‘Mattwing language from Washington and Beijing is for the stage, eventually they will have to negotiate’

After a week of escalation in the trade war between the United States and China, the consequences in both countries do not only show the stock markets. A soy farmer in Kentucky, who says he faithfully votes for Trump, suffers from the Chinese counter -measures loss on its harvest. China is more than the largest buyer of American soybeans. To bridge a long -term trade war, he has to take out loans, like many colleagues, he registers An opinion piece On the website The Free Press. « In fact, we now have to pay to do our work. »

Twelve thousand kilometers away, in the East Chinese city of Yiwu, similar concerns. Jiang Jiayu produces Christmas decorations, of which she exports a significant part to the US. Normally the orders would flow in now, but this year they will not be done. She is considering stopping if something does not change quickly, she tells AP news agency. « I’m not going to put money on it to stay in this market. »

But a quick end to the trade war does not seem to be in sight yet. Since last week, Washington stacked one import tax on the other: 34 percent, 50 percent, 20 percent, 21 percent, added 125 percent. The new taxes are on top of the 20 percent that the US previously put on Chinese products. And China always reacted with the same counter measure, so that 125 percent input tax has to be paid on the import of American products in China since Friday. The world’s largest two economies are on a collision course and militant rhetoric dominates on both sides.

Yet Jue Wang, who teaches at Leiden University about the political economy of China, is cautiously optimistic that both parties will talk to each other. « I don’t think the taxes go up further, because they are already too high, » she says. « In the end, negotiations have to be made, because this gets out of hand. »

As far as is known, there is no contact between China and the US. How do you see those negotiations come about?

« Both governments understand that the prosperity of producers and traders are being affected, negotiations are the only way out. I can’t say who will take the first step, but ultimately that does not matter. It is now so high that the impact is no longer to quantify. What does 145 percent actually mean? What does that do with your bbp? The numbers? To solve this.

„Ze zullen nu op zoek zijn naar de juiste mensen om de boodschap over te brengen. Dat is hoe het altijd werkt als staten onderlinge problemen willen oplossen. Zo hebben China en de VS het contact hersteld in 1972 (toen de Amerikaanse president Richard Nixon naar China reisde voor een bezoek dat buitenlandminister Henry Kissinger in het geheim had voorbereid). Ik weet niet precies wie dat nu doen voor China. Waarschijnlijk dezelfde of een vergelijkbare groep mensen als die de onderhandelingen met de VS did after the first round of the trade war. « 

This weekend it became clear that the American taxes do not apply to electronics for the time being, such as iPhones. Is that an olive branch?

« No, that is well -understood self -interest. They cannot make some important products themselves. And some sectors have a lot of influence within the US government, including the industry you call. »

Would China, with its faltering economy, actually be able to handle a long -term trade war? Is there the risk that this will lead to social unrest?

« China is able to control the situation for some time. The government has a tradition of support to exporters and producers and has instruments to support consumers.

„Kan China het overleven? Ja. Kan Amerika het overleven? Ja. Maar op de lange duur is het natuurlijk niet wenselijk: als dit voortduurt, zullen meer mensen hun werk verliezen, meer fabrieken en boerenbedrijven zullen sluiten. En dat terwijl de Chinese economie al zoveel problemen kent. Maar mensen zullen niet in armoede en hongersnood vervallen, of de straat op gaan. De export naar Amerika is een deel van China’s bbp (ongeveer 3 procent), maar het is niet alles. Er His other markets for Chinese producers.

China has been trying to stir up domestic consumption for a long time to become less dependent on exports. Is this crisis an extra catalyst for that?

« In recent years, China has tried to promote domestic consumption, but not as a replacement for exports. Of course it wants export to grow, and that growth now slows down- due to rising production and wage costs and through the trade war.

« The Chinese government can fuel consumption with incentive measures and support packages, but if you want people to save less and spend more, you have to give them trust. Public services must be so good that people put less money aside for education, health care or retirement. I think this situation will have the government put that even more emphasis on domestic spending, but » « 

Do you think China sees the disturbed trade relationship with the US as an opportunity to improve the economic relationship with Europe?

“China has always strived for a strong trade relationship with Europe, apart from what happens to the US. It is not a simple triangular relationship. The EU has its own concerns about China, such as safety, the fear of dumping cheap goods, or the fear of ironing the US too much against the hair. Thinking what for trade relationships they wish with China. « 

What could be on the table with a negotiation with the US?

« First of all, both sides must calm down. Levensings of 145 percent are shocking – it will be hollow numbers. You could also say: 2,000 percent, but it makes no sense: people simply do not go any more trade. So as the first step they have to bring those taxes back to levels that can be negotiated really. For example, they will demand lines that the Americans weaken their limitations on China’s technological development.

The US and China have both used a lot of nationalist rhetoric: China cannot be harassed, America cannot be squeezed … How do you make the turn to a conversation?

« They serve their home crowd. That is a political game to show that they are strong leaders, the right party. But the Chinese government is also good at combining political rhetoric and propaganda with practical solutions. It is not difficult to say: we have to protect our exporters and our companies. We are prepared to negotiate, if the VS do not.”

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