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As recently reported, the U.S. Justice Department proceeded with several charges against Chinese company, Huawei. The department alleges the firm defied the United States’ sanctions on Iran and pilfered integral production information from U.S. competitors into the global technology market. Moreover, President Donald Trump recently reaffirmed his stance regarding U.S.-Chinese trade relations: keeping past tariffs and other trade restrictions in place. Along with restrained trade exchanges with the country, the Trump administration is concerned about the current industrial race between the United States and China for the technological breakthrough in 5G services. With all these factors creating further U.S.-Chinese tension, multiple federal officials display apprehension and equate the current situation to the Cold War.
Even before the Justice Department announced these charges, many officials expected little progress to come from U.S.-Chinese trade discussions. The senior vice president of the U.S.-China Business Council, Erin Ennis, announced earlier this week, “We are anticipating no big outcomes this week.” Another consultant on Chinese affairs, Scott Kennedy, says that “China has yet to show any indication that it is ready to address US and global concerns about its structural issues.” Yet after this incident, the United States appears ready to push the Chinese government further for economic and legal reform. Attorney-General Matt Whitaker propagates, “As I told high-level Chinese law enforcement officials in August, we need more law enforcement cooperation with China.” Clearly, the Americans’ distrust in dealings with China may obstruct necessary future collaborations.
Unfortunately, this trend of heightened tension between the world’s largest economic powers already existed before these accusations. The United States objected about Chinese commercial constraints on several occasions to the World Trade Organization and other major global committees after pressure from major American firms. These U.S. corporations accused China of unfair tariffs, price limitations, government subsidies, disregard for intellectual property rights and so on. These allegations only increase as the nation begins its return to an economy directed by state-ownership. Of course, these issues give the United States plenty to be concerned about, especially with the potential misuse of technological infrastructure and personal data by China with the aid of 5G services.
However, neither country should consider the continuation of this “trade war” as the best macroeconomic decision. During this period of global economic slowdown, the world cannot afford this hindrance on international trade. The United States and China remain the two largest importers and exporters and thus influence global economic growth. By imposing limits on their domestic markets, the two nations bring global trade to a halt. Some economists worry this standoff will eventually result in an impending recession, much like that following 2007.
Therefore, many suggest and look forward to future discussions and a reasonable compromise between Presidents Donald Trump and Xi Jinping. Such an agreement would have tremendous long-term effects on the future of global markets. An agreement would also shed light on the future direction of discussions between the two countries. For example, their ability to constructively converse will determine the world’s capacity to curb environmental degradation, as these are the planet’s largest polluters. Going forward, a positive or negative end to the Huawei case is a microcosm for the macrocosm of U.S.-Chinese diplomatic relations.