{"id":144,"date":"2019-06-18T11:50:15","date_gmt":"2019-06-18T11:50:15","guid":{"rendered":"http:\/\/blogs.cardiff.ac.uk\/logistics-manufacturing\/?p=144"},"modified":"2019-06-18T11:50:17","modified_gmt":"2019-06-18T11:50:17","slug":"the-china-us-trade-war-where-next","status":"publish","type":"post","link":"https:\/\/blogs.cardiff.ac.uk\/logistics-manufacturing\/the-china-us-trade-war-where-next\/","title":{"rendered":"The China-US Trade War – Where Next?"},"content":{"rendered":"\n

Written by Mike Wilson & Katy Huckle<\/em><\/p>\n\n\n\n

The\nBelt and Road Initiative and Trade Wars<\/strong><\/p>\n\n\n\n

We recently published a blog post by PARC\u2019s\nown Professor Peter Wells on the Belt and Road Initiative (BRI), or the One\nBelt One Road (OBOR) as it is sometimes referred to. As it grows and develops, the\nBRI continues to divide and create factions between East and West, and in this\npost we address the implications of those factions and the potential global\nimpact of an escalating trade war.<\/p>\n\n\n\n

So what is the purpose of the Belt and Road Initiative? With the on-going standoff between China and US, is the BRI simply a way for China to preserve its economic growth by opening up new trade routes and markets (a necessary defensive precaution against US trade tariffs)?\u00a0Or is it, combined with the Made in China 2025 initiative, actually part of a full frontal Chinese assault, in its bid to become the world\u2018s most powerful economy?\u00a0 <\/p>\n\n\n\n

What\nis the Belt and Road Initiative?<\/strong><\/p>\n\n\n\n

Let\u2019s start with a deeper look at the BRI\nand some of its implications. Firstly, we must remove a common misconception \u2013 the\nBRI is not a repackaging of the Eurasia land bridge, or the Trans-Siberian rail\nconnection from China into Eastern Europe. It is much more than that.  The BRI is an initiative started by China in\n2013 to expand and open up new routes of international trade. To date, 125\ncountries have signed up to the BRI and total projected investment lies somewhere\nbetween $6 and $10 trillion. <\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Whilst comparisons have been made to the\nold \u2018Silk Roads\u2019, the BRI encompasses land, maritime and pipelines to facilitate\ntrade expansion, reaching well beyond that of the original silk roads.  The Main Axis of the BRI includes Central,\nEast, West and South Asia. The Indian sub-continent, the Middle East, Africa\nand Europe are known as The West Wing, with Italy attracting huge media\ncoverage in late March when they become the first G7 country to sign up to the\nBRI.  In 2018 the BRI scope grew further to\ninclude Central and South America, thereafter The East Wing, with Panama being\nthe first East Wing country to sign up.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

To enable the construction of the BRI, China\nhas financed many initiatives across Asia and the Middle East; including ports,\nrailways and other construction projects. \nThese projects have incurred recent criticism, often described as a\nsinister move by China to entrap and indebt vulnerable nations whilst expanding\nits network.<\/p>\n\n\n\n

China and Chinese Capital have been top of\nForeign Direct Investment lists for many years, and the cost of capital often\ninvolves the issuance of work visas in order for Chinese citizens to work\ndirectly in Asia, Africa, Latin America and Eastern Europe.  By all appearances, China wants to credit its\nway to economic growth, and has been doing so for many years.<\/p>\n\n\n\n

Made\nIn China 2025<\/strong><\/p>\n\n\n\n

The \u2018Made in China 2025\u2019 initiative is the\nvision that China will be the leading economy in a number of advancing\ntechnologies, which directly opposes current US dominance in manufacturing and\ntech, prompting an extreme reaction from the United States and its leadership.\nIt is a 10-year project with an enormous budget of up\nto $US 300 billion<\/a>; and its purpose is to increase the propensity of\nChinese brands on the global market, whilst improving product quality and\ninnovation.  Under Made in China 2025,\nmore and more products will be designed and assembled in China, concentrating\ninitially on the 10 below industries:<\/p>\n\n\n\n

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https:\/\/blog.csoftintl.com\/revamping-made-china\/<\/a> <\/figcaption><\/figure>\n\n\n\n

East\nvs West?<\/strong><\/p>\n\n\n\n

The ongoing Trade War between China and the\nUS kicked into a new gear after the blacklisting of Chinese telecoms provider\nZTE in 2018, and has now escalated further with the US attack on telecoms giant\nHuawei.  Huawei, a leading world provider\nof telecoms equipment, has been accused of numerous security breaches,\nincluding espionage.  However, it is\ndifficult not to view this escalation as simply another battleground in the\nAmerican Chinese Trade War. <\/p>\n\n\n\n

The United States has identified the\nincreasing Chinese economic power as a major threat to their own economic\nmight, and has also accused China of unfair competitive practices, facilitated\nby Chinese government-backed financing. The US is very wary of China\u2019s\n\u2018relaxed\u2019 approach to intellectual property, and it has also accused China of\ncurrency manipulation.  These accusations\nhave helped enable the US to justify its somewhat extreme measures against\nChinese products in recent months.  As\nfar as the US is concerned, it\u2019s time to fight back.<\/p>\n\n\n\n

And, with actual warfare (thankfully) out\nof the question, the next best option open to the United States is trade warfare.  The timing is ideal, as the cost of\nproduction in China has risen dramatically in recent years, in line with the\nincreasing cost of Chinese labour.  It\u2019s\nno longer a cheap, underdeveloped country that Western organisations can put to\nuse as a factory. Western organisations are now looking to relocate their manufacturing\nfacilities either to cheaper shores, such as South East Asia, or back to the\npoint of consumption where automation can keep down costs.  A feeling of nationalism and protectionism was\nalready brewing, and Trump\u2018s \u201cAmerica First\u201d mandate managed to capture that sentiment.\n<\/p>\n\n\n\n

But the knock-on effect we see today has much\nbigger implications than just the US vs China. \nThe world\u2018s two largest economies cannot enter into a trade \u2018Cold War\u2019\nwithout there being a major impact on the rest of the world. What will that\nimpact be?  It\u2019s still too soon to say, but\nas China continues to build up the BRI, and the US flexes its muscles as the\n(current) largest supplier and customer to most global markets, will we see a world\nsplit into sides\u2026 East versus West? <\/p>\n\n\n\n

Trump\u2019s\nTrade War and Telecoms<\/strong><\/p>\n\n\n\n

Trump\u2019s blockade of ZTE and Huawei, which\nincludes the banning of US products into Chinese equipment, could be the first\nindication of an entire industry split between East and West. New Zealand and\nAustralia have already followed Trump\u2018s suit by banning Chinese telecom\nequipment. Parts of Western Europe are still in intense debate about whether or\nnot to impose a ban, which will not be an option for any of the Eastern European\ncountries that have already bought into BRI.  <\/p>\n\n\n\n

It is difficult to imagine a complete global\ndeterioration into an either\/or situation between the East and West.  We live in a global economy where billions of\nproducts are produced halfway around the world from the point of\nconsumption.  Surely we cannot draw a\nsolid line between East and West that those products cannot cross?  However, if we extrapolate from the telecoms\nindustry, whereby China will now slowly be forced to design and manufacture their\nown semi-conductors and electronic hardware, then we could be looking at two\ndistinct telecom industries (East and West) or even two separate internet\nset-ups, which will not only be more costly but also more divisive in a\nglobally connected world.<\/p>\n\n\n\n

Troubled\nTimes for China?<\/strong><\/p>\n\n\n\n

It certainly doesn\u2019t look like it.  Whilst the ongoing trade tariffs and\nblockades on US components is an inconvenience right now, China is far from in\ntrouble \u2013 in fact, if China can execute its plan, it will be cemented as potentially\nthe most powerful economy on Earth. How the West will react over the coming\ndecades remains to be seen.  China\u2019s\ninvestment along the BRI and in to Eastern Europe definitely throws up some\ninteresting and potential conflicts. Whilst trade tariffs and closing borders\nare protectionist measures, they are extremely counter-intuitive to the global need\nfor innovation, development and collaboration as we progress towards Industry\n4.0 and, eventually, a 5G-enabled, IoT world.<\/p>\n","protected":false},"excerpt":{"rendered":"As their ongoing trade war continues to escalate, Chinese-US trade tensions are never far from the headlines. China\u2019s growing Belt and Road Initiative continues to divide and create factions between East and West. In this PARC Insight, Mike Wilson and Katy Huckle address the implications of those factions and the potential global impact of an East\/West trade divide.","protected":false},"author":1612,"featured_media":148,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12,8],"tags":[],"class_list":["post-144","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-geopolitics","category-insight"],"meta_box":[],"_links":{"self":[{"href":"https:\/\/blogs.cardiff.ac.uk\/logistics-manufacturing\/wp-json\/wp\/v2\/posts\/144","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.cardiff.ac.uk\/logistics-manufacturing\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.cardiff.ac.uk\/logistics-manufacturing\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.cardiff.ac.uk\/logistics-manufacturing\/wp-json\/wp\/v2\/users\/1612"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.cardiff.ac.uk\/logistics-manufacturing\/wp-json\/wp\/v2\/comments?post=144"}],"version-history":[{"count":3,"href":"https:\/\/blogs.cardiff.ac.uk\/logistics-manufacturing\/wp-json\/wp\/v2\/posts\/144\/revisions"}],"predecessor-version":[{"id":151,"href":"https:\/\/blogs.cardiff.ac.uk\/logistics-manufacturing\/wp-json\/wp\/v2\/posts\/144\/revisions\/151"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blogs.cardiff.ac.uk\/logistics-manufacturing\/wp-json\/wp\/v2\/media\/148"}],"wp:attachment":[{"href":"https:\/\/blogs.cardiff.ac.uk\/logistics-manufacturing\/wp-json\/wp\/v2\/media?parent=144"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.cardiff.ac.uk\/logistics-manufacturing\/wp-json\/wp\/v2\/categories?post=144"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.cardiff.ac.uk\/logistics-manufacturing\/wp-json\/wp\/v2\/tags?post=144"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}