Unsustainable Trade Imbalance
Wu Chia-lung, a Taiwanese macroeconomist and researcher, said on the “Pinnacle View” program that the Chinese Communist Party’s (CCP) decades-long, irrational control over the Chinese economy is the primary cause of the ongoing trade deficit the United States has with China.“Due to the disruption caused by the pandemic, the first phase of the U.S.-China trade agreement did not resolve the trade imbalance between the two countries, so the United States had to increase tariffs this time,” according to Mr. Wu.
“But according to the CCP’s line of reasoning, tariff hikes constitute an oppressive and bullying move, so it must retaliate. However, given that China is the surplus nation itself, how are you (CCP) going to strike back? The whole rationale is to steer towards a trade balance.”
“It almost seems like China’s trade wars with others are inevitable,” he continued. “Ever since China’s economic reforms in the 1970s, which gradually shifted the country toward an export-oriented economy, the fundamental issue that has remained to this day is the lack of domestic demand to consume its own supply. Because of this, the CCP decided that, without decreasing supply, its excess inventory would be exported to overseas markets, which escalates tensions with other countries and provokes protectionism, which in turn intensifies trade wars, and so on.”
Li Jun, an independent TV producer, while mentioning Secretary of Treasury Janet Yellen, stated on “Pinnacle View” that the increased tariffs prevented the CCP from stimulating economic growth by exporting products from highly subsidized industries.
“According to Yellen, under the Chinese regime’s support, all the capital is being transferred from the real estate sector to the ‘new productive forces,’ such as electric vehicles, lithium-ion batteries, and solar panels,“ he said. ”The overcapacity situation currently occurring in China will only worsen due to such overinvestment.”
‘De-risking’ and Shifting of Manufacturing Centers
Guo Jun, editor-in-chief of the Hong Kong edition of The Epoch Times, said on “Pinnacle View” that “one of the most discussed terms in the past few years is ‘de-risking.’ What are the risks? It’s the inflation caused by the worsening of U.S.-China relationships, especially with trade wars. However, we also see that the United States is determined to increase imports from countries and regions other than China. The shelves we used to see filled with made-in-China clothes and goods have now been replaced with products from Vietnam, Indonesia, etc.”“It doesn’t seem on par with the de-risking policy if the United States allows a flood of Chinese electric vehicles to enter the country. So the implementation of tariffs is inevitable to prevent that. I think there will be more actions coming out, as the ultimate goal is to de-risk and shift the supply chain.”
She believes that in the bilateral trade war, China, which relies heavily on critical high-tech imports and Wall Street investment from the United States, has limited countermeasures, while the United States has a wider range of countermeasures.
“I think the worsening of U.S.-China relations is more detrimental to the CCP than the United States since it’s almost impossible for the CCP to find alternative supply lines. The United States’ high-end semiconductor restrictions on the CCP are some of the examples,” she said. “By all means, the CCP will try to force the United States to cooperate with them; a recent example of this was its attempt to mediate a reconciliation between Fatah and Hamas, two opposing Palestinian organizations, following their meeting in Beijing. If the two groups were able to reconcile, then Beijing’s influence would be greatly increased, and the United States would be compelled to work with the CCP on Middle East issues.”