US And China Trade War Between Offensive and Defensive Realism
Mian F
Published on: 2021-03-07
Abstract
The arrival of Donald Trump in power has brought many changes in international relations especially between the United States and China. Since his arrival, Trump wanted to impose his hegemonic will to all countries of the world by posing as the real defender the United States. "America first" In its approach Trump thus created a commercial tension between China and the United States for over a year through the imposition of tariffs on Chinese products. By the end of March 2018, Washington had imposed additional tariffs of 25% on steel and 10% on Chinese aluminum. On July 6, 2018, a first tranche of customs surcharges on $ 34 billion of Chinese imports was targeted. Beijing countered by taxing the same amount of imports from the United States. This war has neither a winner nor a loser because it has consequences for the economy of the two countries. However, it should be noted that even though China was the victim of the American offensive. It defends itself well and it has many assets to face this war more than the United States. First, it should be noted that China controls its own economic system. It can devalue its own currency to reduce the effect of the crisis. China has a second weapon, which is the "Made in China 2025" plan, launched three years ago to develop a more innovative industry and gain autonomy in ten sectors (including information technology, but also robotics, aeronautics and space, ocean engineering, electric vehicles, biomedicine, new materials, energy. This is his third weapon to counter the US embargo relaunching the comprehensive regional economic partnership with its Asian partners to counter the Trans-Pacific Partnership (TPP) launched by Barrack In addition, China has the new initiative of "one belt, one road" to reach Europe by land, crossing the republics of Central Asia and Russia, or by sea, through Africa.
Keywords
Made in China; weapon; Embargo; Trans Pacific Partnership; one belt, one roadIntroduction
The trade war between China and the United States began in January 2018, when US President Donald Trump decided to introduce, over four years, customs duties on washing machines and solar panels. So this was followed by Chinese reactions, of course and then new measures put in place by the United States, etc. As early as February 2018, China triggered an anti-dumping investigation on US sorghum. On March 8, it was the application of taxes by the United States on steel and aluminum then, at the end of March, the publication of a list of 1300 Chinese products (flat screens, weapons, satellites, medical equipment, etc.) taxed from China and entering the United States. Other measures and countermeasures have since followed, impacting more and more goods traded between China and the United States. This trade war remains however one aspect among others of a wider economic war that the United States delivers against China. An illustration of this can be seen in the tightening of control over Chinese foreign direct investment (FDI) in the United States and vice versa. The Chinese have indeed invested a lot around the world in recent years, worrying a number of countries (Germany, United Kingdom, France, etc.) including the United States. President Trump has recently blocked two investments on the pretext that China's influence was too great (Broadcom's acquisition of Qualc
China's Lattice acquisition). In return, the Chinese banned the acquisition by Qualcomm (US company) of a Chinese electronics company in July. On April 16, 2018, the US administration barred a Chinese company, Zhongxing Telecommunication Equipment Company Limited (ZTE), from accessing a number of goods and services of US origin. This economic war is a real shock between the United States, which seeks to retain its leadership and the challenger, China, who wants to gain ground. However, it must be said that this war has neither loser nor winner. According to analysts, the goal of the Trump administration is to put pressure on China, so that it opens its market more. Beijing has always declared being open to negotiations but feels forced to impose retaliation on American intransigence.
Theoretical Framework
This trade war finds its explanation in the context of offensive realism and defensive realism. We talk about offensive realism because it is a theory that defends the interests of the state but especially he thinks it must quickly attack before being attacked. This is why, according to the offensive realists, the search for power is very necessary in order to impose its hegemony by putting an end to anarchy. As for offensive realism, it finds that power must be sought in order to protect oneself. From that, we can understand the report which determines the relations between China and the United States today. Indeed, the States are in offensive position because they want to remain the only ones to control the world. Considering the exponential rise of China, the United States does not know where it can bring them. In other words, the United States is afraid of being overtaken by China, which continues to grow from year to year. On the other hand, we have defensive realism. In the future the conflicts can be avoided because each state is powerful and able to protect itself. It means, “We do not attack directly, but we defend ourselves when we are attacked”. This is why China's position can be described as defensive realism. In the face of the imposition of US hegemony, China has had no choice but to defend itself. Defensive realism does not mean we are in a position of weakness, but it reflects the behavior of a state that wants to avoid war firstly. That is why the strategy of punching Trump's table did not work as in the good old days because China did not let it go. In addition to that, the most important thing to remember is China's strategy in managing this tension. Indeed, being a world power, China has always favored dialogue, but in reality, it has many other strategies to deal with American sanctions. All this shows that China has a defensive position. It has always said that it is open to negotiations. But it was forced to impose retaliatory measures in the face of American intransigence. Through the trade war that Donald Trump declared to china, it is appropriate to see a maneuver of the United States to force the hand of the Chinese leaders to liberalize their economy and more particularly, the capital account of the country. The goal of the US maneuver is, under the guise of commercial pressure, to impose on China a penetration of its financial sector by the major Western banks. Yet China had already proposed measures that lay the foundation for greater collaboration in the field with Westerners. Following Donald Trump's visit to Beijing in November 2018, China's Vice Minister of Finance Zhu Guangyao has come out in favor of a package of liberalization measures. From now on, foreign companies will be able to control up to 51% (49% today) of Chinese companies active in brokerage, asset management or futures trading. This ceiling will be removed within three years. In life insurance, the foreign equity limit will be raised to 51% by 2020. In addition, regulations that currently prohibit foreign firms from holding majority stakes in banks will be dismantled. Currently, a foreign investor cannot own more than 20% of the capital of a Chinese bank. No timetable has, however, been set for this point of the ongoing financial reform in China. These concessions have not convinced the White House tenant who has been demanding ever more reciprocity of the Chinese leaders, especially at the G20 meetings in March 2018. The Chinese reaction was a form of self-defense by uniting the country's forces behind one man, Xi Jinping, in the face of growing external pressure. Chinese threats to US soybean exports are particularly problematic for Donald Trump. Indeed, soybean cultivation in the United States is the one that allowed the Republican candidate to win the presidential elections. From a strictly political point of view, this data is obviously not insignificant. The reaction of the tenant of the White House was not long in coming. As usual, the rationality did not seem particularly to the appointment. On Thursday, April 5, 2018, President Trump threatened to impose restrictions on China on a volume of imports in the order of 100 billion dollars. The line followed by Peking, at the time when these lines were written (April 9, 2018), essentially consisted in not being frightened by the barking dog, provided that it merely barked
The Causes Of War
Economics causes
The trade tension between the United States and China has several causes. First of all, it is necessary to know that the sanctions of Donald Trump are at the base of this fact. So unlike Europeans or Japan, China has resisted and, did not let it go. For example, while the US administration signed a memorandum for Chinese imports worth $ 60 billion on March 22, 2018, the Chinese government decided in return the tariffs imposition on a volume of US imports in the order of $ 50 billion [1]. No less than 106 US products exported to China will be subject to tariffs of 25%. The automotive sector will be affected. Aircraft weighing less than 45 tones (which de facto exclude Boeing from the scope of these measures) will also be affected. In general, Donald Trump's trade war is on three fronts. He wants first to reduce the trade deficit between his country and China, then blocks the transfer of technology by US companies to Chinese companies, thus denying them access to innovation and competitiveness at lower cost. Finally, he wants China to stop tightening its currency, which it deems to be artificially low, so that its products are less competitive on the international market. In fact, it is the Made in China plan that was targeted by the Trump administration [2]. Indeed, this plan was adopted by the Chinese authorities in 2015, to "support the up scaling of the Chinese economy, reducing its dependence on foreign technologies [3]. It is divided into several areas: increase investment in research and development, improve the automation of Chinese factories, and develop strategic sectors such as robotics or microchips. In reality through this plan China wants to improve the overall quality of its manufactures, boost innovation and labor productivity, achieve an advanced level of integration of information technologies, reduce and consume energy and materials and develop multinational companies and industrial clusters with strong international competitiveness. Second, by 2035, China is seeking to reach an "intermediate level" among the world's manufacturing powers, "significantly improving innovation capacity," making "breakthroughs" in key areas, boosting competitiveness and becoming a diverse global leader in innovation industries. By 2049, and coinciding with the 100th anniversary of the founding of the People's Republic of China (PRC), China aims to "become the leader among the manufacturing powers of the world" have the ability to lead innovation and possess competitive advantages in large manufacturing areas, and "develop advanced technology and industrial systems [4]. The objective in 2020 is to arrive at a product made with 70% of Chinese components and materials. Today, most Chinese smart phones are equipped with the chips of the American Qualcomm. "Or, China seems to have implemented, so far with some success, an import substitution strategy in the field of semi -conductors. Until recently, China was a secondary player in this strategic sector. "According to the latest report from the SIA, the industry trade union in the US, while it swallowed up nearly 30 percent of global chip production in 2015, China produced only 4 percent, which puts the country far behind the United States (50%), South Korea (17%), Japan (11%), the European Union (9%). An anomaly that Beijing wants to correct by developing its local production of integrated circuits. And this catch-up operation seems to work because "China is, for the first time, ahead of the United States and Japan in terms of investments in the sector, becoming in 2016 the third largest investor in semiconductor production. And it should earn a place in 2018 against the background of diatribes (badly) staged on social networks; the President of the United States wants to prevent the industrial takeoff of China while the latter seeks to avoid getting stuck in what economists call a middle income trap. That is, when a developing country begins its process of industrialization, there is a shift in the labor force from agriculture (still poorly productive in underdeveloped countries) to industry which is a higher productivity sector. This displacement equates macro economically to a sustained and significant increase in per capita income, since the wave of industrialization corresponds to productivity gains in labor-intensive and low-cost sectors producing goods for export. But as the country reaches a middle income level, the pool of labor from the countryside is drying up as the "surplus" peasantry has been absorbed by the industry. The result is a decline in the country's international competitiveness and, consequently, a decrease in growth, while at the same time, other poorly developed countries are starting to catch up and enter a phase of strong growth. The solution that China has found lies in the implementation of a process of increasing the value added of its industries and increasing domestic consumption but also in a strengthened management of its economy by the government. As expected, US agriculture will be the most severely affected. US exports of soybeans to China will indeed be taxed, the stakes are high. China imported last year.
United States Rivalry with China
The Sino-American war is also caused by the rivalry that exists between these two great powers. But we should recognize that it is the United States which rivals China. This is why we believe the conflict is comparable to that of the trap of Thucydides, a 4th century BCE Greek historian who studied the causes of the Peloponnesian War [5]. In his analysis, he developed the theory that this war was almost inevitable, because Sparta, being a well- established power, could not accept having its status questioned by Athens, an emerging power. The threat generated by the rise of Athens thus made war inevitable. This is the case with the US and China today. In this same context it should also be noted that China is today the only country that scares the United States because of its emerging power. In fact, in recent years, we have witnessed a rise in China's power throughout the world. Particularly in Africa, China tends to catch up with the USA, which has long been their first partners in trade. With the emergence of China, this rivalry is at the same time commercial, and even diplomatic. It has an economic and technological dimension because the American competition against China is now much broader. However, this competition extends to all kinds of functional areas and geographic theaters. It is played out in the military, diplomatic, economic and technological spheres [6]. In other words, the trade and technology war is only one facet of their rivalry and is now global because it extends to the geostrategic domain [7]. Moreover, its manifestations are evident in all corners of the world beyond the Indo-Pacific region alone, including in developing countries.
Since the American sanctions, this rivalry has grown in intensity as well as in amplitude. This is proof that the emergence of China as a competitive power of the United States has therefore become very evident today. For example, between 1980 and 2010, there was no major problems in the Sino-American relations because the United States was the dominant power. But today the situation has changed substantially. The emergence of China as a competitive power with the United States has become very evident today. In 2000, China controlled just 4% of the world economy, while the United States’s share reached 31%. Today, China's share is 15%, while that of the United States is reduced to 24%. Moreover, China is engaged in an ambitious plan to dominate by 2025 various futuristic technologies in robotics, space exploration, the development of driverless vehicles and the economy of new energy. Being influenced by the strategic vision of Thucydides' trap, American policymakers chose during the 1970s to develop a close relationship with China on the assumption that they could manage the latter's rise in a peaceful manner. In short, they wanted to avoid confrontation and not fall into Thucydides' trap. That’s why over the past decade, this rivalry has started to be felt internationally. According to officials and diplomats, the paralysis of the UN Security Council has often been caused by Russia on the Syrian file, but it is now dominated by the Sino-American rivalry, which pollutes more and more subjects [8]. China's exceptional expansion into the world economy (from less than one percent of world trade in 1978 to over fourteen percent in 2017), the accumulation of windfall trade surpluses, the accumulation of financial reserves Out of the ordinary (which is almost twice that of its immediate follower Japan) had long infuriated the United States, and they were looking for ways to reduce these imbalances. Thus on the Chinese side we have witnessed a radical change of attitude since 2013. While Deng Xiaoping had insisted on discretion and apparent humility, China is asserting itself as a new world leader offering a new model of society in the face of a West that it considers losing momentum and decadent. Symbolic of this ambition, the pharaonic projects of the new Silk Roads revealed place China at the center of a system of international relations reviving the ancient vision of the Chinese Empire as the center of the world. Then there are the industrial projects set out in the Made in China 2025 report which select around ten key sectors for China's future industrial development to achieve a high level of self-sufficiency, reducing the import content by 60 to 30%, to become in 2035 a great innovative nation, move China from the status of a “world factory” to that of a “great industrial power”, mastering research, innovation and the production of high added value goods. These ambitions have provoked increasingly virulent reactions from the United States which associates China's huge trade surpluses with unfair competition to the detriment of American employment, to use the resulting financial surpluses to finance the creation of giant companies, its Silk Roads projects hijacking international networks for its own benefit and finally copying (if not pirating) American technologies. Today China is viewed by the United States as a strategic adversary, and their trade clash is beginning to seriously worry other major economies [9]. In the American rivalry against China, the Trump administration believes it has found China's Achilles heel, and has decided to offend China in certain key areas such as semiconductors, the electronic chips that give power to our smartphones and computers, and have become the petrol of the 21st century. Faced with the new Chinese power, the United States adopted new measures which will have the effect of depriving the Chinese telecom equipment maker, Huawei, from September 2020, of these precious essential components. Washington has already banned US companies from selling any screws to Huawei. From now on, any company in the world using an element of American technology will have to comply with this embargo, an extraterritoriality that Americans are accustomed to. Huawei has become the symbol of emerging Chinese power. Its irresistible rise has started to worry Washington, who arrested 18 months ago in Vancouver the company's chief financial officer, the founder's daughter, on charges of violating sanctions against Iran. She is still trying to escape extradition to the United States. But in reality Huawei is only the visible part of what has taken the form of a technological cold war, with on the one hand being sidelined from the US market; on the other hand, there are incentives for American companies to stop producing in China in strategic sectors. The technological map of the world is changing, as Americans do not want to lose their leadership in advanced technologies to their strategic rival. Of the 21st century [10].
The American Offensive against China
The trade war resulted in American sanctions that constitute an offensive against China. Indeed, the United States decided to apply from August 23, 2018 tariffs of 25% on a total $ 50 billion worth of Chinese products, as announced by the US Trade Representative. Washington already applied these additional tariffs since July 6 on $ 34 billion of Chinese imports [11]. Now, $ 16 billion worth of products are targeted. Some 279 products are concerned, said the ministry, in a statement, claiming to respond to "unfair trade practices of China, such as forced transfers of technology and intellectual property rights." The Trump administration accuses Beijing of "depriving. US companies have the ability to operate licenses, "says the ministry. It also denounces "cyber intrusions into US commercial computer networks to gain unauthorized access to important business information." This announcement of an additional $ 16 billion of products taxed at 25% was not a surprise. By June, the White House had committed to these punitive measures against China in the open trade dispute with China in order to reduce the US's trade deficit. It must be remembered that this conflict has erupted since the end of March, when Washington imposed additional tariffs of 25% on steel and 10% on Chinese aluminum. On July 6, a first tranche of customs surcharges on $ 34 billion of Chinese imports was targeted. Beijing countered by taxing the same amount of imports from the United States. Thus in early August, the White House went further: the US Trade Representative (USTR), Robert Lighthizer, said the United States planned to tax even more Chinese goods. With the whole world, China's total exports surged in July 12.2% year on year, higher than in June and much more than expected by experts surveyed by Bloomberg (+ 10%). Similarly, imports of the Asian colossus jumped 27.3% year on year last month, well above the increase of 16.5% anticipated by analysts, and very strong acceleration over a month (they had grown by only 14.1% in June). Thus, Washington and Beijing found themselves in a trade war with the entry into force Monday of new customs taxes on 260 billion dollars of Chinese and American goods, at the risk of derailing the world economic growth. Ignoring multiple warnings from economists and businesses, the Trump administration has imposed punitive 10% tax on Chinese imports from 0:01 (4:01 am local time).
Defensive Strategies of China
For its part, China relies on commercial retaliation against American productions, just to show that it will not bend [12]. In the United States, these measures are not without effect on farmers, who, with rising tariffs, see their sales plummet, especially for cereals, pork, beef ... Mr. Trump promised them aid substantial (up to $ 12 billion), but these are poured out, and, according to the Wall Street Journal, the concern sets in: "Patriotism does not pay bills," testifies the one of them [13]. Especially since, very conveniently, Beijing has completely abolished tariffs on soya imported from Bangladesh, India and South Korea, and makes its market in Brazil (for cereals and meat) or in Australia. And we know that is not easy to get back a lost customer. In the Trump administration, many thought that China would bow, like Mexico, which accepted some restrictions, and especially the introduction of a minimum hourly wage of $ 16 (the minimum wage) among the big three US automakers) in some auto-exporting companies. Never before has a free trade agreement included such a social clause, even though its application will be restricted. The situation is different for distribution giants like Walmart, which sources 80% off the Pacific, and for some manufacturers. Meeting in Washington in mid-August, their representatives estimated that "these rights will wreak havoc in their industries [14]. China has a second weapon to cope with a slowdown: the "Made in China 2025" plan, launched three years ago to develop a more innovative industry and gain autonomy in ten sectors (including technology of information), but also robotics, aeronautics and space, ocean engineering, electric vehicles, biomedicine, new materials, energy [15]. Public and private research and development expenditures followed; they now exceed 2.3% of GDP. Naturally, the government hoped to shorten the time to acquire the technologies of the future by buying companies abroad; Washington is vetoing it, and some European governments, such as Germany's, have introduced restrictions. However, it has enough financial reserves to lengthen the setting in China itself. No announcement with fanfare, but as Mr. Yifan said in French and no pun intended "the US embargo on electronic products has put the ear of the leaders, because China represents the first market for American chips. In a short time, Chinese companies will produce them and at a better price. In addition to boosting their own economy, Chinese leaders are indeed aiming for two goals: to have a free hand and gain audience in the world, especially from developing countries. Trump's use of US licensed technology and the exorbitant dollar privilege to punish companies working with Iran and forcing them to break up must have convinced them to break out of the addiction trap. They said Beijing would continue to trade with Tehran, using the yuan, as part of bilateral financial arrangements. "It would have been impossible without the policy of internationalization of our currency," says a Beijing economist specializing in international relations who prefers to remain anonymous [16]. However, the major Chinese banks still operate mostly in dollars. As for the products exported to the countries hated by America, they must not contain any American component so as not to fall under the Trumpian sanctions. The telephone group Zhongxing Telecommunication Equipment (ZTE), a forbidden time overseas for trading with North Korea and Iran, had to pull back; he is now closely watched by Washington [17]. This form of limited sovereignty is hard to swallow for the Zhongnanhai nationalists, where power sits, in the shadow of the Forbidden City. In all likelihood, the plan "Made in China 2025" will be accelerated, while it was precisely in the catalog of grievances brandished by the Americans. They see it as a dangerous "desire for self- sufficiency," said Elizabeth C. Economy, director of Asian affairs in the United States.
Consequences Of The War
The Reciprocal Economic Consequences on US and China
Contrary to what many people say, this trade war has consequences for both China and the United States [18]. In total, the Chinese and US products involved amount to $ 100 billion. That's a lot of the $
580 billion worth of goods traded in 2017 between the two countries. The economic consequences, of course, can be diverse and varied. There will be windfall effects for some companies, and perhaps, for some countries, who will benefit, to reposition themselves on a number of markets that have been lost by the companies and countries that are victims of this trade war, whether it is Chinese side or United States side. With regard to this shock of the two main powers, China has much more to lose in the short term than the United States, because it still depends largely on its exports. The United States will face two major risks: marginalization and economic risk. For the latter in fact, in the current economic situation, it may be difficult for this country to boost production and to significantly increase its exports. There are two major difficulties for them: on the one hand, the need to find adequate domestic labor; on the other hand, the inevitable lapse of time between the moment when the American economy will slow down its imports, and the moment when it will be able to supply the market with domestic products, if it can because the measures of trade are also accompanied by a more restrictive migration policy in the context of full employment. In addition, some sectors are specifically targeted by China and are already suffering from this trade war. This is the case of the agricultural sector in the United States, which is also a major exporter. In addition, it is found, another interest that has found China, those farmers and more broadly the US agricultural sector, are mostly voters of President Trump. Thus, by touching the farmers, it is also possible to directly affect the popularity of Donald Trump today. So it's strategic for China. US companies are also very dependent on their markets in China [19]. The automotive sector is alarmed by its heavy reliance on imports of Chinese components. He estimates that the measures announced could lose up to 700,000 jobs in the United States. There are also companies like Boeing or General Motors, to name but two, whose first outlet is the Chinese market [20]. On the Chinese side, all exporting companies are now concerned. The succession of measures announced by Donald Trump means that a very large part of the products that are exported to the United States are today affected by taxes of 10 to 25%, or perhaps, tomorrow, significantly more. The sectors of Chinese activity most affected by these customs taxes are all its main export sectors: household appliances, electronics, information technology, etc. As a result, it is very clearly the key sectors of the Chinese economy that will be penalized by this war even if China, remaining more moderate in its engagement in this conflict, should be able to find outlets in other markets. In its response to the United States, China chooses the key products. For example, in 2017, China imported $ 154 billion worth of US goods. Among the 50 billion targeted Wednesday are key products for the US economy, such as soy and automobiles. By targeting soybeans, Beijing supports where it hurts, says Zhang Monan, a researcher at the China Center for International Economic Exchanges. "We know that many peoples who support Donald Trump come from agricultural states like Illinois or Iowa. He explains. "If China takes revenge on American agriculture, I think many of its supporters will turn away from the American president. The consequences are valid for both countries so that "Nobody comes out winner of this trade war." According to analysts, the goal of the Trump administration is to put pressure on China, so that it opens more its market. On the purely monetary side, the most obvious risk is inflation in the US economy. If US households have to pay more to buy certain goods, especially from China, this may create a vicious cycle of price rises and, in response to this inflation, there is a risk of rate hikes by Federal Reserve (US Central Bank). However, to cope with the commodity crisis of 2015 and 2016, many African countries have resorted heavily to external borrowing, and others, in addition, have made monetary adjustments through devaluations. A sharp rise in interest rates in the US economy may thus increase capital flight and deteriorate the already fragile external situation of the countries in the region.
Consequences on International Relations
Trade tensions have greatly upset international relations because the USA and China are the main world leaders. This is why the Chinese President warned Donal Trump that the consequences would be irreparable [21]. The words of a UN official show that the situation has worsened a lot because in the past disagreements between Council members were limited. Your opponent one day on one subject could be your best ally the next day on another subject ". However today everything is overflowing, there are camps or disagreements that run from one topic to another. In short, the tensions between the United States and China have really become problematic "for the organization. Along the same lines, Olof Skoog, The Ambassador of the European Union to the UN said that there is a huge gap in the global multilateral architecture and that it is very serious " The Sino-American crisis thus had consequences on the global management of the corona virus pandemic. It meant that the Americans could not benefit from the support of China, which quickly succeeded in its administration. Based on this observation, we can therefore say that it had a global impact on the management of this pandemic. First, the United States suspended the suspension of its contribution to the World Health Organization (WHO) Tuesday April 14, 2020 [22] on the economic level; the trade war had several consequences. The International Monetary Fund had warned that tariffs would have a negative impact on both the US and the world economy [23]. This is why the International Monetary Fund (IMF) warned against the dangers of a trade war between two of the world's greatest economic powers, China and the United States. In the same way, the OECD claimed that the escalation between the United States and China would give a serious blow to global growth by 2021, creating pressure on prices that would force the Federal Reserve to intensify monetary tightening. According to the organization's latest economic forecasts, global growth is expected to drop from 3.7% in 2018 to 3.5% in 2019 and 2020, despite a still satisfactory growth rate If the United States imposed 25% tariffs on Chinese imports worth $ 200 billion from January 2019, and if China retaliated, it would double the impact on the two countries' production and would push up consumer prices in the United States in particular by 0.6% compared to forecasts. In a worst-case scenario, global GDP would be 0.8% below baseline by 2021, and U.S. production would be more than 1% below baseline. Chinese production would be even more affected. World trade would decline by 2% and investment would decline by around 2% on average across the organization for Economic Co-operation and Development (OECD). The organization for Economic Co- operation and Development (OECD) also pointed out the risks of a sharp slowdown in China, volatility in oil prices, uncertainties over Brexit and the fragility of some euro area banks, saying the interplay of these risks could have consequences. unpredictable
and very negative repercussions on the world economy. For Europe, the institution expects identical growth of 1.6% in France and Germany, lowering its forecasts for the latter by 0.3 point this year and 0.2 in 2019, following the surprise drop in the GDP of the euro zone's largest economy of - 0.2% in the third quarter. While the OECD has kept the forecast for France unchanged for this year, it has cut it by 0.2 points for next year. In addition to all this, it should also be noted that the world economy which was affected to the extent or in addition to Beijing, President Trump had unleashed trade hostilities against Brussels and Moscow, which he soon saw as enemies. Indeed, after the customs taxes on steel and aluminum targeting mainly China, Washington was now threatening to overtax European automobile imports, to sanction countries that trade with Iran.
Conclusion
Shortly, we can say that the commercial tension between the United States and China has neither won nor conquered. However, it is necessary to note the good strategies by which China has faced this war. It should also be noted the many strengths of China that show China would be ready to overcome this difficulty that is only temporary. The trade war between the United States has consequences for both countries and even for the world economy through Africa.
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