Earl CarrandLi Qingsi

Macroscope | Costs of a US-China break-up are too high for either to bear

Earl Carr and Li Qingsi say constructive engagement between the two nations goes back decades, and any damage to bilateral ties will hurt the global economy. Fundamental differences aside, the two must try to find common ground on core strategic interests

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US President Donald Trump delivers a speech at the Great Hall of the People in Beijing last November. Trump’s “shock and awe” of US trade tariffs has produced little progress in the last few rounds of negotiations with China, nor have tariffs reduced the bilateral trade deficit for the US. Photo: Reuters

Earl CarrandLi Qingsi

Published: 12:15pm, 18 Oct 2018Updated: 10:36pm, 18 Oct 2018

The escalation of an economic skirmish into a trade war is front and centre on many people’s minds in China and the US.

We should not forget the four decades of constructive engagement between the two countries, engagement which resulted in collaboration to combat global health pandemics like severe acute respiratory syndrome (Sars) and Ebola, among other issues. Nonetheless, a trade war has the potential to erode such collaboration at all levels, from government institutions to people-to-people exchanges.

The “shock and awe” of US trade tariffs has produced little progress in the last few rounds of negotiations, nor have the tariffs reduced the bilateral trade deficit. Chinese exports rose nearly 15 per cent in September compared with the same month a year earlier, according to government data published on October 12.

This beat analysts' forecasts and was stronger than figures from August. The acceleration suggests China is weathering the first waves of the tariffs fairly well, even though it is widely acknowledged that the months ahead will be much harder for both China and the US, taking into account the latest tariffs.

US options are narrowing down to two: capitulation or further escalation. Any unilateral moves will only serve to strengthen China’s hand. We are seeing this especially in public opinion towards the US, and President Donald Trump in particular.