Business China Dialogue with Mr Xu Yuhuan on his analysis of US-China trade relations
The trade conflict is unlikely to escalate into a full-blown trade war, but politics will make global markets more volatile, said Mr Xu Yuhuan from China Securities Regulatory Commission Shenzhen Office, who was the guest speaker for the Business China Dialogue held on 17 May 2018.
Since the establishment of diplomatic relations between China and the United States, both countries have progressed and deepened their cooperation in the areas of economics and trade. However, following the assumption of U.S. President, Donald Trump embraced a protectionist trade policy, which led to an investigation into Chinese trade practices, and proposed tariffs on Chinese imports.
In response, China took countermeasures to firmly defend the interest of the nation, which included a newly proposed tariff on imports of soybeans from the U.S., in an attempt to shake up Trump’s supporters from soybean-producing states. While the trade dispute between the US and China continues to heat up, two trade talks and a teleconversation took place as of 19 May.
On the tactics, Mr Xu analyzed that, U.S. President Donald Trump, known to be ideologically flexible, is likely to maximize the options. He also took the direct approach of openly stating that both leaders will always be friends, no matter what happens with the dispute on trade. Mr Xu believed that Trump’s underlying motivation is to restore the declining approval rate of his presidency.
On the other hand, China took the stand that they will firmly defend the interest of the nation and its people in this trade war. Preparing for the worst, China also leverages on geopolitics to retaliate Trump’s protectionist trade policy.
The trade imbalance between China and the United States has sown the seeds of the trade dispute between the two countries. Mr Xu identified the causes of the trade imbalance, which includes industry structure, trade structure, over-consumption, Triffin dilemma and export restrictions. U.S. government subsidies for China, dispute on Intellectual Property protection, China’s manipulation on the exchange rate and lowered entry barriers of many industries were pointed out as the cause of trade conflict.
Mr Xu concluded that the trade conflict is unlikely to escalate into a full-blown trade war. However, he warned that tactical trade responses are likely to increase the volatility of the global market. He also highlighted that China will eventually benefit from further opening-up, and the high-tech industry and 2B service industry will have a lot of room for developments.
In addition, Mr Xu also noted that as China further liberalized its asset management and commodity futures markets, Singapore can explore opportunities under the Belt and Road Initiative and deepen cooperation in areas like financial and legal services.
The dialogue saw a turnout of 50 attendees, with heated discussion during the Q&A segment. The Business China Dialogue series featured experts from the business sector and government to provide insights into current issues of the day. Members of Business China are invited to the exclusive sharing and networking sessions.