CASE STUDY: CHINESE GOVERNMENT 9
Running head: CASE STUDY: CHINESE GOVERNMENT 1
Case Study: Chinese Government
Student’s Name
Institutional Affiliation
Abstract
The United States and China are among the countries in the global context that have the highest annual revenues due to the countries’ stake in the global share markets. The Chinese government understands the dynamics that are at play when dealing with the United States and has therefore remained keen on the need to introduce policies that are meant to protect China’s interests. According to this research, the Chinese government has adopted strict approaches that include tariffs and unconventional sourcing in a bid to deal with the complications of dealing with a hegemonic superpower. This study notes that while the Chinese government has been able to galvanize some levels of inroads into the global economy. The current measures may end up hurting the economy more than benefiting it in the long-term. This study argues that in the present context, the actions of the Chinese government have contributed to investment challenges and a broader concern around the sustainability of the stock market in the future.
Introduction
The rise of China as a global economic powerhouse has led to an essential challenge to the underlying global hegemonic dominance by the United States primarily on matters about the trade. The underlying problem has contributed to instances of concerns around tense relations between the Chinese government and the United States as the emerging superpower seeks to consolidate her dominance globally. Notably, China is currently the largest trading partner with the United States, having solidified her overall ability to trade with the USA through two-way trade agreements. The agreements have seemed mutually beneficial in the past, until the recent state of economic recession that continues to hit the global economic landscape. In essence, as both of the countries find ways of dealing with results of the recession, there have emerged concerns regarding the future of the Sino-American agreements as both governments introduce measures that are focused on austerity.
Background
The United States and China share significant interests given that they are the dominant economies in the current global setting. The two countries control a majority of the global trade linkages, and this, therefore, means that any underlying conflicts may have a direct implication on the operational dynamics on global trade and the global financial systems. The assertion is because the two countries have had a significant interlink over the years partly because of the high level of the flow of goods. In the end, the ability to keep this relationship in place is a critical part of the overall global trade process (Dikarev, 2017). The underlying concern, in this case, is the fact that strained relationships between the two countries have the potential to also affect other vital areas such as labor relations, global financial capital and the flow of people across the global setting.
The government of China has also come under immense pressure recently due to the difference in approach that has become evident in comparison to the United States. First, the current concern between the two countries stems from the difference in virtues and the social ideologies that the Chinese hold over the Americans. The Chinese government has also shown a keen focus on high national savings rate. The approach that the Chinese government has adopted involves the provision of cheap goods and cheap financing in the process of achieving greater extents of corporation and collaboration (Ainsworth, 2016). In the end, this is seen in the American context as a socialist approach that is uniquely different from the capitalistic view synonymous with the Americans. The resultant concern has been the cataclysmic crisis, which can never be compared to a bubble. The aspect has over time exposed the profligacy synonymous with the American context.
The Key U.S. Issue
One of the most significant concerns that stands out between the United States and China is the underlying trade deficit between the two countries. In the year 2018, the Chinese –U.S. deficit was at $ 419 billion which has been growing over time in a trend that has resulted in immense imbalances. The Chinese government has seemingly used cheap goods and cheap approaches to financing to achieve a higher trade imbalance with the United States. The Chinese government has been on the spot due to the reality that this trade imbalance is s consequence of a strategic attempt by this government to create an unfair trade balance with the United States in a way that would ensure the Chinese economy grows more than the American economy. On the same note, the Chinese government has been accused of the use of using other unconventional means to create an unfair context.
The Chinese government has been keen on capitalizing on the global supply chain context by putting together imported components from other countries and assembling them as Chinese products. The issue with China is perhaps the fact that the government is keen on expanding her influence at the global level. In essence, this is affecting the bilateral relationship with the United States because it is challenging the status core entirely. The emerging trade deficit has, therefore, been assumed to be partly a result of the underhand trade policies adopted by China in recent times.
A recent study notes that the Chinese government’s approach has changed over time due to the apparent feeling of development in the country. Pundits argue that as a consequence of this feeling of progress, China may not feel the need for enhanced relations especially because of the sense of self-sufficiency that seems to be enveloping her global status. For instance, China has the largest source of global domestic labor, which is also overly cheap. The underlying assertion, in this case, is that the government in China may have adopted a strategy that broadly seeks to affirm her unwillingness to compromise due to the underlying assumption of labor sufficiency. Globally, China is a source of cheap labor an aspect that has contributed to the changing scope of labor sourcing from the country (Ferguson, 2019). The majority of American countries still rely on China for labor, and this makes the country stand out as a significant global source of labor an aspect that makes the Chinese government develop a sense of self-reliance even in the process of dealing with countries such as the United States.
The Chinese government seems rather keen on the need to use this cheap labor as a tactic towards developing a greater extent of control global. For this reason, the Chinese government has continued to focus on the promotion of cheap labor as a tool towards attracting more national revenue. The United States on the other hand still struggles with the indefiniteness of the cost of labor, which in essence, seems to be a significant concern for most of the companies that currently operate in the United States. For instance, it has become almost impossible for American based companies to afford both technical and professional labor due to the underlying reality that the cost of labor in the country is overly expensive. The Chinese government has been accused of dishonesty in the approach to the regulation of labor-related outcomes in the country an issue that has also formed the basis for massive labor-related standoffs that the government has been keen to refute. Nonetheless, this is some of the problems that seem to develop the underlying concerns between the United States and China. The underlying reality is that when the labor costs are low, the resultant loss of goods and services tend to be equally low.
The other major concern relates to the issue of tariffs.
In essence, there has been an argument to the effect that the Chinese government has been quick to counter any possible declarations of trade tariffs. For instance, in August of 2018, the United States and China ended up in a complicated situation when China decided to introduce measures that would be aimed at defending her dignity. The decision would seek to ensure that the country has countermeasures in place to ensure that any underlying tariffs by the United States would be met with strict countermeasures. The consequence of this situation was a greater extent of trade tensions that would eventually culminate in the escalation of trade at the global markets. The fact that the United States and China are the main players in the global markets means that any instance of tensions between the two countries may lead to significant pressures in the global markets.
The other major issue that stands out with regards to tariffs relates to the recent decision by China to react to the $200bn 10 percent tariff on Chinese goods. The decision by the United States was a countermeasure to underlying duties by the Chinse government aimed at giving undue influence to Chinese companies over the American Companies especially in relations to the steel and the aluminum industries (BBC, 2019). The recent issues in the Sino-American context represent a significant concern that currently forms the basis for a critical focus on the future of international markets.
One of the most significant concerns in the relationship between the United States and China is the reality that China must continuously seek to stamp her authority in the global context. For instance, in the case of China, the government has almost always acted as a countermeasure to the cases of detrimental American tariffs that have affected continuously trade between the two countries and the global markets (Ferguson & Mansbach, 2019). China would begin the process of increasing the overall tariff levy on the United States especially with regards to agricultural products. The Chinese finance ministry would start the process of introducing tariffs that would have a lasting implication on a variety of agricultural products including Soybeans and beef. The Chine government decision to add these tariffs was a counteraction to the Americans tariff measures. In the last five years, China has also been accused of implementing measures that have a direct implication on the energy sector.
The Chinese government has had underlying tariff related concerns when dealing with the United States. The energy sector is among the areas where the Chinese government continues to implement harsh policy directives against the United States. The tariffs have focused on the liquefied natural gas where the Chinese government has been considering swapping the United States’ liquid gas cargo for other European utility companies. The Tariffs on liquefied natural gas in this context may have lasting implications on the current relationship between the two countries especially given the current demand for natural gas in the United States. The United States and the Chinese government have failed on more than one occasion to agree on the modalities of engagement an issue that will more than likely have lasting implications on the prices of natural gas across the markets.
The underlying reality is that in the last year alone the Chinese government has imposed a higher import tax on American companies. The existing import tax duty on the United States companies may continue to have an underlying implication on the ability by such entities to remain profitable (Tzogopoulos, 2010). The Chinese government seems to be gearing up for a diplomacy concern especially because, in the end, these tariffs are likely to have an underlying implication on the existence of LNG companies in China.
Conclusion
The reality of the current tensed relations between the United States and China is that both countries seem to be following a path towards counter tariff measures, which in the end, may have an underlying implication on the future of the two countries. The paper notes that the Chinese government has introduced unbecoming approaches when dealing with the United States that include trade tariffs, varying virtue-based ideologies, and underhand trading initiatives, which have led to massive balance deficits for the United States. The concerns are at the heart of the retaliatory measures by the United States.
References
- Dikarev. (2017). Sino-American Relations Under Donald Trump: Time of Changes or Continued Struggle for Hegemony? International Affairs, 63(005), 69-85. doi:10.21557/iaf.49755767
Ainsworth, R. T. (2016). Trump & VAT: NAFTA, Trade Barriers & Retaliatory Tariffs. SSRN Electronic Journal. doi:10.2139/ssrn.2919058
Aizhu, C., & DiSavino, S. (2018, August 3). China tariffs on LNG, oil aim at U.S. energy dominance agenda. Retrieved from https://uk.reuters.com/article/us-usa-trade-china-energy/china-tariffs-on-lng-oil-aim-at-u-s-energy-dominance-agenda-idUKKBN1KO27S
BBC. (2018, December 2). US and China agree to suspend new tariffs. Retrieved from https://www.bbc.com/news/world-latin-america-46413196
Ferguson, Y. H., & Mansbach, R. W. (2019). Expanding Chinese influence and China-United States relations. Foreign Policy Issues for America, 45-57. doi:10.4324/9781351186872-4
Tzogopoulos, G. N. (2019). Sino-American relations under Trump. Europe – Against the Tide, 159-168. doi:10.5771/9783845292762-159