3 Reasons for the U.S.-China Trade War

The U.S.-China trade war may very well be the event that defines which nation will end up as the top superpower of the 21st century. (Image via  pixabay  /  CC0 1.0)
The U.S.-China trade war may very well be the event that defines which nation will end up as the top superpower of the 21st century. (Image via pixabay / CC0 1.0)

The U.S.-China trade war may very well be the event that defines which nation will end up as the top superpower of the 21st century. And as far as the U.S. is concerned, there are three major reasons why it has headed into the trade war — China’s disregard for World Trade Organization (WTO) rules, protecting American industries, and keeping China’s power in check.

China’s disregard for WTO rules

The Chinese government is notorious for its blatant disregard of WTO rules. A few of the trade commitments they made and failed to honor include — reducing export subsidies, preventing intellectual property (IP) theft, providing foreign banks with the same treatment as national ones, and stopping the manipulation of technical standards.

Ignoring WTO trade rules has meant that Chinese companies could operate more competitively in the U.S. while American companies struggled to gain access and to operate in the Chinese market. And President Trump, being the aggressive businessman he is, was simply unwilling to see his country participate in such a lopsided trading arrangement.

“Each time China claims to move toward opening up trade, they turn around and introduce another new mercantilist trade barrier to counteract it. Unfortunately, the WTO enforcement system has been ineffective in stopping these infractions. And with such a weak dispute settlement system in place at the WTO, China is largely shielded from being punished for its misdeeds by individual countries”, Stephen J. Ezell, vice president of innovation policy at Information Technology & Innovation Foundation (ITIF) says in an article published at the organization’s official website.

The Chinese government is notorious for its blatant disregard of WTO rules. (Image: World Trade Organization via wikimedia CC BY-SA 2.0)

The Chinese government is notorious for its blatant disregard of WTO rules. (Image: World Trade Organization via wikimedia CC BY-SA 2.0)

Protecting American industries

China also posed a major threat to American businesses, not because they were able to innovate at a faster pace, but due to the fact that they simply stole the technologies of U.S. companies, reverse engineered them, and flooded the markets with cheap knockoffs. It is estimated that China’s theft of U.S. technology costs the nation trillions of dollars every year.

The entire “steal and sell” process usually starts with the Chinese military, which tries to obtain any kind of business information they can from American enterprises. These include things like blueprints, formulas, experiment data, research papers, and so on. In the second step, specialized teams set up by the Chinese government turn the stolen information into usable designs. And in the final stage, these designs are provided to Chinese companies, which then mass produce the final product at such cheap rates that American firms are unable to compete.

Trump plans to impose more sanctions on China until the government agrees to honor IP rights and stops stealing from U.S. businesses.

China also posed a major threat to American businesses, not because they were able to innovate at a faster pace, but due to the fact that they simply stole the technologies of US companies, reverse engineered them, and flooded the markets with cheap knockoffs. (Image: Chris via wikimedia CC BY-SA 2.0)

China also posed a major threat to American businesses, not because they were able to innovate at a faster pace, but due to the fact that they simply stole the technologies of U.S. companies, reverse engineered them, and flooded the markets with cheap knockoffs. (Image: Chris via wikimedia CC BY-SA 2.0)

Keeping China’s power in check

Finally, China’s increasing military might is clearly a security threat to the U.S. and the entire world. And Trump has been very vocal about how China’s government would seek to erode the American values of freedom and equality as they gain more power.

The South China Morning Post quotes Trump as saying: “China and Russia challenge American power, influence, and interests, attempting to erode American security and prosperity,” while adding that the two countries “are determined to make economies less free and less fair, to grow their militaries, and to control information and data to repress their societies and expand their influence.”

Given that China poses such grave threats to the U.S., it should be easy to understand why President Trump has been adamant in escalating the trade war until the Chinese government is willing to compromise. After all, bullies only understand bullying.

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