. Later, 10% tariffs were added to an additional $200 billions of Chinese imports. This prompted an immediate Chinese retaliation, proposing tariffs on $110 billion in American goods in September.

As one could feel through the energy of the lecturers, Dr. Wang and Dr. Scissors expressed very different opinions on the matter.  

Dr. Wang believes the trade war is a result of globalization, as China stepped into membership at the WTO. He asserted China’s economic policy encourages a common rule, allowing each country to assist each other in better development:“Without the WTO, without the shared principles—obligations—this world would be disastrous.”

He later expressed his distaste for the trade war, arguing America has violated WTO rules by not dealing fairly and honestly with other contracting parties without taking unfair advantages. Dr. Wang also mentioned that China’s retaliation is acceptable according to WTO’s National Security Defense rules. He thinks economic security is very important and self-defense is a necessary manner to survive in contemporary society; however,. he finds the American government’s ignorance of international law is an abusive exercise of rights, serving as a negative example to other countries and  weakening the WTO system. Even still, Dr. Wang is optimistic about the trade war’s future .Citing the Tao De Ching he said, “A violent wind does not blow the whole morning, nor a rainstorm ends the entire day.” In short, he believes the trade war is only a short period in history, and a short period will not influence the Chinese holistic development. “In the end, China and the United States will work together,” Dr. Wang concluded.

Dr. Scissors offered a contrasting view on the issues at hand, believing that only signing an agreement and following WTO’s policies will not solve the problem completely. He interprets all U.S. commits in the WTO, as subject to U.S. law.  Chinese developments are negatively influencing American position in the world, so the U.S. is looking for a way to regain the upper hand. In truth though, Dr. Scissors believes the trade war has more been used for propaganda than actual substance: There is no trade war. . .trade is proceeding exactly as it did before.” The U.S. is importing goods from China, and Chinese products still come to the U.S. , “There is a risk but not an actual trade war.”

He also pointed out that China is facing many problems at the moment. In order to achieve its own economic goals, China not only needs to spend money, but also opens competition for creating more new technologies and innovation. The Chinese government does not believe in opening competition, so China cannot produce unique products. At this time, China may buy others’ innovation or steal technologies, which is not responsible action by a WTO member either. Rising under the heat of his opinion, Dr. Scissors declared China’s strategy as a “technologic cold war”. Scissors spoke to other problems within China as well: an aging population, manipulating the currency exchange rates based on dollar fluctuation, and an accumulation of debts. Overall, Dr. Scissors says China’s challenge is much larger than the United States’.

In the end, America and China both are facing their own challenges in the future and the trade war will continue to hurt not only the U.S. and China, but other nations’ economies. As world superpowers the world economy is contingent upon their ability to work to work together. Each trying to fulfill their own interests, the trade war is as much about the economy as it is about political ambitions. Only time will tell where the trade war will take us and whether peace can be found.