China has warned that it is attacking a prominent trade contract with the US at Beijing’s expense, ratcheting rhetoric in a swirling trade war between the two largest economies of the world.
A spokesman for the Chinese Commerce Department responds to a report Monday that suggests President Donald Trump is putting pressure on other countries to isolate China, saying the US president will “emphasize and mutually exclusively” against nations fighting against the US.
The warning has since been suspended on roughly 60 trading partners, as the country prepares for consultations with the US, seeking exemption from “mutual” tariffs imposed by Trump.
So, what influence does this latest verbal vomit have on how much influence China has in global trade and can drive the wedge between the other capitals and Beijing?
What is the background?
The Wall Street Journal recently reported that Trump is using tariff talks to encourage US economic partners to curb trade with China and curb Beijing’s manufacturing control.
In return, these countries were able to ensure reduced US taxation and trade barriers. The Trump administration said it is in negotiations with more than 70 countries.
On Monday, China’s Commerce Ministry fought back, warning other countries that “to seek the skin of a tiger to “sacrificed other people’s interests, seeking the skin of a tiger.” In fact, those who were about to attack dealing with the US – tigers – claimed that they would eventually eat up themselves.
The ministry also said it would target all countries that are in line with our pressure to hurt Beijing.
What about the US-China trade situation?
He increased them in China after Trump halted “mutual tariffs” on major US trading partners on April 9th. US trade tax on most China’s exports rose to 145%. Beijing is retaliating with its own obligations on 125% of its US goods.
Trump has long accused China of exploiting the United States through trade and throwing tariffs as needed to domestically manufacture and return work to the United States. He also wants to use tariffs to fund future tax cuts.
On his part, Chinese national president Xi Jinping traveled to three Southeast Asian countries last week to strengthen regional ties. He urged trading partners, including Vietnam, to oppose unilateral bullying.
“There are no winners in the trade war and the tariff war,” Xi said in an article published in Vietnamese media without mentioning the US.
Like other countries in Southeast Asia, Vietnam is caught up in the crossfire of the trade war. Not only the manufacturing hub itself, China frequently uses it to send exports to the US, avoiding the tariffs imposed by the first Trump administration on Beijing in 2018.
Elsewhere, the Trump administration last week began consultations with East Asian allies over tariffs with Japanese delegations visiting Washington, D.C., last week, with South Korean officials set to arrive this week.
Today, many countries are stuck between the two largest economies of the world, China, large sources of manufactured goods and major trading partners, the US and key export markets.
How dependent is the world on China’s exports?
In a report released in January by the Roy Institute, a Sydney-based think tank, analysts discovered in 2023 that about 70% of China imported from China than the US.
China’s rapid rise as a trade superpower could be traced back to 2001, the year it joined the World Trade Organization (WTO), and after years of successful protectionist industrial policies, it began dominating world manufacturing.
In the 2000s, China benefited from the relocation of its international supply chain. This was turbocharged by a large influx of foreign investment, a large pool of low-cost labor, and undervalued currency exchange rates.
By 2023, China has become the largest trading partner in at least 60 countries, almost twice the US and the largest trading partner of 33 economies.
The gap between them is growing in many countries too. An analysis by the Lowy Institute found that in 2023, 112 economies were traded with more than twice as many China as China, rising from 92 in 2018 during Trump’s first trade war.
“The important dependence that China has developed around the world, especially in Asia, that lot is [of trading partners] We can’t do it without China,” said Alicia Garcia Herero, an economist at investment bank Natixis.From important minerals to silicon chips, China’s exports are almost irreplaceable. ”
Has world trade been leaning even further in favor of China since Trump’s last trade war?
In 2018, two years after the first administration, Trump imposed a 15% tariff on more than $125 billion in Chinese products, including footwear, smartwatches and flat-screen televisions.
Since then, the US has become an even more important source of demand for non-Chinese exports, particularly from Mexico and Vietnam, reflecting the impact of many years of US tariffs on China.
However, if part of Trump was to hurt Beijing, his first salvo failed.
Since 2018, more countries have been deepening their trade ties with China at the expense of the United States.
When China joins the WTO, more than 80% of the countries have more two-way trade with the US than China. According to an analysis by the Lowy Institute, this had dropped to just 30% by 2018, the year of Trump’s first tariffs.
That trend has solidified ever since. In 2018, 139 countries traded more for China than for the US. By 2023, that number had risen to 145, with around 70% of the world’s economy now being traded for China more than the US.
“Trump doesn’t seem to understand how important China’s trade flows have become,” Garcia Herero told Al Jazeera. “And I don’t think he’ll get what he wants because he doesn’t offer much with carrots like more investments.”
Can a country afford to alienate China through trade?
According to Garcia Herero, some countries, such as Mexico, which have particularly deep trade links with the US, will probably “say no to Chinese imports.”
However, she emphasized that “decoupling is virtually impossible because China’s presence in the supply chain is so large for most of the other US trading partners.”
In fact, all over the world, China has become an invaluable source of imports. For example, the European Union had a trade deficit with China worth 396 billion euros ($43.2 billion) in 2022, up from 145 billion euros ($165 billion).
China accounts for 20% of EU goods imports. The equivalent figure for the UK is 10%. Last week, Treasury Secretary Rachel Reeves said it was “very stupid” for the UK to engage in less trade with China.
China’s trade role is equally important across developing countries. About a quarter of Bangladesh and Cambodia’s total imports come from China. Almost a fifth of Nigerian and Saudi Arabia’s products come from China.
“Trump’s trade policy is shortsighted,” Garcia Herero said. “If we try to pry trade with China, we may work in a country where the US has military bases… they may have to accept US concerns.”
“But in most countries, especially in the global southern countries, the more Trump threatens the country, the more it goes to China.”
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