Why the US isn’t winning the trade war with China | FT
China already outpaced all other major world economies last year as the coronavirus pandemic has plunged many of them into chaos. It seems that the East Asian country’s relatively strong economic position also gave it an edge in the trade war with the United States..
According to official customs data, the world’s second largest economy ended 2020 with a total trade surplus of $ 78 billion in December. China’s overall surplus for the year reached a record $ 535 billion, up 27% from 2019. Meanwhile, exports rose to record levels.
«Amid the buzz about disengagement and de-globalization, it is somewhat unexpected that the pandemic deepened ties between China and the rest of the world», – written by Macquarie Capital’s chief economist for China Larry Hu (Larry Hu) in research report.
Louis Quidges (Louis Kuijs), head of Asian economics at Oxford Economics, attributed much of China’s success to its fight against the pandemic that broke out in the Chinese city of Wuhan just over a year ago. He added that China has benefited from strong demand for personal protective equipment. and electronics, as people all over the world have worked from home.
«After China recovered from its own Covid-19 crisis, China was open for business as the pandemic triggered huge demand in the US (and other countries) for Covid-19-related goods.», – said Quijs.
Meanwhile, China’s trade relations with the US have become even more imbalanced: Beijing’s trade surplus with Washington surged to $ 317 billion in 2020, up 7% from a year earlier and the second-highest ever, according to Chief Economist for Greater China at ING Iris Pang (Iris Pang). This amount is only $ 7 billion less than the level of 2018, when Donald Trump launched a fierce trade war with the Celestial Empire to rectify what he called one-sided relationship with the world’s second largest economy.
«Judging by the sharp increase in U.S. imports from China in 2020, it seems fair to say that Trump’s trade war with that country has failed.», – said Quijs.
Good trading news comes days before China is expected to release end-2020 GDP data – another likely positive indicator. Analysts widely expect China’s economic growth to accelerate further over the last three months of the year. Analysts polled by Reuters expect China’s GDP to grow 2.1% in 2020.
«Since [China] plays a critical role in many supply chains and remains fundamentally a very competitive place to manufacture, it is much easier said than done to «secede» From him», – said Quijs.
However, China’s future is not rosy. Analysts note that the President-elect Joe Biden, most likely won’t be able to change the vector pressure to the country in some areas after taking office next week.
«Biden’s government will take a different, less belligerent and more resilient approach to China», – said Quijs. «But it is politically impossible for Biden to lift tariffs on Chinese goods anytime soon.».