The United States President Donald Trump once again overthrew the outcome of the China-U.S. negotiations and announced tariffs on US$50 billion of China imports. As China launched its own countermeasures, Trump fires back at Beijing with threat of new tariffs on $200 billion in Chinese goods. As a result, the world market has been greatly shaken. After the tariffs of US$ 50 billion, Trump's main policy advisor Peter Navarro issued another report stating that the outcome of the China-U.S. trade warfare was "China has much more to lose".

Facing the aggressive trade offensive of the United States, the Chinese Ministry of Commerce stated that China will take counter measures, but emphasized to shift to "quantitative and qualitative" in its approach, indicating that China's policy view on this unexpected trade war is still confined to the trade aspect and will only respond when the U.S. takes any action.

With regard to the current complex situation, Anbound has visited a senior strategic researcher. He combined some of Anbound's research conclusions over the past several years and discussed some of his views on the current China-U.S. trade war:

1. Concerning the trade war, the United States has long-term preparations, but such cannot be said of China. For some time, China was over-optimistic and its policy was based on the assumed unchanged pattern of the world, the Belt & Road Initiative and China's "rise". As we have said repeatedly in the past few years, careful study must be conducted on the Belt & Road Initiative, yet it was the West, not China that had conducted the in-depth study. When the Chinese strategies had yet begun to mature, the West already paid attention to them, and a group of right-wing hardliners had been putting their efforts to deal with such strategies. Many books have been published, and the research is very thorough and well prepared. As a result, the current trade war is like a professional player dealing with an amateur player; the advantage is on the U.S. side.

2. In the past, the United States avoided politicization, now this is not the case. As China's policies are more idealized, the U.S. has taken its national interests as the main focus. As a result, China has suffered losses in the overall situation, and there are some concessions in the negotiations while the United States has obtained practical benefits. In this way, China's policies would be out of balance and the direction of policies would need to be redefined. However, as there are no concrete results, the American hardliners against China began to make further demands and advance the politicization of trade issues, which has never been done by the U.S. in the past In fact, we do not believe that the United States has fully prepared for the politicization of China's trade issue; it would be preposterous if one says that the U.S. is well-prepared for it; the current world cannot afford the shock of the trade war.

3. Due to inadequate preparations, China is suffering. What does reducing the China-U.S. trade imbalance have to do with the middle-class in the U.S.? The U.S. is not a welfare society; Trump changed America's medical welfare when it was just being reformed. The unemployment rate is less than 4%, but have Americans' wages risen? Can the growth rate of wages compete with the rising cost? Has the debt of American families decreased? China's loan to the U.S. is not mere US$ 50 billion, but close to US$ 400 billion, which means that it is advantageous to the U.S. government but has almost nothing to do with the U.S. general public. Trump is only Republican by name; what he did was what the Democrats would do. Even if the U.S. completely cuts off the trade with China, what needs to be imported would still be imported, though with higher price and lower quality. Therefore, if there is no major adjustment in the economic structure of the United States to make this capital and technology based country revert to a manufacturing industry country; "America First" will just be an empty talk. The world market has been disrupted, yet the U.S. has nothing to gain; the American people would indeed pay a very high price.

4. On the issues of intellectual property rights and world trade, China does have serious problems with its policy disorder issue. China does require the transfer of intellectual property rights on some major systems, yet this has often to do with major deals with China's state-owned enterprises; when engaging with Western enterprises under the free market rules, this was agreed by all parties and when the Western enterprises gained profits none of them made any protest. Most of these Western enterprises in fact were benefitted during China's development boom for more than a decade and their profits were sustained by the Chinese market for a long period of time; currently China's service and trade's constant deficit proves this point well. It is strange therefore the Western governments to make noises while the enterprises remain silent. The problem with China's intellectual property policy is that it is too unified without industrial category subdivisions, nor market for technology; this happens to washing machines, refrigerators, cars, and even high-speed trains and drugs are like that. These were part of the transaction agreements, yet the flaws in China's macro-intellectual property policy have now become an issue, and the issue is not explained well by the Chinese Ministry of Commerce. Such issue was actually started by Western enterprises failed in transformation; those enterprises successful in transition such as Hitachi and Panasonic are often silent in this regard, as they see that they and China produce different products while still obtaining profits.

5. In the trade war between China and the United States, many people in China are worried that Europe and Japan would side with the U.S. and take the opportunity to take advantage on China. While this could happen, it is important to note that the main axis of global competition is between Europe and the U.S., not between China and the U.S. Since its founding, the U.S. has been competing with European countries; even the two World Wars had to do with the competition between Europe and the U.S. While there is an ideological problem between China and the U.S., the ideology dispute is mainly on the talk. While U.S. and China are friends, they can be competitors and have disputes. Trump is now taking care of the interests of his allies as much as possible, but things will change. The regions or countries that can really compete with the U.S. are Europe and Japan, not China. China is still in the learning stage in the field of technology. It is not China, but Europe and Japan that can cause major competitions and conflicts with the U.S. Trump has already understood this point long ago; he will sooner or later turn to those countries that take advantages on the U.S. Therefore, the world's 1+3 Paradigm is realistic in the future; that is the U.S. dealing with Germany, Japan, and China.

6. The U.S. is abusing its discourse power. On the contrary, China has not used social media to intervene in the U.S. presidential election. Instead, China has participated in the sanctions against North Korea. It is the U.S. and South Korea that have turned against the U.S. sanctions and violated the purpose of the UN sanctions. China does not have fake car emissions statistics to allow its cars to make big profits in the U.S. Chinese immigrants spent a lot of money in the U.S., while other immigrants in the U.S. blew up the World Trade Center. China's solar energy products have been anti-dumped by Western countries that claim to be leading the environmental protection trend. The U.S. has withdrawn from global climate negotiations while China is supporting such negotiations. Edward Snowden is not in China, and the things he exposed are mostly true, but China has not pursued it. China has not been in war against the West for almost half a century; tens of thousands of U.S. soldiers that have been killed in recent years have not died in China. The so-called "Chinese threat" is mostly fictional. In fact, China has been reforming and has been focusing on survival and making money; it has opened up the market according to the demands of the West. In the past, the profits of Western enterprises gained from China were not much, yet today China has become their main source of profits. Are all these wrong now? It is clear that the U.S. is actually abusing the right to speak in the world.

7. The isolationist tendency of the U.S. is due to the economic crisis. The Wall Street financial crisis has never gone far, and in fact it hasn't even ended. Some people in the Western academia stated that there is no theoretical basis for engaging in the trade war. The main reason why this kind of voice actually occurs is that such people do not understand the relationship between global trade disputes and the actual crisis. They do not realize that the trade war is not a trade issue at all, but an inevitable outcome of the in-depth development of economic crisis. The ideas behind "Make America Great Again" and "America First" do not happen in the vacuum but were formed under crisis. Such is the predicament faced by the U.S., and if Trump did not take such actions, the next President of the U.S. will, unless the crisis faced by the world is resolved.

8. China's public opinion should not be too sensationalistic. The atmosphere of Chinese public opinion is actually beneficial to the U.S., and it is not conducive to China itself. In fact, the issue of trade wars is a large-scale production of complex knowledge systems, not a matter of economics. It is not as simple as trading or transaction; instead to understand it requires in-depth interdisciplinary knowledge. A little knowledge with irresponsible comments and lack of the sense of direction will only make things more complicated.

9. China's policy direction is still in hesitation, such thing does not happen in the U.S. With regard to China's policies, there is a large number of people who specialize in analysis. To take the pension centralization policy as example, when this policy was introduced, the public knew that the funds of the central government are tight, and there are doubts concerning China's long-term development and stability. Another example is that once the targeted capital easing policy was introduced, the public knew that China's financial system has structurally failed and is now in a state of hesitancy. Chinese governments at all levels like to hear what university professors say, yet in the U.S., university professors don't participate in policy. Larry Kudlow was a news commentator, and there are many people like Peter Navarro in the U.S. The U.S. system allows them to surface and do their works. Meanwhile, policies in China tend to be isolated and the impact of these policies would only be discussed at the later stage.

Trump's policy may be "right" for the United States. He is the leader of the U.S. and does not assume world responsibility. As for the impact, it is determined by the level of policies that countries around the world respond to. The ones that have bigger impacts are those that have problems with their own policies, while those that have smaller impacts are those that respond to policies. However, there is one thing that is certain: the tendency of the U.S. to isolate itself under the competitions will cause it to give up its influence on the world market and gradually lose the world's overall support for the political and economic status of the U.S.; such principle of world order will not change. Therefore, even if the U.S. wins against China, it may lose the world.

However, we should not simplify the issue whether China would lose in the trade war. Just look at North Korea; the U.S. has to repeatedly reconcile with this country in poverty. As a major world power, China has ways to deal with the U.S. trade war, and this is not just from the perspective of business. Winning or losing has always been a spatial issue.

Final Analysis Conclusion:

In this world of dilemma, China needs to see its direction clearly, and take charge of that direction.