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Navigating the US-China Trade War

The initial tariff-focused trade war between Washington and Beijing evolved and evolved into another facet of political and economic engagement between the two countries.

The competition between the two superpowers poses unprecedented challenges and dilemmas for the “middle powers” who seek to move between the two superpowers in terms of economic and security engagement. New Zealand is her one of the Asia Pacific countries. Dr. Hongzhi Gao and Dr. Monica Ren obtained this update.

T.Of course, there can be no doubt here. The world faces a new alarming level of political tension, including economic and ideological rivalries between superpowers. One of the most significant of these non-military conflicts is the ongoing US-China trade war that began in early 2018.

U.S. Trade Representative Catherine Tai said earlier this month that the tough tariffs imposed by the United States on Chinese imports would not be lifted until Beijing adopts more “market-oriented trade and economic policies.”

“What we really want from China from an economic and trade perspective is that the Chinese economy works like ours, embodied in institutions like the World Trade Organization, which we believe is the It’s a pretty clear separation between the government and the state, and the market and the economy, in line with the assumptions and norms we feel,” Tai said.

President Biden has also failed to address the US tariffs set by his predecessor and recently said China’s “unfair economic practices” are bad for US workers and bad for the US as a whole. Washington’s view appears to be centered on using tariffs as a weapon for the post-Corona US economic recovery. Its arsenal includes the tough “Section 301” tariffs introduced by Doanld Trump.

Catherine Tai, U.S. Trade Officer/photo newswire

First round of tariffs on $50 billion worth of strategic and industrial goods from China leads to so-called “Section 301” investigation into Beijing’s misuse of U.S. technology and intellectual property, leading to retaliation from Beijing rice field. As the current Biden administration looks at ways to curb inflation, many observers suggested lifting some of the larger tariffs would be a positive move.

One view of international trade theory is that when a country’s trade barriers are high, foreign firms are pressured or encouraged to invest directly in that country and avoid tariffs and other non-tariff barriers. That’s what it means. The idea is that if a country is reluctant to import goods and services from other countries because of domestic employment or limited foreign exchange reserves, it will usually welcome foreign direct investment and bring foreign capital and technology domestically. It is intended to make it possible to bring in to help with employment and the economy. , contributing to an increase in exports.

Unfortunately, this idea doesn’t pan out given the state of US-China geopolitical relations. Because the US doesn’t want Chinese money. Of course, it’s not money backed by the Chinese government, which has an interest in potentially advancing US-based technology. Chinese in security-related industries like semiconductors.

Simply put, traditional understandings of the motives and barriers to foreign direct investment (FDI) must be reconceptualized and reassessed when geopolitical conflicts and security threats are brought into balance. Hmm. geopolitical power. Investors and analysts are scrambling to find solutions that mitigate the impact of security concerns on international investments and operations.

The deterioration of relations between the two countries has had a significant impact on FDI flows between the two countries. For example, China’s FDI inflows to the US fell from its peak value of US$18 billion in 2016 to negative territory in 2020 (OECD data, 2022). Chinese companies cut investments and sold direct investments in the United States.

Currently, China’s direct investment in the United States appears to be on the rise, but crises such as China’s expansion into the South China Sea and the conflict over Taiwan continue to put the country in a political stalemate. At the same time, the Chinese economy faces severe domestic headwinds. A falling housing market, lower consumer spending, COVID-19 lockdowns and inflation are all cooling the Chinese economy.

Under U.S. law, a foreign company listed on a U.S. stock exchange must either prove that it is not under the control of a foreign government or be audited by a U.S. accounting agency to determine that.

based in Beijing byte dance (which owns the popular app TikTok) has either transferred storage and control of personal user data to a US operator (which was eventually stored on Oracle’s servers in 2022) from the previous Trump administration, or A complete ban on the US market with the sale of ownership to a US company.

Many economists and political scientists attribute the rivalry between the two countries to the “populist” leadership of US President Trump and China’s President Xi Jinping, but their political and economic ideologies and methods of governance remain largely unchanged. The difference cannot be ignored in understanding economic escalation. political tension.

During negotiations for a truce in the first phase of the tariff war, Washington said Beijing would “overhaul its web of laws and regulations to provide far greater protection against these threats to U.S. businesses and to respond to violations. “Including higher penalties and a sure mechanism.” Beijing to honor its pledges. ”

China has essentially rejected requests from the United States for major institutional changes, citing national sovereignty grounds — the same reasons Washington cited when scrutinizing investments in the United States from Chinese companies.

Underlying the extreme difficulties in resolving key disagreements in trade and investment between the two countries is China’s support and promotion of an authoritarian state-capitalist ideology on one side, and the United States’ support for a democratic and free market. There is a large institutional distance between the two countries, which they advocate. Another capitalist ideology.

The two countries remain distant from each other in terms of political and economic governance, and the conflict has moved away from initial concerns about bilateral trade imbalances. It’s about China’s seemingly unstoppable rise as an economic powerhouse with huge ambitions.

The problem with a neutral country (e.g. NZ) engaging with both countries is: Which countries are they closer to for security, prosperity, and governance models? What should they do to reduce the collateral damage of the big game battles?

Dr. Hongzhi Gao is an Associate Professor of International Business at Victoria University of Wellington and since 2018, a founding member of Tui China Research, which studies the form, scope, nature, impact and implications of the US-China conflict. He has teamed up with colleagues from New Zealand, Australia, Taiwan and Italy.

Dr Monica Leng, Lecturer in International Business at Macquarie University, Sydney, has been working with Dr Gao to study the impact of the US-China trade war on Australian and New Zealand companies and the global semiconductor industry since 2018. .

Opinions expressed are those of the author

– Asia Media Center

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