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A Trade War That is Unwarranted

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  • Yongding Yu

Abstract

The Trump Administration has presented three major reasons to justify the initiation of a China–US trade war: China's large trade surplus against the US, China's failure to comply with World Trade Organization (WTO) commitments and China's unreasonable acquisition of US technology and theft of intellectual property rights. The fundamental cause of the US trade deficit is its persistent saving deficiency. China has complied with WTO commitments, although there remains significant room for improvement. The case against China for the so‐called unfair acquisition of foreign technologies and cyber‐enabled intellectual property rights theft is weak at best, although China needs to redouble its effort in protecting intellectual property rights. President Trump's trade war will not drive China to abandon its resolve to catch up to the advanced economies. China is ready to fight a war of attrition. Unfortunately, both sides – as well as the rest of the world – will incur heavy losses in the process.

Suggested Citation

  • Yongding Yu, 2018. "A Trade War That is Unwarranted," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 26(5), pages 38-61, September.
    • Handle: RePEc:bla:chinae:v:26:y:2018:i:5:p:38-61
    DOI: 10.1111/cwe.12255
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    References listed on IDEAS

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    1. Ben S. Bernanke, 2005. "The global saving glut and the U.S. current account deficit," Speech 77, Board of Governors of the Federal Reserve System (U.S.).
    2. repec:fip:fedgsq:y:2005:i:mar10 is not listed on IDEAS
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    Cited by:

    1. Jie Wu & Chan‐Guk Huh & Jacob Wood, 2021. "Globally chained economies, unwitting victims of the US‐China trade war," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 35(2), pages 60-76, November.
    2. Jie Wu & Jacob Wood & Xianhai Huang, 2021. "How does GVC reconstruction affect economic growth and employment? Analysis of USA–China decoupling," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 35(1), pages 67-81, May.
    3. Sean Kenji Starrs & Julian Germann, 2021. "Responding to the China Challenge in Techno‐nationalism: Divergence between Germany and the United States," Development and Change, International Institute of Social Studies, vol. 52(5), pages 1122-1146, September.

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