Whatever a business savvy US President Donald Trump is doing with the economic prospects of his country has led to forcing over 1,000 economists - including 14 Nobel laureates - to demand him revisit his approach to the global trade without any further loss of time. They have told Trump in clear and unambiguous terms that his stance on trade threatens to repeat the mistakes the US made in the 1930s, when the Smooth-Hawley Tariff Act triggered a trade war that is widely seen as one of the principal catalysts for the Great Depression, although researchers still try to find out what actually had caused that gravest economic crisis in the history of the US. The Trump administration has clearly gone berserk to reduce its trade deficit with China and others. There is no denying that every country has a right to correct its trade imbalances with its trading partners but the path that the US President and his team members have taken towards China is fraught with grave consequences for global trade and peace as tensions between the US and China increased after the two countries ended the second day of their two-day high-stakes talks on Saturday with "big differences". The overt trade talk failure is said to have brought world's two largest economies on the brink of a trade war.
The US posture that translated into a list of demands including a $ 200 billion cut in trade deficit and an end to state subsidies on strategic industries may legitimately be described as unreasonable akin to bullying China. The situation, therefore, gives birth to a question: Can the US or any other country bully China, and to what extent? Although this question has no easy answer, the world trade or economy stands to lose a lot in the event of an all-out trade war between the US and China. Unfortunately, however, the two days of talks in Beijing between Steven Mnuchin, the US treasury secretary, and Liu He, the vice-premier, seem to have only deepened mutual suspicions after weeks of rhetoric against each other. Unlike Trump who has said that China is 'spoiled' by trade wins over US, China has shown a measure of maturity as a statement released by the official Xinhua news agency described the talks as "frank, efficient and constructive" but added that there remained "significant disagreements over certain issues". Another Xinhua statement said: "Both sides recognise there are big differences on some issues and that they continue to step up their work to make progress." It has also been reported that the Chinese too made demands, calling on the US to stop threatening to impose $150 billion in tariffs on imports and ease national security reviews of Chinese investments.
That investment restrictions on Chinese companies and tariffs are among the tools to punish China constitute a fact that has found its best expression in the Beijing talks as a document purportedly handed to Chinese officials described the trade relationship between the two countries as "significantly imbalanced". The US's trade and services deficit with China was $337 billion last year and the Trump administration is pushing for a $200 billion cut in that deficit by 2020. It is quite known that Trump has repeatedly attacked China, accusing the country of 'raping' the US with its policies. In the Beijing moot, the US also reportedly called for China to immediately stop providing subsidies to certain industries. China must end some of its policies related to technology transfers, where foreign companies are forced to hand over key technologies in exchange for access to China, a key source of tension underlying the dispute, the list says.
Be that as it may, it has also been reported that Mnuchin also wanted assurances that China would not retaliate against US measures currently being pursued against it. For instance, the US says China should agree not to target US farmers or agricultural products, and "not oppose, challenge or otherwise retaliate" when the US moves to restrict Chinese investment in the US in sensitive sectors. It is, therefore, quite interesting to note that China has already announced tariffs, however modest, on some US agricultural goods in order to send a strong message across. Providing subsidies to State-Owned Enterprises (SOEs) still constitutes the plank of China's economic policies even after the demise of Chairman Mao Zedong four decades ago. And China has successfully shown to the world that it is the only country in history that has lifted as many as 600 million people out of abject poverty through its hybrid economic policies that it began to pursue under the leadership of Deng Xiaoping since the late 1970s.