Long-Term Impacts of the Chinese-American Trade War
The global political and economic landscape has been changing in the context of several factors. They are: the globalization of the world economy, rising interdependence of national economies, growing global competition, and increasing role of developing countries, as well as the gap and uneven socio-economic development of global players. Global competition has strengthened due to rebalancing the weight of countries in the world economy in favor of the developing countries. This leads to the use of customs and tariff measures to regulate foreign trade, contrary to internationally established rules and international trade principles by developed players, particularly the United States (Li et al., 2018). The most striking confrontation between global players is the escalation of the US “trade war” with China. China’s participation in the system of international economic relations, according to the US, is dishonest and threatens the US national economic security. Although the US’ policy in this trade war seems to be effective, it is too early to assess the long-term impacts. Thus, I present my research interest from this angle.
Confronting China’s “unfair” trade practices, which have harmed the American economy and American manufacturers for many years, is one of the main goals set by D. Trump. The effectiveness of the US Administration’s protectionist foreign trade policy is confirmed by the signing of the first package of a fundamentally new trade agreement between China and the United States (Kwan, 2020). One of the key conditions of the first phase of the agreement between the United States and China is increasing China’s purchases of American products and services. The US also agreed to change the tariff measures imposed on Chinese imports. The trade agreement addresses intellectual property issues, technology transfer, agricultural products, financial services, currencies, dispute resolution, and the increase in mutual trade.
It is evident that, despite the outlined positive dynamics in the system of US-Chinese economic relations, it is too early to talk about any guaranteed progress and the end of the “trade” war. The American protectionist policy results showed its effectiveness in reducing the deficit of American commodity trade (Khan, 2020). The reduction or complete elimination of the customs and tariff barriers introduced by the United States will be gradual; therefore, it is premature to assess the results. Also, in the context of falling world oil prices and a troublesome epidemiological situation, it is still difficult to calculate the effect of US-China trade for partners.
Globalization of the World Economy
The globalization of the economy has become a consequence of the increasing embeddedness of national economies into the world economy. It has also resulted in the international division of labor, the emergence of world financial markets and international organizations, the unification of countries into integration groups. The globalization of the economy at the present stage includes such areas as the formation of transnational corporations and banks, regionalization of the economy, intensive development of international trade, financial globalization. Signs of economic globalization include the prevalence of growth rates in the volume of international trade transactions over the growth rates of world GDP, liberalization of trade relations between countries, and many others (Antonelli & Fassio, 2016). Considering the above signs of economic globalization, at first glance, this process seems beneficial for all countries’ development, as it contributes to economic and social progress.
Nevertheless, attention should be paid to the possible consequences that may negatively affect a large number of the population. The transformation of the international economic system into a global one can lead to a variety of negative consequences. These include the spread of cross-border crime, that is, excessive openness of the borders of states can contribute to the development of arms and drug trafficking (Hirst et al., 2015). Another negative impact is the high risk of the rapid spread of financial crises and economic problems from one region to others. One should not also forget an increase in the number and size of fraud and speculation in the global financial market.
References
Antonelli, C., & Fassio, C. (2016). Globalization and the knowledge-driven economy. Economic Development Quarterly, 30(1), 3-14.
Hirst, P., Thompson, G., & Bromley, S. (2015). Globalization in question. John Wiley & Sons.
Kwan, C. H. (2020). The China-US trade war: Deep‐rooted causes, shifting focus and uncertain prospects. Asian Economic Policy Review, 15(1), 55-72.
Li, C., He, C., & Lin, C. (2018). Economic impacts of the possible China-US trade war. Emerging Markets Finance and Trade, 54(7), 319-340.