U.S-China trade war

The May 12 announcement is best viewed as a truce that does not shift the underlying structural reality: the U.S. and China are locked into a long-term cycle of escalating strategic competition.

The tariffs may be lower, but the structural tensions at the heart of the trade conflict remain unchanged.

Both sides walked back the eye-popping tariff rates announced since April 2, but no progress was made on structural issues.

Tariffs have played a large part in the growth and expansion of the Chinese economy since the 1980s.

Through public reversals, shifting deadlines, and contradictory signals, U.S. credibility – and thus the ability to negotiate its way out of the trade war – has significantly eroded.

China has been steadily working to elevate the international profile of the RMB. Though progress has been gradual, it carries real risks to the U.S. dollar’s dominance.

Before the tariffs, businesses took advantage of a public comment period to lay out the dangers of a trade war. It seems clear that the Trump administration didn’t take their concerns into account.

China’s academic and policy circles see economic and diplomatic opportunities amid the crisis of Washington’s trade war.

Since 2018, Chinese firms have been pursuing internal reforms, supply chain restructurings, and accelerated innovation, with the result of “selective decoupling” from the U.S.

Beijing is executing a three-layered plan: shoring up its domestic front, tightening the screws on the U.S., and repositioning itself on the global stage.

Washington and Beijing have entered a phase of hardened rhetoric, reciprocal sanctions, and reduced people-to-people engagement. The risk of miscalculation is now dangerously high.

Zheng Yongnian provides his recommendations for China to “remain undefeatable” amid both tariffs and the broader competition with the U.S.