countering china in trade and its effect on world

 Intensifying geopolitical rivalry and a fragmentation of the global economy are threatening the liberal international order

slap a fresh round of tariffs on a range of Chinese imports 

ट्रेड में चीन को कैसे काउंटर किया जा रहा है ? 

1 US targeting china -

announcement by United States President Joe Biden, in May, to slap a fresh round of tariffs on a range of Chinese imports, has refuelled fears of a new phase of decoupling in the world economy. 

2 By western country -

policymakers in Europe are also deliberating having a ‘united front’ to counter China’s pursuit of coercive economic practices.

what is risk from china 

1 With China, the West’s trade risk calculations have increasingly become a function of national security. 

 2 Washington assumes that since economic interdependence does not benefit China and the U.S. equally, it is likely that Beijing will weaponise vulnerabilities .

 3 In fact, the Biden administration’s decision to resume a tariff war with China, reveals how political, and not economic. 

The story in the tariffs

अमेरिका कितना निर्भर चीन पर ? 

Story of electric cars 

The latest tariff on Chinese electric vehicles (EV) is a case in point. Given that the U.S. imports few EVs from China, 

 US support for the ongoing efforts of the United Auto Workers (UAW) to scale up EV manufacturing domestically.

 quadrupling of tariffs from 25% also explains the fear that the American auto union has vis-à-vis the fast-growing Chinese car and battery industry and its ability to outcompete domestic automakers 

The new tariffs on medical devices

on the other hand, are a straightforward way to grow independent of China. For a decade now, China has been the primary source of medical equipment to the U.S., with imports nearing $640 million in 2023.

manufacturing and research laboratories in China 

Many American health-care businesses have their manufacturing and research laboratories in China, and they have been ramping up their investments owing to China’s growing health-care needs for the elderly and demand for quality health-care services.

 क्या होगा इसका असर ? 

However, the deepening mistrust between the leaders of China and the U.S.

•  creates pressure on the private sector 
• increase the burden of health-care costs on domestic patients in both countries. 
• costs of protection are borne through higher prices paid by consumers.

The long-term effects

how the world will face loss 

1  tit-for-tat tariffs 

The vicious cycle of tit-for-tat tariffs further exacerbates the dangers arising out of protectionism, encouraging other countries to follow suit. 

2 delay the green transition targets  

Moreover, the new import restrictions on Chinese clean energy products would delay the green transition targets and the expansion of renewables worldwide. 

 3 dip in their earnings 

As China faces slowing growth and rising household debts, many US and europe multinationals  dependent on China’s vast consumer market will see a dip in their earnings.

 4 heavily dependent on China for their exports like Australia and Brazil 

For resource-rich countries such as Australia and Brazil, a slowing Chinese economy would not only hurt their exports in various commodities but also create downward pressures on iron-ore prices.

 For these economies that are heavily dependent on China for their exports, diversifying into other markets is never an easy task.

5 critical raw minerals with China may entail a greater risk  

Similarly, the European Union’s approach to de-risking trade in critical raw minerals with China may entail a greater risk of Beijing tightening its iron grip on the supply chain.

6 Southeast Asia 

While the region is said to benefit from production and investment shifting from China, the dependence on Beijing for technology and investment continues to run high. 

And the region’s prospects of replacing China as the major supplier of components and manufactured goods could dim if Washington imposes stricter rules .

 access to goods from third countries that use components either made in China or by Chinese firms located in these countries.

 7 India

 remains next in line in expecting to benefit from the decoupling dynamics. 

 The reason is that India’s manufacturing continues to be in a catching-up phase despite several initiatives by the government. 

New Delhi faces tough competition in low-end manufacturing from its South and South-East Asian neighbours, and its deep economic entanglements with China remain.

A potential crisis

global investors 

would deeply feel the psychological effects of decoupling. 

 block the appointment of judges to the WTO Appellate Body

What makes this strategy worse is its deliberate distancing from the World Trade Organization (WTO). 

 

Once a flag bearer of WTO rules, Washington continues to block the appointment of judges to the WTO Appellate Body, rendering the adjudicatory process paralysed. 

While a direct collision between the two is unlikely, the intensifying geopolitical rivalry along with the fragmentation of the global economy puts the future of the liberal international order at a high risk. And, it would benefit neither the U.S., China or the rest of the world.

source the hindu