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Bluffer or crusader: Is Trump’s trade war with China for real?

17 4 59

(Hong Kong) – President Trump, like a proverbial bull in a China shop, has thrown global trade relations into turmoil by attacking long-standing international trade agreements such as NAFTA and the WTO which he says have been damaging to the US. He’s also threatening major trading partners in Europe and Asia, and notably China, with heavy tariffs on their exports if they don’t reduce their trade surpluses with the US.

It’s a little strange, one must admit — a bit like consumers condemning Walmart or Amazon for luring them into spending too much by selling them goods at too favorable a price — but that’s where things stand.

The Trump administration is telling China that unless it can slash its trade surplus with the US by some $200 billion a year by 2020, it will be socked with tariffs on its exports to the US. But US trade negotiators haven’t stopped there. They are also demanding, at least at this point in negotiations with Beijing, that China drop its plans for a government-funded program called ‘Made in China 2025.’ It’s aimed at using state funding of technology firms to push China into the lead in advanced technologies like artificial intelligence.

READ MORE: US wants China trade deal as talks resume, says White House adviser Kudlow

A country with a huge state-owned business sector, China has long relied on central planning and state funding to develop its economy and to raise the living standards of its 1.3 billion people. This approach has shown remarkable success, especially over the past three decades. Understandably China, while willing to talk about buying more US goods to reduce the country’s trade surplus with America, insists its ‘Made in China’ technology development plan is “non-negotiable.”

That’s going to be a huge problem for US-China trade relations going forward.

High wages in the US relative to China (and the rest of the developing world) have long meant that US manufacturing industries have had to massively boost productivity or shift into producing high-value-added products such as advanced high-end automobiles, aircraft or hydropower turbines — either that or move production abroad to low-wage countries.

Nations such as Germany,........

© RT.com