U.S. trade policies are giving China a 'rare and unprecedented strategic opportunity' - Entrepreneur Generations

Chinese President Xi Jinping and U.S. President Donald Trump 
(Photo by T. Peter-Pool, Getty Images via The Conversation)

In the trade war between the U.S. and China, China may have some key advantages to stymie U.S. businesses -- including farmers -- while developing new trading partners. "The two economies are now locked in an all-out, high-intensity trade standoff," writes Linggong Kong for The Conversation. "As an expert on U.S.-China relations, I wouldn’t expect China to [back down]. Unlike the first U.S.-China trade war, when Beijing eagerly sought to negotiate with the U.S., China now holds far more leverage."

Dynamic shifts in China since 2018 make this round of tariffs different. "The importance of the U.S. market to China’s export-driven economy has declined significantly," Kong explains. "At the start of the first trade war, U.S.-bound exports accounted for 19.8% of China’s total exports. In 2023, that figure had fallen to 12.8%."

Overall, the U.S. is more dependent on Chinese goods. "By 2022, the U.S. relied on China for 532 key product categories – nearly four times the level in 2000 – while China’s reliance on U.S. products was cut by half in the same period," Kong writes. "Beijing believes Trump’s tariffs risk pushing the previously strong U.S. economy toward a recession."

China has a set of retaliation tools to use against the U.S. that the U.S. does not hold over China. Kong adds, "It dominates the global rare earth supply chain – critical to military and high-tech industries – supplying roughly 72% of U.S. rare earth imports."

U.S. farmers are also a target for China. Kong writes, "China accounts for about half of U.S. soybean exports and nearly 10% of American poultry exports. On March 4, Beijing revoked import approvals for three major U.S. soybean exporters."

Beyond financial targets, China is using the U.S. trade policies as an opportunity to rebuild its stressed trade relations in Asia and Europe. "After Trump had first raised tariffs on Beijing – China, Japan and South Korea hosted their first economic dialogue in five years and pledged to advance a trilateral free trade agreement," Kong writes. "On April 8, the president of the European Commission held a call with China’s premier, during which both sides jointly condemned U.S. trade protectionism and advocated for free and open trade."

Despite the harm Trump’s tariffs will "inevitably do to parts of the Chinese economy, Beijing appears to have far more cards to play this time around," Kong explains. "It has the tools to inflict meaningful damage on U.S. interests – and perhaps more importantly, Trump’s all-out tariff war is providing China with a rare and unprecedented strategic opportunity."

from The Rural Blog https://ift.tt/Am895n7 U.S. trade policies are giving China a 'rare and unprecedented strategic opportunity' - Entrepreneur Generations

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