Sino-American trade war likely to be long-running - André Chieng

The trade war between the US and China is complex and will not be easily ended, André Chieng, CEO of strategic consultancy AEC, told the SCOR annual conference held in October. While America may think it is winning, he highlighted issues that suggest this is not the case.

“The Sino-American relationship has become a kind of black hole in today’s geopolitics. No one really knows what it is made of and at the same time, it swallows everything it comes into contact with,” he said. “It is impacting everything from the international order to the evolution of future technologies.”

He said that key among the measures the US has deployed against China are those aimed at preventing China’s emergence on two major battlefields: technology and global influence.

“The first is illustrated by the US attacks against Huawei; the second, by its opposition to the Belt and Road initiative, which Americans consider the main vector of Chinese influence in the world today,” he said.
He added that the strategies used by the two sides are very different.

“President Trump’s strategy is clear,” he said. “He starts by taking measures that will prompt his opponent to take even more drastic ones. Then he ends up claiming victory, even if the victory is not as brilliant as he pretends.

“President Trump has been much more vocal about the trade war than the Chinese. This makes China look very passive, as if it were unable to take initiative. From a Western perspective, this means, ultimately, defeat.”

He said that Trump thinks he has won because he has placed tariffs on products imported by American industry and the actual cost has been absorbed in the production chain, meaning the American consumer hasn’t felt the impact of the increase in prices.

However, Trump may be playing into the hands of China, whose strategy Chieng characterised as turning the weapons of the enemy against him, letting him think he has won a great victory when actually it is the reverse, and choosing the right moment.

“Very soon the tariffs will affect the consumer directly, as is demonstrated by the fact that Trump had to postpone some tariffs to avoid spoiling the American Christmas,” he said. “Although the American economy seems to be flourishing, most economists predict that the country is on the eve of a recession. No one can say exactly when it will happen, but when it does the moment will be critical. It will make the positive effect of a trade deal more advantageous than China-bashing – which is now very popular not only with Trump, but in all sectors of American society.”

He added, however, that he is not optimistic about the end of the war between the two countries.

“The fundamentals of this war are too deep and too severe to allow it to disappear instantaneously,” he said. “Trump’s demands go far beyond the balance of trade, to the very core of the Chinese economic and political system. At the same time, the US can use many other weapons against China: cutting access to American technology in the name of national security, using the explosive situation in the South China sea, stirring trouble in Hong Kong, to name a few. A real peace treaty is very far away because the US will not accept to be overcome by China and China will not accept being dominated by the United States.

“We should get used to the idea that the Sino-American war is going to be very, very long and multidimensional. We can only hope that it will be restricted to the world of diplomacy and will not degenerate into military confrontation.”