How to survive a trade war
The author is a Beijing correspondent at the JoongAng Ilbo.
The U.S.-China trade negotiation fell apart, and the ultimate weapon of a $300-billion tariff list has been released. China declared extended resistance. The endgame between U.S. President Donald Trump and Chinese President Xi Jinping has begun.
The 10th negotiation between the two countries in Beijing on May 1 ended smoothly, but a reversal happened as the Chinese leadership reviewed the negotiation plan. Xi considered a revision of domestic laws as an infringement of sovereignty and reportedly decided that all positive and negative responsibilities occurring thereafter would be on him. A draft with an altered agreement was sent to Washington through diplomatic cable. Trump exploded the tariff bomb without hesitation.
The Global Times’ editor in chief, Hu Xijing, advocated for Xi’s position, saying that China had a superior system with solid party leadership. Xi says that China had a clear advantage in system compared to the sand-like governing group in the United States. Hu claimed that China had ample experience pursuing a war and negotiation at the same time — for example, the United States and China in the late period of the Korean War. He was referring to the armistice negotiation and local warfare that lasted three years. Renmin University Prof. Jin Canrong was sure of victory because China had three king cards — rare elements, U.S. treasury bonds and sanctions on U.S. companies operating in China.
The New York Times criticized Xi for failing to manage U.S.-China relations. It pointed out that, unlike Mao Zedong (who engaged in ping-pong diplomacy with Nixon), Deng Xiaoping (who made ties with Carter), Hu Yaobang, Zhao Ziyang (who invited American economists for policy advice), Jiang Zemin and Hu Jintao, Xi challenged the United States with an anti-U.S. agenda.
The clash between the United States and China is likely to break the global structure of division of work and lead to a war for jobs. From the 1970s, companies in the United States relocated lower industries abroad, and unemployment surged. As Trump addresses trade issue with China, he urged reshoring. As China pursues expansion along the Silk Road, some analysis says that 100 million jobs could be threatened on China’s part if exports to the United States are interrupted and foreign currency is blocked.
Job shortages are already an urgent issue in Korea. Jobs are created by companies. Korea needs to nurture global companies and invite foreign companies. Remodeling into a business-friendly country is the only way to survive the age of the U.S.-China trade war.
JoongAng Ilbo, May 14, Page 29