Contemporary Chinese Political Economy and Strategic Relations: An International Journal (Dec 2018)
The Sino-US Trade War: Survival, Domestic Reforms and the Belt and Road Initiative
Abstract
In July 2018, President Donald Trump stated in an interview with CNBC that he is willing to impose tariffs on all USD 505 billion worth of Chinese exports to the US. At the time of this writing, this has not become a reality. While it is strikingly clear that China cannot match the US in a tit-for-tat tariffs fight due to an imbalance in import volumes in favor of the latter, China can and has made some tactical decisions in its imposition of tariffs. For example, many of the tariffs levied on US goods target products which originate from states that have voted for Trump. At the same time, many of these products – such as soybeans – China can procure in other markets. This paper does not explore how China can mobilize the extent of its geoeconomic tools to gain an advantage in this developing trade war, as this has already been widely covered in the media. Instead, comprising two parts, this paper examines how China can use the pressures created by this trade war to better advance its grand strategy. In the first, against the backdrop of the regime’s survival, the trade war can be used to leverage and increase the pace of its domestic reforms, which will be critical to the long-term sustainability of its financial sector and economy. In the second part, this paper explores how China can push forward its geopolitical ambitions – notably, the Belt and Road Initiative – in the vacuum left behind by the trade war and the Trump Administration at large.
