Expert seminar analyzing the U.S.-China trade war and the Chinese economy

Dr. Jia began his remarks by commenting on the escalating tensions between the U.S. and China, but he maintained that he is “not pessimistic.” To support this view, he highlighted the historical background between the two nations. “There was a period of the time when the U.S. helped China build hospitals and universities and also trained doctors in advanced medical technology,” said Dr. Jia. In addition, a series of high-level diplomatic developments, including President Richard Nixon’s visit to China in 1972 followed by paramount leader Deng Xiaoping’s visit to the U.S. in 1979, ushered in a period when the two nations seemed to be moving toward greater cooperation. “After establishing diplomatic relations, the key concept in the relationship became the pursuit of ‘mutual interests.’ At this point, the two countries were enjoying a particularly close relationship, and the U.S. even backed China to join the World Trade Organization (WTO),” said Dr. Jia.

Regarding the current trade dispute between the U.S. and China, Dr. Jia explained that “some analysts have observed that the purchasing power parity (PPP) of China has become larger than the United States. There is a theory that any country that dominates the world order will always be threatened by the second-most powerful country and will attempt to block the other country from gaining power. The economic power of the U.S. has already reached a critical point, and therefore the nation has become more exclusive and intolerant of competitors. As a result, the U.S. has increasingly focused on containing and restraining China. However, it is the same situation in China. We also became too arrogant, so the trade battle may be prolonged.” According to Dr. Jia, the key concept for the U.S.-China relationship in the future will be transforming into “rivalling powers.” Rather than finding middle ground, trade wars between the two countries will likely come and go, repeatedly appearing and disappearing.

In spite of recent tensions, Dr. Jia remains optimistic about the broader relationship between the U.S. and China. “Metaphorically speaking, the U.S.-China trade war is like the tip of an iceberg floating on the surface of the sea. If you look underwater, you can see that the relationship is connected by strong bonds through the global nature of manufacturing, innovation, and the financial markets. As Deng Xiaoping argued, the U.S. and China should advance shoulder to shoulder in an ‘age of peaceful development.’ In order to achieve this goal, China ought to pursue economic reforms,” said Dr. Jia.

Dr. Xu, in his comments regarding the future of the Chinese economy, compared China’s situation with Japanese development. “In modern history, Japan achieved a miracle twice in its economic development – the Meiji Restoration, which industrialized Japanese society, and the postwar economic recovery after the destruction of World War II. In spite of the massive devastation, Japan's success in developing its economy while enduring a series of crises amazed the world and the country became known for its economy and manufacturing,” explained Dr. Xu.

In addition, Dr. Xu asserted that China can learn many lessons from Japan’s experience, especially the prolonged period of economic stagnation called the “lost two decades” that followed the collapse of the bubble economy in the 1990s and continued through the global financial crisis in 2007. “China must ensure it does not fall into the same economic rut,” said Dr. Zu. “However, in terms of developing private business and innovation, China lags a decade or two behind Japan. China simply copies America in its innovation development. In addition, the establishment of tax systems in China such as the fixed property tax and inheritance tax is far behind the U.S. and Japan. China also restricts internet use, which has a negative impact on the future of the country by stunting creativity and innovation,” said Dr. Xu.