China Asserts its Confidence in a Potential Trade War With America

China’s determination and confidence in engaging in a trade war with the United States raise wariness and concern from experts regarding decisions of the Trump administration.

Since President Trump released the tariffs on steel and aluminum as well as the tariff package on Chinese goods, China has responded with a series of tariffs on American goods, bracing itself for a potential trade war.

The vice minister of finance, Zhu Guangyao, has commented that “China is not afraid of a trade war” and believed that China is on the rise to its economic dominance and revival. The news media outlets of China, which are government controlled and monitored, have painted Mr. Trump as a protectionist villain and China as an opponent and defender of global free trade. This, however, is far from the truth considering the efforts China has conducted in the past to outcompete its foreign competitors in technology markets.

China might also appear more vulnerable to the trade war than it has stated. The Chinese economy is one that is hugely dependent on its exports, and therefore Washington has much leverage on Chinese manufacturers, who are dependent on American consumers and investors. On the other hand, China has already targeted a third of what it buys from America and seems like it will soon run out of retaliatory tariffs to impose on American goods.

However, it is important to take into account that Chinese government does have great control over its economy and therefore has a stronger grip over job markets, credit markets, banks and its industries. Its companies, heavily state-run, could survive a trade war with much more resilience than many American, private companies and organizations.

Experts have also pointed out that the United States might be overestimating the tariffs’ impact on the Chinese economy, considering that American actions could only hinder Chinese’s economic growth and expansion by one-tenth of a percentage point. This figure was minimal and would not impose a great strain on Chinese economy or the government at all.

On the other hand, China’s strategy has been heavily focused on agriculture, which does play an important sector in its economy. More important, those who would be hit by tariffs on soybeans and other agricultural produces and products are a majority of those who sided with Trump during the election. Therefore, “China wants the American domestic political system to do the work”, according to a professor of economics at Peking University.

In response, Mr. Trump has threatened Xi with an additional $100 billion tariffs on Chinese goods, observing that “Rather than remedy its misconduct, China has chosen to harm our farmers and manufacturers.”

China’s officials and experts have expressed continuous hopes that Mr. Trump would adjust his plans because of protests and opposition from farmers and manufacturers who will be hit most severely by these tariffs on farmer produces. To further assert pressure, China has also proposed tariffs on cars, chemicals and other products, many of which also heavily produced in regions that were avid Trump supporters during his election.

China has also outlined its ultimate strategy, which would include appealing to the World Trade Organization to protest America’s protectionist policies and tariffs. China so far has succeeded in projecting itself in the moral high ground by holding the stance of free trade, marking Mr. Trump as the close-minded villain of global free trade.

In the words of China’s flagship newspaper, People’s Daily, “Today, it targets China, and tomorrow may take aim at tother countries.”

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