Washington:
Two of the largest economies in the United States and China-Duniya are closed in a dangerous trade stand-off, with no winners. As the US Arm-Twist tries China-to demand a deal from the tariff-it is rapidly clear that in Beijing, there may be more profit than President Donald Trump in Beijing and his colleagues think.
The United States remains an almost irreparable market for China for its manufactured goods. However, experts warn Washington not to underestimate Beijing’s ability to oppose the tremendous strategy of the Trump administration. The combination of a stronghold on some strategically important materials including centralized political control of Beijing, diverse export markets and rare earth metals and magnets gives China a lot of space to interact with the US.
The complexity of the United States dependence on China was evident over the weekend when the Trump administration exempted smartphones, laptops and TVs from its new tariff – goods that the US mainly imports from China.
Business power
In FY24, Beijing had a trade surplus of approximately $ 300BN with Washington, with about 15 percent of its total exports going to the US. The popular consensus is that countries with large trade deficit countries like America gain more power in a business struggle than surplus countries (such as India and China), which gives the export fuel to the imbalance.
But what if a surplus nation is selling a loss country, and stopping the purchase eventually causes it to harm it more? A Bloomberg report states that this is a case with China, on which the US is dependent on many things such as electronics, machinery and some processed minerals.
Some of America’s largest groups, including Apple and Tesla, are dependent on production in China. These companies faced an existent crisis in Trump’s 145 percent levy on goods from China.
On the other hand, China’s imports from the US are very focused on agriculture – such as soybeans, cotton, beef and poultry – and therefore lower values are promoted.
Talking to Financial Times, Marta Bangoa, Professor of International Economics at City University, New York, said how was the final balance of risk from the US in the US and China’s heavy internal trade.
“American dependence on China is high, as China can more easily source agricultural products, which can easily change electronics and machinery than in the US,” he said.
“Beijing is already buying soybean from Brazil, for example, so there is a slightly more profit in China.”
Inflation fear
In addition, America is a consumer-powered economy, and large taxes on things that consumers may like. Last week there was a major performance of the power of American consumers when Trump was forced to take a nap first as his taxes were halted by most mutual taxes for 90 days after the market bloodshed.
He also exempted technical products like smartphones, laptops and TVs with his new tariff. Although Trump and his economic team later insisted that all exemptions would eventually be subject to other adjacent tariffs, Americans had a short -term vengeance to the Americans who plan to buy TV or smartphone.
new friends
Since Trump launched a trade war with China by putting regional tariffs on steel, aluminum and solar panels during his first term, Beijing has tried to reduce its dependence on American markets. The US government data shows that China has reduced its trade risk in the US market by 21 percent in 2016, which has increased to 13.4 percent last year.
At the same time, China has resumed its trade through South East Asian countries such as Vietnam and Cambodia, where Chinese manufacturers took advantage of cheap labor, according to the FT report and came into contact with American tariffs.
Chinese exports to Vietnam allegedly increased by 17 percent in March.
As Trump tried to strengthen China, President Xi Jinping began his first foreign trip of the year to show China’s clout in the region. Xi landed in Vietnam for the first time on Monday, where she asked the government to oppose the “unilateral bullying” to maintain a global system of free trade – although she reduced the naming of America.
The Chinese leader is about to visit the next Malaysia and Cambodia. Beijing is also trying to redirect additional capacity in alternative markets, including countries in the European Union, India and global South.
Autocratic
In the autocratic China, the ruling Communist Party is less reactive to pressure than the White House, which has already been forced to respond to the bonds and stock markets.
According to the Center’s head Alfredo Montofar-Hellu at the Conference Board Think-Tank in New York, Beijing was entering a business stand-off with greater ability to encourage its economy in a recession.
Beijing has more liver to manipulate its domestic market, which is closely seen by authorities as an indicator of social stability and economic feeling. According to the FT report, Beijing has recently intervened in the market in recent weeks, in which state institutions are running coordinated action to support the “national team” share prices.
Rare monopoly
China controls more than two-thirds of global rare earth production and more than 90 percent of processing capacity, and the US is dependent on these minerals required for modern manufacturing. This gives Beijing an important point of leverage.
China has already stopped the export of some rare earth elements last week, including dysproosium and terbium, which are essential materials in products such as jet engines and EVS.