US Vs China- War For The Economic Future

War for the economic future

- Patrick Cooke

As the rhetoric from the US White House swerves from combative to compromise and back again, uncertainty in the global trading environment is creating potential pitfalls for emerging markets the world over. In the Association of South-East Asian Nations (ASEAN), which counts China as its largest trading partner, member states watch with trepidation as President Donald Trump ramps up threats of levies on nearly all Chinese products shipped to the US.

Not only could an escalation in the trade dispute between the world’s foremost economic powers lead to falling demand for ASEAN-made products in China’s industrial value chain, there are also fears that South-east Asian nations could be flooded with Chinese exports of steel, aluminium and other commodities once destined for the US, thereby depressing prices and squeezing out domestic producers.

President Trump’s fixation on reducing the bilateral trade deficit with the country he labels a “strategic competitor” is accompanied by his administration’s concern over “Made in China 2025”, the ambitious 10-year blueprint that seeks to place China at the forefront of advanced manufacturing by enhancing the enabling technologies and spearheading progress in the emerging industries, such as artificial intelligence (AI), robotics, biotechnology, and electric and automated vehicles.

US objections are ostensibly about unfair competition in the form of local content requirements and generous state subsidies and incentives for Chinese firms, but they belie bigger concerns that the US is losing its competitive edge. Indeed, Made in China 2025 poses a much more potent long-term threat to the US’s economic primacy than any bilateral trade deficit.