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  • The world's leading superpowers are locking horns

  • Game on here, trade war between the US and China is here

  • Over the past 16 months America and China have been trading blows...

  • ...through tariffs on goods

  • We are looking at a reality that has a 25% tariff on every single product...

  • ...that would come in from China

  • The impact is being felt on industries worldwide

  • But what is the story behind the America-China trade war?

  • So the trade war, what have you guys been looking at?

  • The US doesn't like that China is growing so fast...

  • ...and set to overtake America as the biggest economy in the world...

  • ...if it hasn't already by certain measures

  • Basically China and the US are caught in this race...

  • ...of imposing tariffs on each other

  • So the US slaps a high tariff on certain products then China retaliates

  • It's multiple industries across multiple markets, it's huge

  • And I think right now would be a really good time to look at what's happened...

  • ...how it could impact the world from now on

  • At The Economist, we've been covering the trade war extensively

  • Soumaya Keynes is our trade and globalisation editor...

  • ...based in Washington, DC

  • How did this whole trade war kick off?

  • How did this whole trade war start?

  • For a long time there have been frustrations that...

  • ...past American administrations had with the Chinese

  • On the 2016 presidential campaign trail...

  • ...you started to see some really tough rhetoric

  • We can't continue to allow China to rape our country...

  • ...and that's what they're doing

  • And so he gets into office, his United States Trade Representative...

  • ...that's the kind of official trade negotiator...

  • ...they're working on this big report

  • So they're essentially investigating China's economic practices

  • Essentially the question they're asking is...

  • ...has China done anything that would frustrate America's economic interests?

  • And they find surprise, surpriseyes

  • How long a history is there of these complaints the US has about China?

  • These concerns go back for a really long time

  • And I think to understand them properly...

  • ...you really need to go way back to the expectations that people had...

  • ...when China was thinking about entering the World Trade Organisation

  • China's economic rise has been dramatic

  • In 1978 China's GDP at market prices was just 6% of America's

  • Last year it had grown to 66E00:02:32,760 --> 00:02:34,840 When considering local spending power...

  • ...China has already overtaken America

  • This unprecedented growth began with President Deng Xiaoping

  • He started opening up China's economy to the world in 1978...

  • ...and the country quickly becamethe world's factory

  • Over the next decade, exports as a share of GDP tripled...

  • ...and by 1988 15% of China's exports went to America

  • The World Trade Organisation opened its doors to China in 2001

  • And it was America that ushered it in

  • Bringing China into the WTO is a win-win decision

  • It will protect our prosperity and it will promote...

  • ...the right kind of change in China

  • After joining the WTO, China became an economic superpower

  • But people had expected the country to also become...

  • ...more like a Western capitalist economy

  • That didn't happen

  • America now claims that China achieved its growth by not playing fair

  • Are those claims justified?

  • To find out the answer, I spoke with David Rennie...

  • ...he's our Beijing bureau chief

  • There's two ways in which China certainly hasn't been playing fair

  • One way is just that China treats Chinese companies differently

  • So, if you are a Western business...

  • ...your Chinese competitor not only has better market access...

  • ...but maybe the land that it built its factory on was given for free...

  • ...maybe it got a giant tax break

  • ...China just doesn't have a level playing field

  • There's then the really dirty stuff: stealing foreign companies' technology

  • If you asked Chinese officials about the accusation that...

  • ...China is stealing its way to the top...

  • ...they will say, well hang on, America steals secrets too

  • So why are you coming after us?

  • The American government will tell you sure, they spy and they steal stuff...

  • ...but never for commercial purposes

  • With Donald Trump's election in 2016...

  • ...you had a president who actually set about getting tough with China...

  • ...once he was in office and we never really had that before

  • The Trump administration has been using tariffs...

  • ...or taxes on imported goods...

  • ...to try to force the Chinese to change their ways

  • In July 2018 America imposed tariffs of 25%...

  • ...on $34bn worth of Chinese products

  • That almost doubled the average tariff rate on Chinese imports...

  • ...from 3.8% to 6.7

  • But with every increase from America, came an increase from China

  • Since the start of the trade war...

  • ...China has more than doubled its average tariff rate

  • America's has tripled

  • The fight has become overtly political...

  • ...because China's tariffs are hitting President Trump's voter base

  • Many counties where Trump won in the 2016 election were here...

  • ...in the Great Plains...

  • ...and these are the counties most affected by China's tariffs

  • Someone who knows all about the impact...

  • ...tariffs are having beyond the data...

  • ...is Chad Bown from the Peterson Institute for International Economics

  • He's been analysing international trade for decades...

  • ...but the trade war has put his research in the spotlight

  • Some people have referred to it as my World Cup or my Super Bowl

  • It's something I've been studying in the background for 20 years

  • And now all of a sudden the world seems to be interested in this

  • What role do tariffs play in a trade war?

  • Tariffs are basically a tax...

  • ...but it's a tax that's only paid for goods that are produced...

  • ...outside of the country, in a specific place

  • One of the things that China has done in its tariffs is...

  • ...it's imposed really high tariffs on American exports of soyabeans

  • This is a huge product that farmers in Iowa and across the Midwest...

  • ...grow only to sell to China

  • So, how are these tariffs and...

  • ...the trade war impacting the wider world economy?

  • I think at some level we're seeing the decisions that businesses make...

  • ...be affected by this

  • Nowadays, they're not sure what markets are going to be open to them...

  • ...in the future and that's going to impact their investment decisions

  • The International Monetary Fund, the IMF...

  • ...they expect economic growth to be a lot lower in the future...

  • ...because of the tensions arising during the trade war

  • The global economy is slowing down...

  • ...and everybody's increasingly concerned about that

  • As things stand now, a ceasefire in the trade war could be drawing near

  • The two leaders are hoping to agree on a “phase onedeal soon...

  • The two leaders are hoping to agree on a “phase onedeal soon...

  • ...which could mean some tariffs being lifted

  • The Trump administration wants China to buy more American produce...

  • ...and tighten up their intellectual property rules

  • If that phase one deal is signed...

  • ...will it be the beginning of the end of the trade war?

  • I took that question back to Soumaya

  • The Americans are hugely ambitious for the kinds of changes...

  • ...that they would want from the Chinese but...

  • ...those ambitions I don't think will be reflected...

  • ...in the preliminary phase one deal

  • The Chinese government wants its economy to do well...

  • ...wants its citizens to get richer

  • The extent that the Americans persist in demanding these big changes...

  • ...to the Chinese economy, it's going to be really difficult to get a deal

  • Even if there is a phase one deal...

  • ...there will be a lot of issues still to be resolved

  • But there's more to the trade war than just tariffs

  • America has also imposed restrictions on some Chinese firms...

  • ...especially ones in the tech industry

  • We cannot allow any other country to outcompete the United States...

  • ...in this powerful industry of the future

  • Specifically over one Chinese company

  • Huawei can offer cheaper prices...

  • ...because they are heavily subsidised by the Chinese government

  • We've made another film that looks closely at Huawei...

  • ...and why the West is worried about it

  • It includes a rare interview with Huawei's CEO Ren Zhengfei

  • I do not really understand America's political motivation

  • And we looked into how these tensions will impact American industries...

  • ...already dependent on Huawei technology

  • The biggest issue, I think, with all of this political turmoil...

  • ...surrounding the Huawei name is uncertainty

  • You can watch the Huawei film right now by clicking on the link opposite

  • If you want to learn more about the trade war you can click the other link...

  • ...where you'll find all the research we used to make this film...

  • ...as well as other articles we've written...

  • ...including a special report by David Rennie

  • And as always if you like what you saw, hit that subscribe button

The world's leading superpowers are locking horns

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America v China: why the trade war won't end soon | The Economist

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    Courtney Shih posted on 2019/12/04
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