Caught in a Thucydides trapThe ancient Greek historian Thucydides said, “The strong do what they can, and the weak suffer what they must.” Today, those with power still dominate international relations. The United States fired off trade attacks without considering whether their targets are allies or rivals. China, as the world’s second-largest economy, punished Korea for defying its warnings against installing a U.S. antimissile system. Korea, the weaker country, took the suffering in stride.
The two superpowers are waging a chicken game with their tit-for-tat tariff actions. Warships from the two countries are facing one another in the disputed South China Sea, raising fears of a full-fledged clash. After Washington slapped 25 percent tariffs on 1,300-odd imports from China worth $50 billion for infringing U.S. intellectual property rights, Beijing matched them with 25 percent tariffs on 106 American imports. Their offensives have been strategically targeted.
Washington aimed to shake up core sectors chosen by President Xi Jinping to create innovation in China. Its tariff list included high-end medical products, bio drugs, industrial robotics, electric vehicles and the semiconductors that are being groomed by Beijing to be on top of the world by 2025. Washington wants to slow China’s transition from manufacturer to technology leader.
Beijing also aimed at Washington where it would hurt. Its tariffs targeted farm products and cars and other finished industrial goods, whose makers voted President Donald Trump into office. It is not difficult to guess what the next move for Beijing will be. Its $3 trillion foreign exchange reserve includes $1.17 trillion in dollar assets.
The two can strike a deal before their tariffs come into effect. Despite tough talk from Trump, his aides talk of compromise. Pundits think Beijing has more to lose from a full-blown war with Washington, since its economy hinges more on revenue from the United States. Exports to the United States took up 18.9 percent of China’s total outbound shipments. The surplus in trade with the United States took up 65 percent of its total surplus balance. American exports to China made up just 8.4 percent of its total exports. It incurred $337 billion in deficit in commerce with China. Half of its trade deficit is owed to China. Since Beijing cannot deny the imbalance, it is likely try to find a settlement. The two countries have clashed four times over intellectual property rights since 1990, but found a compromise in each time.
The heart of their conflict is China’s ascent. The conflict can come back on other fronts. What can the weak do to survive the crossfire? Korea must make products that no superpowers can dare to block. We must do what we can with our potential.
JoongAng Ilbo, April 7, Page 34