US-CHINA TRADE WAR.The world two-largest economies China and United States

US-CHINA TRADE WAR
STUDENT DETAILS
[Email address]

US-CHINA TRADE WAR P a g e | 1
Introduction
The world two-largest economies China and United States are undergoing an economic
conflict termed as trade war. In 1984, US became China’s third largest trading partner and
China became America’s 14th largest trading partner. Both the nations have signed a US-
China Relations Act in 2000, establishing a healthy trade relation between the nations and
granting China to join the World Trade Organisation, also defined the China with a status of
most favoured nation (Congress.Gov, 2000). Due to the unfair trade practices of the China,
US imposed tariffs in order to force the China to make changes in work as per the US says.
The unfair trade practices of China such as forced transfer of US technology to China and the
theft of American Intellectual Property have resulted in growing trade deficit and the trade
war between the two economic giants have affected both the nations along with other nations
of the world (Council on Foreign Relations, 2019).
US-China Conflict
US started imposing the tariff on the products after the China started exporting subsided
products in American market, and competing with such products become difficult for the
American companies and the President Trump of US claimed that China has manipulated
their currency, and imposing tariff is the only option in order to fix the situation and compete
with the Chinese products and companies. In 2017, US had $566 billion trade deficit and
$336 billion trade deficit only with China. Along with imposing the tariff, Trump announced
that China has robbed hundreds of billions in a year through intellectual property threat which
is a great loss for the US economy (Swanson, 2018).
Trump has imposed the tariffs and the plans due to which the conflict between the countries
increased, but the main responsibility of the situation is on China. As due to unfair practices

US-CHINA TRADE WAR P a g e | 2
of the China US president has took certain steps in order to deal with the China’s companies
and products. In this respect Trump shut down Huawei from the US market declaring as a
national emergency, and informed other nations to not to deal in products of Chinese
company, as the China government could use the products to spy within the other countries
(Stewart, 2019).
Both the nations are focusing on being world’s largest economy, and in order to achieve the
position, both the nations are under a trade war which might have a negative effect for both
the nation in future. As both the nations are economically strong, and are developed
economies of the world, due to which both the nations are comparatively strong and hence
the conflict more competitive than being a cooperative conflict, and both are trying to make
changes accordingly in the international working system (Wong, 2019).
Another reason of the conflict between the US and China was forced transfer of American
technologies to China. The China’s MNCs took advantage of the US free trade policies to
acquire small American companies and after that using cyberthreat to gain the American
technology. The US government took necessary steps in order to protect the companies from
handling over their technologies and key assets to Chinese companies, and retain their
effectiveness within the industry. In order to overcome the effects of such Chinese
government’s unfair practices the US government focused on imposing tariffs on the products
imported from China, also focused on shutting down the Chinese technological firms in US,
so that the treat of data transfer and spying can be minimized (Mason, 2019).
Trump is developing strategies in order to slow down the growth of China and to force
Chinese government to act as per the US government. But the Trump is not able to
understand the Chinese culture of doing business, and to understand that china will not bend
in US pressure and will stand firm. The US government imposing tariffs on the products are
becoming burden on the citizens, farmers and businessmen within the economy. As due to

US-CHINA TRADE WAR P a g e | 3
high tariffs the Chinese organisations has cut their orders from the American farmers and
manufacturers and the American consumers must bear the burden of the imposed tariff by
paying off high prices for the goods and services.
The conflict between the nations increased when the US President Trump announced tariffs
on Chinese Imports, worth at least $50 billion, in response of the theft of the intellectual
property and the American Technology, which included goods and service of daily use and
on the investments made within the US nation. After that Trump imposed fresh tariffs of
around $34 billion on Chinese products, on which the China responded by imposing tariffs on
around 500 U.S products. President Trump’s beliefs that imposing tariffs on the Chinese
imports will result in forcing China to make a favourable deal to the US government has
resulted in fall in stock market (Palumbo & Costa, 2019).
Strength and weakness of both the nations
China and the United States both are the world largest economies, among which the US has a
larger nominal GDP as compared to China, whereas china has larger GDP when compared in
terms of PPP. The China is classified as a world’s largest exporter as well as US is considered
as world’s largest importer. In economic terms both the nations are apart from each other but
still are the important pillars of the global economy. The china’s product development is its
strength, as the China follows the policy of importing technologies and then renovate them to
create innovative product. But the model of renovating the technologies is also the weakness
for the country as it does not meet with the needs and requirement of true innovation. The
world requires innovation that the world has not experienced, but the technologies produced
by the china are far away from it (Nye, 2019).
China is focusing on investments in science and technologies in production and innovation
but the products manufactured in China lacks the quality standards and integrity in its

US-CHINA TRADE WAR P a g e | 4
products. Due to which the Chinese products are advanced but are offered at low price and
even does not durability, the manufacturing organisations should focus on this aspect while
production of goods and service. Manufacturing organisations in China have a benefit of
cheap labour, due to large availability of educated workforce. such facilities have resulted the
manufacturers in movement of their manufacturing units into China (Center for American
Progress, 2011).
The Chinese government has set long term goals and aggressive targets for the economy
which is a strength for the economy as such targets and plans focuses on the economic
growth and sustainability of the nation over a long time period. The government is focusing
on developing its own innovative technologies so that the dependency on other countries for
the technology requirement can be reduced. With a strong central government, implementing
plans and policies focused towards future growth of the nation, China now has the world’s
largest hydroelectric dam, also the world’s fastest supercomputer. Also, China is focusing on
renewable energy sources and it produces more than two gigawatts of solar power every year
(Vergeron, 2012).
Along with the mentioned strengths and having a strong governance at the centre, china
government delegates its power among local and state level governments and as a result fails
to meet the ultimate goals and objective. As the central government forms strict laws and
policies but the local governments are not held accountable for the achievement of goals and
standards.
United States being the world largest importer also has a consumer who spends on the quality
products and service and contributes to the overall economy. The consumer confidence in US
is at record level, and the US economy represents about 70% of gross domestic product. The
US industrial sector has seen a strong earning growth in each quarter due to implementation
of innovations and technologies in the manufacturing process. The companies in US focuses

US-CHINA TRADE WAR P a g e | 5
on improving technology, updating the machinery used and hiring talented and required
personnel in order to provide the consumers with better experience and quality products. The
US economy has the lowest level of unemployment, which indicates that the industries have
the sufficient amount of workforce contributing towards productivity and output for the
economy, also resulting in generating more income which influences the nations per capita
income, and with more people engaged in earning results in more spending which adds an
additional boost to economic growth (ScienceDaily, 2018).
US economy is considered as a flexible, resilient and innovative. As the economy has
recovered from number of setbacks and is among the world’s largest economy. The US
government has opened the control over the firms, the enterprises are open in order to hire or
fire the employees as per the requirement and the firms does not have any government
interventions while conducting their business activities, due to which they are effectively able
to contribute towards innovations within the economy. But providing the organisations with
free control is also a weakness for the US economy as the organisations focus on their
profitability and focus on innovations that can boost their profitability rather than having
major focus on the societal development along with organisation’s economic development
(CLS Investments, 2018).
The weakness of the US government can be termed as the increased tariffs which is
impacting the product prices due to which the spending capacity of the citizens is impacting.
The US economy has high level of debts, such debts impacts the economic growth of the
nation, results in lower growth of economy, lower inflation rate and influences the growth of
nation in long term (Harris, 2019).
With such strengths and weakness both the nations are focused becoming the world’s most
power economic nation, and has landed in a situation of trade war. China knows about its
unfair trade policy, but the practices is helping the nation in protecting its domestic firms

US-CHINA TRADE WAR P a g e | 6
from the external competition and to grow and expand. Also, the Chinese culture supports the
Chinese products over products imported from other nations (Richburg, 2018).
Conclusion
The trade war between the nations has become a critical and would result in cold war
between the nations. The conflict started due to the use of unfair trade practices by the China,
such as stealing the American technologies and imposing subsidised product in the American
economy, affecting the economic growth of the America based organisations. Due to such
practices the trade deficit of the US increased, and the President Trump imposed tariffs in
order to control the deficit and banned sale of specific Chinese technological products within
the American market, Huawei is an example of such company whose product was banned
from selling within the nation. The Chinese economy has a skilled and large workforce but
does not meet the innovative technological requirements in comparison with the American
manufacturing organisation. China has a benefit of a strong central government at the centre
focused towards nation’s long-term growth and controls the technological and innovative
requirements within the organisation, whereas the US follow the open trade policy due to
which the government has less control over the technological advancements within the
organisation. The conflict between both the nations can be resolved through setting up a
proper trade agreement defining every term upon which both the nation agrees to follow and
work accordingly.

US-CHINA TRADE WAR P a g e | 7
References
Center for American Progress, 2011. China’s Strengths and Weaknesses 101. [Online]
Available at: https://www.americanprogress.org/issues/security/reports/2011/02/08/9074/
chinas-strengths-and-weaknesses-101/
[Accessed December 2019].
CLS Investments, 2018. U.S. ECONOMY: 3 STRENGTHS AND WEAKNESSES. [Online]
Available at: https://www.clsinvest.com/2018/11/07/u-s-economy-3-strengths-and-
weaknesses/
[Accessed December 2019].
Congress.Gov, 2000. H.R.4444 - To authorize extension of nondiscriminatory treatment
(normal trade relations treatment) to the People's Republic of China, and to establish a
framework for relations between the United States and the People's Republic of China..
[Online]
Available at: https://www.congress.gov/bill/106th-congress/house-bill/04444#summary
[Accessed December 2019].
Council on Foreign Relations, 2019. U.S. Relations With China. [Online]
Available at: https://www.cfr.org/timeline/us-relations-china
[Accessed December 2019].
Harris, J. T., 2019. Strengths and weaknesses of United States. [Online]
Available at: https://www.britannica.com/place/United-States/Cultural-life
[Accessed December 2019].
Mason, J., 2019. Exclusive: China shifts position on tech transfers, trade talks progress -
U.S. officials. [Online]

US-CHINA TRADE WAR P a g e | 8
Available at: https://www.reuters.com/article/us-usa-china-trade-exclusive/exclusive-china-
shifts-position-on-tech-transfers-trade-talks-progress-us-officials-idUSKCN1R905P
[Accessed December 2019].
Nye, J. S., 2019. Commentary: China a country with great strengths, but also important
weaknesses. [Online]
Available at: https://www.channelnewsasia.com/news/commentary/china-us-rivalry-
cooperation-strengths-weaknesses-11424970
[Accessed December 2019].
Palumbo, D. & Costa, A. N. d., 2019. Trade war: US-China trade battle in charts. [Online]
Available at: https://www.bbc.com/news/business-48196495
[Accessed December 2019].
Richburg, K. B., 2018. Someone tell Trump the trade war is over. China won.. [Online]
Available at: https://www.scmp.com/week-asia/opinion/article/2135330/someone-tell-trump-
trade-war-over-china-won
[Accessed December 2019].
ScienceDaily, 2018. Report shows United States leads in science and technology as China
rapidly advances. [Online]
Available at: https://www.sciencedaily.com/releases/2018/01/180124113951.htm
[Accessed December 2019].
Stewart, E., 2019. The US government’s battle with Chinese telecom giant Huawei,
explained. [Online]
Available at: https://www.vox.com/technology/2018/12/11/18134440/huawei-executive-
order-entity-list-china-trump
[Accessed December 2019].

US-CHINA TRADE WAR P a g e | 9
Swanson, A., 2018. Trump’s Trade War With China Is Officially Underway. [Online]
Available at: https://www.nytimes.com/2018/07/05/business/china-us-trade-war-trump-
tariffs.html
[Accessed 18 December 2019].
Vergeron, K. L.-d., 2012. China's Strengths and Weaknesses. [Online]
Available at: https://www.robert-schuman.eu/en/european-issues/0235-china-s-strengths-and-
weaknesses
[Accessed December 2019].
Wong, E., 2019. U.S. Versus China: A New Era of Great Power Competition, but Without
Boundaries. [Online]
Available at: https://www.nytimes.com/2019/06/26/world/asia/united-states-china-
conflict.html
[Accessed December 2019].