USA and China Trade War

As per the claims of US officials, Beijing has decided to enhance the purchase of American goods in China to reduce the imbalance of trade existing among the two countries. The experts, however, recommend that this will a great change but difficult to achieve. Although, it is still in the proposal phase and no agreement has been made for the trade talks from the two sides was also added by the officials. There has been no comment made from the side of Chinese Commerce Ministry.

This step has been taken to end the bitter trade clash among the two economic powers of the world. Washington and Beijing had threatened the tariffs in the current months for about tens of billions of dollars in each other’s products. The trade talks happened in Washington on Thursday among the Chinese delegations and top officials from US. Then, the White House added, “the two sides agreed to continue the discussions on Friday.”

The officials present in the Thursday’s meeting were an Oval Office between President Donald Trump and Chinese Vice Premier Liu He. The top economic adviser to Chinese President XI Jinping were also present. The demands of US were presented in the Chinese government in the first round of talk that happened in Beijing earlier this month, it asked for lowering the US trade deficit with China by $2000 billion with the end of 2020.

It wasn’t immediately clear what steps the Chinese government would undertake to increase the imports from United States. US government figures stated that China had bought American goods the previous year worth $130 billion. As per the experts, China would have to struggle to increase the rise of imports of American goods. This would cause an increase of $200 billion.

US China Trade War: Suggestions of experts

As per the prominent emerging market economist of Aberdeen Standard Investments, Akex Wolf, “It’s unclear how exactly China gets to this number.” He also said that to increase the import from United States, China may need to purchase the industrial machinery from United States rather than countries such as Germany and Japan. But if it attempts to do so, there may be disturbance in the supply chains and increase the tensions within the countries. Also, the fact that if American could supply the kinds of machinery China needs remains unclear. American companies may need a long time to meet the needs of China.

Wolf further added, “They could redirect their Airbus (EADSF) purchases to Boeing (BA), but it’s unrealistic for Boeing to have to meet that order book, at least in the short term”. The demand of Chinese government is also pretty unclear.

An economist of the investment bank Macquarie, Larry Hu said, “The Chinese proposal was likely to be dependent on the United States removing restrictions on the export to China of certain advanced American technologies. But the US government might not be willing to do that.”

US China Trade War: Deal on ZTE

China is also pressurizing the United States government to cease the crippling ban on selling American parts to ZTE (ZTCOF). ZTCOF is a Chinese company which makes smartphones and telecommunications. Trump also added on Sunday that they were working on providing ZTE “a way to get back into business, fast”. He also added that the Commerce Department of US were instructed to get it done fast.

The Chinese government were happy with his comments. Trump also took to Twitter on Wednesday to tweet, “nothing has happened with ZTE except as it pertains to the larger trade deal.”

Experts also added that Beijing is trying to make a deal focusing on the imbalance of trade rather than pressurizing the US for its industrial policies which may play an important role in enhancing the industry of Chinese high technologies.

Wolf added, “China wants it to just be about the trade deficit. They want it to be a numbers issue.”

The Sorghum

China has also pointed that it is not interested in making changes to the industrial policies because it is an important part of the development of economy. But the Trade Representative of US, Robert Lighthizer has associated the threat to putting pressure of the tariffs for about $50 billion on Chinese products to the further plans of Beijing of becoming the worldwide leader in the robotics and electrical vehicle industry. Beijing also accused American farmers of dropping the sorghum within the markets which were announced the previous month.

The ministry on Friday added that the steps against US sorghum which is mostly used to feed the animals, “would affect the cost of living of consumers and are not in line with the public interest”