The US-China trade war has taken a toll on both economies. President Trump has stated multiple times that the United States is winning the trade war. The two countries are also reportedly getting closer to phase one of the trade deal. While a trade deal may or may not be reached between the world’s two biggest economies, Chinese President Xi Jinping has been trying to establish himself as a global statesman.
Trump’s trade war
There has been a notable de-escalation in the US-China trade war after the escalation in August. The two sides also appear to be close to phase one of the trade deal. Optimism over a US-China trade deal has lifted stocks globally.
Looking at the US markets, Apple (AAPL) has continued its good run and is up 3.5% in November. Nvidia (NVDA) and Advanced Micro Devices (AMD) have gained 4.7% and 7.0%, respectively, over the period. Plus, Chinese stocks have looked strong. Alibaba (BABA) and JD.com (JD) are up 1.7% and 6.3%, respectively, this month based on their closing prices on November 4.
Xi Jinping versus Donald Trump
Historically, it has been the West, led by the United States, that has held the baton of free trade. Now, it seems that under Xi Jinping, China is trying to establish itself as the champion of free trade amid Trump’s trade war.
On November 4, CNBC reported that that Xi Jinping said at the China International Import Expo that “distances between countries are getting shorter, and interactions among countries are growing, hence the possibility of differences and frictions.” He added, “The right solution lies in consultation and cooperation. All problems would be settled in the spirit of equality, mutual understanding and accommodation.”
Notably, this is the second International Import Expo in China. The event assumes greater significance amid Trump’s trade war. It also underscores the point that China is open to addressing its trade imbalances with other trading partners.
China is opening up its economy at a time when the United States is pursuing a more protectionist trade policy. That said, the United States is still among the most open countries for trade. China still has among the most regressive trade practices for a country of its size and stature.
President Trump prefers bilateral deals over multilateral deals. However, China is working on a mega trade deal called the Regional Comprehensive Economic Partnership (or RCEP). Apart from China, this agreement would include countries Japan, Australia, and Malaysia as members. However, India backed out of the deal at the last moment.
All said, the United States has been losing its global dominance as the Trump administration has irked some of the country’s strong allies on trade issues. Apart from the China trade war, the United States is also in a mini trade war with Europe and Japan. Trump has also threatened to impose tariffs on automotive imports that would hit Japan and Europe.
US-China trade war: The way forward
The US-China trade war is not only about economics. China’s rising ambitions are rightly making policymakers nervous in several Western capitals. Several countries that run big trade deficits with China criticize its regressive trade practices.
However, a united West might be in a better position to take on China. For now, by becoming champion of everything from free trade to climate change, it is China’s Xi Jinping who is emerging as a global statesman.