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US-China relations heading for turbulent times

US-China relations heading for turbulent times


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KUALA LUMPUR: The China-US relationship is likely to undergo years of turbulence amid rising tensions between the two nations to become world’s top economy, an academician said.

According to Professor Gao Jian, Secretary-General of Shanghai Academy of Global Governance and Area Studies, China, tensions between the two global economic giants is not expected to diffuse anytime soon despite a ‘respite’ after the two leaders met on the sidelines of the G20 Summit in Osaka.

He said this was mainly because the US is not used to China’s rise and view the republic’s rapid growth as a challenge.

“Personally, I am not quite optimistic with the (China-US) future. The Americans seem to have the full intention to trigger the trade war with China,” he told Bernama International News Service on the sidelines of the 33rd Asia-Pacific Roundtable recently.

On China’s stance, he said its government had stated that they are not willing to start the trade war but does not fear to do so if any last resort to avert it failed.

“We are not willing because we know trade war will hurt each other, nobody will win from it. It will hurt others too. From our understanding of the domestic political culture of American society, and if there is a trade war, just go ahead.

“But it would be the last choice for both sides, at least for China, because it is not a normal trade war; it’s a trade war between the first and second largest economies in the world,” he said.

He cautioned that the impending crisis would adversely affect other countries, especially the small economies and the whole international trade system, as all the economies are interconnected with each other and are doing businesses with the US and China.

But Gao said contrary to popular belief, smaller countries including Malaysia will not need to choose sides between the world’s two largest economies if a full-blown trade war really happens.

Amid the uncertainties, Gao said China is fully prepared for any eventualities coming its way.

“China now is not as China was, and the same goes with the US. Domestically, we have a lot of social resources to make full use of, to survive, and to some extent, see it (trade war) as an opportunity for us to reshuffle and improve.

“We are pretty much confident about our future” he added.

He said as China-US relations continue to strain, China, on the other hand, is focusing on restrengthening its economic relations with other countries worldwide, including the Association of Southeast Asian Nations (ASEAN) and the European Union (EU).

He said ASEAN has been China’s important trade partner, and it viewed the region’s future with full optimism.

China is ASEAN’s top trading partner for 10 consecutive years, registering a total trade of almost US$600bil (RM2.48 trillion) in 2018, an increase of 14.1% from 2017.

ASEAN is also the third largest trading partner for China, behind the EU and the US. The region’s trade growth rate with China was faster than that of the EU (10.6%) and the US (8.5%).

“China and ASEAN’s economy is very complementary to each other. We are the biggest trade partner in ASEAN and this trend will not stop. I see that Malaysia and Indonesia are extremely important; they are leading, and on the stage of rising up economically,’ he said.

Malaysia is China’s top 10 trading partners with bilateral trade growing 13% year-on-year to US$108.62 billion (RM436.64 billion).

Meanwhile, the EU is now China’s largest trading partner while China is also the second largest trading partner to the EU, with bilateral trade volume recorded at €605 billion in 2018, up from €573 billion in 2017.

Last year, US goods and services trade with China totalled an estimated US$737.1 billion, with a deficit of US$378.6 billion. The US exports were just US$179.3 billion compared to its imports from China of US$557.9 billion.

President Trump, in his presidential campaign, promised to lower trade deficit with China. The trade spat between the two sides started in March 2018 after Trump imposed tariffs on US$50 billion worth of Chinese goods, targeting 1,300 items.

Since then, the US has already slapped tariffs on US$250 billion worth of Chinese products.

In retaliation, China has set tariffs on US$110 billion worth of US goods and is threatening qualitative measures that would affect US businesses operating in China.

In a meeting on the sidelines of the G20 summit in Japan, Trump and Chinese President Xi Jinping agreed to resume trade talks that had broken down in May and the US will put on hold new duties on US$300 billion of Chinese goods.

Trump has also relaxed his stance on Huawei after the US had initially banned US companies from doing business with the Chinese telecommunications giant in May, citing national security risks.

Bernama

GLOBAL AGRITECH SUMMIT

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Gao JianUS-China trade war