What China Can Do to Win The Trade War

There are perceived negative impacts of trade war between the USA and China on China’s economy. If china wants to win the trade war, it could look at following suggestion given by the scholars:

Make Life Difficult for the USA Companies

The Chinese government has a lot of control over its citizens. If government wants its citizens to stop traveling to the USA or to abandon purchasing American goods, easily it can make that happen. For example, in 2016, when Hong Kong people protested for more independence from China, Chinese citizens to the Hong Kong as a tourist dried up. The Chinese government didn’t declare any new rules banning people for visiting Hong Kong, but Chinese citizens stopped visiting Hong Kong anyway. It could happen to the USA companies such as Apple, Boeing, McDonald’s or Burger King which consider symbols of the USA. As such, China can introduce regulatory burden for on the USA companies such as tax certain businesses, implement anti-monopoly investigations, institute environmental regulations…. etc. Also China can make it more difficult for Americans to get visa. All of these, can really slow down the USA business and make their life so difficult in China.

China could build trade partnership with other countries around the world and isolate the USA. If Chania really want to start partnership with other countries, it could join the Trans Pacific Partnership (TPP), which the USA withdrawal partnership with them when Trump came to power. Then China will have a more open trade with these 11 countries. The USA also impose taxes in import goods from Canada, EU and Mexico, to encourage Americans to buy American products. Therefore, China also can initiate trade relation with these countries. Then, china can easily isolate the USA from global trade. This should be a long term objective of China and it will not happen in one night.

According to the USA Federal Reserve (2017), China is one of the biggest holders of the USA treasuries, owning about $1, 168 billion of bonds in 2017. China is one of the biggest holders of the USA treasuries, If Chinese government decide to sell off its shares and stop buying new the USA bonds, it will badly impact on the USA economy.

Devalue the Yuan

If China really desires to aggravate President Donald Trump, and make tariffs moot, it could devalue the yuan. In fact, this will be the best tool it has to get back at the USA. 6. Conclusion The trade war between the USA and China consider as a largest trade war in economic history, each country has imposed tariffs on goods traded with the other. It fears that escalating trade conflict between the world’s two biggest economies could lead to a full-scale global trade war, and lastly it will continue as an another cold war. It has already negativity impacted to China, USA and World economy in different ways. However, there is still huge potential for trade and investment cooperation, considering the strong complementarity of the two major economies. Consequently, the two countries have responsibility to maintain the stability of global trade system, and should solve trade war through multilateral mechanism with win-win solution.