Dinesh Kamath's Editorial 'Trade War between Two Major World Economies' that was published in Newsband

Trade War between Two Major World Economies

The Asia-Pacific Economic Cooperation (APEC) organisation has its leaders principally led by the U.S. and China. The two clashed over the proposed wording of the document. The economic rivalry between Washington and Beijing appeared to fracture the 21-nation summit into two segments.

Washington led the charge on “unfair trade practices” under the Trump administration’s “America First” policy. Vice President Mike Pence, who attended on the President’s behalf, called upon nations to eschew loans that could leave them in a debt trap with Beijing. President Xi Jinping touted Beijing’s Belt and Road Initiative. The BRI has worried smaller Asian nations and the U.S., particularly given that China views the Asia-Pacific landscape as a means to secure economic predominance worldwide.

The troubles began over the summer when both countries started taxing billions worth of the other’s imports. If this continues, eventually global supply chains may be hit, and shrinking trade volumes may cause companies to seek out new trading routes and partners. The WTO may lose their authority. Asia will be at the heart of this war of attrition because strategic control of its high-value maritime trading routes is the key to China’s dreams of global trade dominance.

The world is still poised on the edge of the trade war vortex. Can the forthcoming G20 meeting in Argentina calm the situation.

The former Tanzanian president Julius Kambarage Nyerere once said "When Elephants fight it is grass that gets crushed. When elephants make love it is the grass that gets crushed". He was referring to USA and USSR. Today it is USA and China. But the grass remains.

China was well forwarding with its project based lending business worldwide and was busy on belt and road initiatives and CPEC plan at Pakistan. It is trying to create a right to navigate in Arabic sea by showing its investment in Lanka. But a sudden brake has been applied by Trump with America first policy and started restricting Chinas trade with US by import tariff. Now comes the headache for China and now it concentrates on stabilising its global trade rather than to money lending business. Until the end of the tenure of Trump China has to fumble and  Trump might do more damages to China's trade. China’s dream to bring Ren Mini as a global number one currency will never come true.

The trade issues that exist between America and China are due to different economic structures and development stages in the two countries. These issues can be resolved through dialogue and consultation. A trade war, instead of leading to any solution, will only end up hurting both sides and the global economy. The two sides find a “mutually acceptable solution” to the ongoing trade issue. Trump and his Chinese counterpart Xi Jinping are scheduled to meet in Argentina later this month on the sidelines of the G-20 Summit.

The U.S. on November 5 imposed “the toughest ever” sanctions on a defiant Iran aimed at altering the Iranian regime’s “behaviour”. However, it temporarily allowed India, China and five other major importers to continue buying Iranian oil as they showed “significant reduction” in oil purchase from the Persian Gulf country. Thus the two countries (US and China) continue to confront important differences in the bilateral relationship.