Chinese ask if their country is ready for trade war

File photo of containers being loaded onto shipping vessels at the Port of Long Beach in Long Beach, California.
File photo of containers being loaded onto shipping vessels at the Port of Long Beach in Long Beach, California.PHOTO: AFP

BEIJING • The Chinese leader, wearing a dark Mao suit, and the American president, in a black tuxedo, stood side by side with arms aloft at the Kennedy Centre. Deng Xiaoping and Jimmy Carter smiled broadly as the orchestra played Getting To Know You, signalling the dawn of a new era of friendship and cooperation between their two nations.

Over the next 40 years, China and the United States built the most important economic relationship in the world and worked together on issues such as regional security, counter-terrorism and climate change. Now, faster than many in either nation expected, that has all changed.

Yesterday, the US began taxing US$200 billion (S$273 billion) worth of imports from China, the biggest round of tariffs to take effect yet in an escalating trade war. US President Donald Trump says the measures are necessary to fight an economic model that requires American firms to hand over technology in exchange for market access and provides state subsidies to Chinese competitors.

As relations have deteriorated in recent months, many Chinese are asking if their country is really prepared to take on the world's most powerful nation.

China has abruptly cancelled not only trade talks that were planned this week in Washington but also military-to-military talks scheduled to begin today. The latter move was made to protest against US sanctions imposed last week on a Chinese military department for buying warplanes and missile equipment from Russia.

As the acrimony and rivalry with the US have intensified, the immediate worry in Beijing is how the Chinese public, accustomed to a fast-expanding economy, will handle the trade war, and what impact it might have on the ruling Communist Party's overriding concern, domestic stability.

The government has sought to project confidence.


"Maybe the growth rate will slow 1 per cent. We can accept it. That's not terrible for us," said Mr Hu Xijin, editor-in-chief of The Global Times, a state-run newspaper. He added that Washington would soon realise that its mobile phone and auto manufacturers could not survive without Chinese customers.

"As long as our market is expanding economically and growing, China will win the trade war," he said.

But many others are worried, and some have urged the Chinese leadership to seize the moment and shift the economy even further towards open markets and private enterprise rather than allowing an inefficient state sector to dig in.

"A closed approach will lead to a decline in the rate of national competitiveness," wrote Mr Yan Xuetong, dean of the Institute of International Relations at Tsinghua University, in a recent paper. He warned that China risked returning to the stagnation it suffered in isolation during the Mao Zedong era.

Other Chinese are arguing that the spike in hostility from the US could have been avoided if Chinese President Xi Jinping had continued the policy of "hiding strength, biding time" followed by his predecessors and originally set by Deng.

Mr Xi instead has flaunted two ambitious programmes: the global infrastructure plan known as the Belt and Road Initiative, and the effort to dominate advanced industries known as Made in China 2025, both of which have drawn criticism from the Trump administration.

"The same things can be done without such arrogance," said Ms Yun Sun, an analyst at the Stimson Centre, a think-tank in Washington. "I believe the Chinese policy community does wish to see more actions and more assertiveness, but Xi went too far."

Dr Teng Jianqun, director of American studies at the China Institute for International Studies, said the government needed to accept the new reality and tell the Chinese public that the coming struggle could be the beginning of a long fight for the country's survival as a great power.

"We should let our people fully know that this trade war is not a short-term contest," he said, "but a contest that will determine the future of the Chinese nation."


A version of this article appeared in the print edition of The Straits Times on September 25, 2018, with the headline 'Chinese ask if their country is ready for trade war'. Subscribe