Trade in China

I have been curious about US-China trade relations for a while now and have decided to delve its past, present, and future, breaking it down into parts.

China is one of the ancient civilizations, but its modern gov started with the Communist Revolution in 1949 marks modern china’s rise to power. With the spread of communism, Mao encouraged the proletariat to stand up against the class system and appealed to peasants. After the Chinese Communist Revolution in 1949, the new government under Mao was not given a seat in the UN. Instead, the ousted Chinese Nationalist Party that had fled to Taiwan was seen as true the diplomatic voice of China.

US-China Relations sour

In the time of Democracy and Communist butting heads, it is natural that Chinese and US relations are not great. The US vetoes People’s Republic of China from UN and the Chinese join the war as US forces attack further into North Korea. Taiwan deploys tons of naval forces in the strait between Taiwan and China. China responds by bombing the island of Taiwan. US steps in threatening nuclear attack. At this time, China develops nuclear weapons increasing US animosity/fear of China. China cracks down on Tibetan uprising leading to an outcry of human rights violations. The CIA equips the Tibetan resistance with weapons in the late 50s. Finally, China pivots from the US to the USSR. Cultural and political disagreements with the Soviet Union and China lead to border skirmishes. China now has USSR as a major threat adjacent its borders.

Triangular Diplomacy

Though Nixon was preoccupied with the Vietnam War, he noticed an opportunity to take advantage of the animosity between the USSR and China for United States’ interests. After Nixon’s advisor Henry Kissinger establishes a platform for negotiation in 1971, Nixon visits China in February of 1972. Soon after, the Communist government of China was given a seat in the UN alleviating tension between U.S. and China.  This animosity allowed the US to play off USSR and China, gains from both sides, even though enemies of us.Nixon was really the only president who could do this because of simultaneous fighting with Vietnam.

China’s Economic Growth

Since Nixon opened trade with China in 1972, it has become the world’s new manufacturing center. While some might speculate that this China took on this mantle because it has the largest population in the world. Certainly, the cheap labor force in China was crucial in early stages of development; however, due to the One Child Policy, the labor force has shrunk enormously in recent years, and wages are experiencing an increase. So, how then, does China continue to have the fastest rate of GDP growth? The answer lies in the Communist Party.In China, the Communist Party is in control of everything. The Chinese Communist Party is tasked with electing the leaders of the other eight political parties in China, thus it controls politics. Much of the resources in China are centrally controlled. Oil, cellular networks, and health care all fall under government jurisdiction. This is why Google and Facebook are barred from use in China and replaced by the Chinese counterparts Baidu, Tencent, and WeChat. Education, Living Accomodations, and Transportation all have a tie to government connections as well.Though domineering the Chinese Communist Party is extremely efficient. Government efforts to develop certain areas of China have allowed it to continue its outstanding rate of growth. In fact, between 1980 and 2004, U.S.-China trade rises from $5 billion to $231 billion. Between 1980 and 2010, China’s poverty rate dropped from 88 in 100 to only 4 in 100. Building a middle class has enabled China to redirect focus from export to growing internal markets. JUnder the centralized Chinese Communist Party, development is scarily efficient. If the government decides it wants to develop a town, such as Shenzhen they can do so without any pushback.

Asserting Chinese Dominance in Modern Day

The Belt and Road Initiative is a current endeavor of China that will launch it into a position as one of the world’s largest provider of commercial product. Hoping to capture the same successes of ancient global trade routes such as the Silk Road and the Maritime Silk Road, China wishes to build bridges connecting them to other important trade partners in Europe, Asia, and Africa. Essentially, these bridges are built by giving out insanely cheap loans to poor countries to invest in infrastructure projects that will likely be carried out by Chinese construction companies. From railway construction projects in Kenya, Ethiopia, Indonesia, and Laos to energy development in Sudan, Argentina, and Italy China has found ways to tie itself to nearly every geographical area of the globe. With new debts in place, China now has a stronger foothold politically on the global stage. By providing both money and expertise to foreign countries, China has developed a soft power that will help to serve its political interests.Many worry that this initiative is just another form of a rich nation asserting dominance over power nations. Sri Lanka has had to forfeit one of its major ports to China because its infrastructure projects such as their state of the art airport does not see enough traffic. Concerns such as this have even encouraged countries like Malaysia to back out of OBOR completely.

U.S. Response

As China has become the industrial capital of the world, the United States has had a long standing relationship with China. Just looking at the past 17 years, in 2001 there was only a trade deficit of 83.174 billion dollars. Looking at the numbers from 2017, however, we can see a that the trade deficit has more than quadrupled. The trade deficit now, as you can see is 375.23 billion dollars. Because of numbers such as this it makes sense why there is an ongoing trade war between the United States and China. Militaristically, the US continues to pressure Chinese claims on the South China Sea. Since Hillary Clinton decided to pivot to Asia during her term under the Obama administration, US naval ships and aircraft have been running reconnaissance missions both to test Chinese claims and to update intel on the artificial islands popping up in the South China Sea. As ⅓ of the world’s trade runs through the South China Sea the USA notes that is vital that the South China Sea remains international waters. Politically, the United States has tried to respond to the very clear attacks on the political front. During the Obama presidency, the United States was a part of the Trans Pacific Partnership or TPP. This Partnership is similar to NAFTA in that it is designed to make trade easier between a select few nations. In an op-ed for the Washington post, Obama writes, “America should call the shots. Other countries should play by the rules that America and our partners set, and not the other way around. [but]The world has changed. [and] The rules are changing with it. The United States, not countries like China, should write them. Let's seize this opportunity, pass the Trans-Pacific Partnership and make sure America isn't holding the bag, but holding the pen.” Since then, the United States has pulled out of the TPP due to the high chance of an increased outsourcing of jobs along with a possibility of China backdooring into the agreement making Trump’s efforts in the tariff war meaningless. Most recently, the Huawei controversy coming to light reveals the very obvious antagonism between China and USA. Using the CEO of Huawei as proxy in the trade war it is unclear how Chinese and US relations will be eased in the coming future.