Trade war is ‘inevitable’ and will be long and drawn-out

South China Morning Post     2019-1-30

China’s Vice-Premier Liu He is currently in the US, where he is expected to meet President Donald Trump on Thursday, in a break from negotiations with the top US trade official, Robert Lighthizer.

Liu is attempting to bring an end to a tit-for-tat trade war that has been waged since July 2018, with the US demanding that China opens its economy to foreign companies, reduce its trade deficit with the US and that it treats foreign companies operating in China fairly.

As well as slapping tariffs on billions worth of Chinese exports - which have been reciprocated in part by Beijing – Trump has demanded an end to forced technology transfer and intellectual property theft.

If these issues are not judged to have been addressed by March 1, tariffs on US$250 billion of Chinese goods will increase from 10 per cent to 25 per cent the following day.

Zhang Yansheng, the chief research fellow at the China Centre for International Economic Exchanges (CCIEE) - a government-affiliated think tank - said that fundamental differences over economic issues, political systems and security will not be resolved by the March 1 deadline.

“I think the conflict [between China and the US] is inevitable and will carry on in the long term,” said Zhang, at a media briefing in Beijing on Wednesday.

“It’s irrational now, but over time, after a lot of fights and talks, it will become rational and the two will collaborate again.”

US firms willing to hand over technologies to do business in China

He added: “If the tariffs go up to 25 per cent, it’s going to be insufferable for both US and Chinese firms.”

Zhang - who is also listed as a member of the Academic Committee of China’s state planner, the National Development and Reform Commission (NDRC) - said that the additional tariffs would have a wider negative effect on global trade.

His views on the challenges in resolving the trade war are in line with many top US officials, who have downplayed the chance of a quick solution.

“We do have another 30 days after this, so my expectation is that we’ll make significant progress at these meetings, but I would just emphasise these are complicated issues,” US Treasury Secretary Steven Mnuchin said on Monday.