Economists examine the intricacies of U.S.-China trade relations

By AASHNA SUNDESHA | October 25, 2018

The International Studies Department hosted “China-U.S. Trade War Symposium” on Wednesday as part of its Aronson Center for International Studies Speaker Series. In collaboration with JHU Global China Connection, the series aimed to increase understanding about the economic relationship between China and the U.S. 

The talk was divided into two parts, featuring Director of the Center for Financial Economics Robert Barbera and Director of the School of Advanced International Studies (SAIS) China Studies Andrew Mertha.

Barbera began his address by giving the audience a brief run-down on the U.S.’ current demands from China. He discussed the history of trade and the increase in trade due to the increase in globalization, leading to higher exports and imports between 1997 to 2007.

“In the Great Recession, things went sideways for trade globally and sideways for trade in the U.S.,” he said. “Trade with China continued to deteriorate, and so we now do run a very large bilateral trade deficit.”

Freshmen Riya Jain found that while parts of the talk were high-level, it was helpful and interesting overall.

“In general, some of the things they talk about helped me reenvision the way that I perceived a country like China or the United States’ strategy towards China,” Jain said.

Barbera went on to explain why it would be naïve to assume that the U.S. needs to eliminate the trade deficit with China. He explained that economists don’t look at bilateral trade deficit but instead look at how negotiations can affect many countries.

He also explained the specific nature of U.S.-China Trade, using bonds as an example to illustrate a situation where the U.S. is in a deficit.

“China is a giant buyer of U.S. treasury bonds”, he said. “The fact that we have a big deficit with China means China is a big buyer of our debt.”

Barbera acknowledged Chinese officials’ frustration with U.S. administration officials on the issue of meeting their demands, such as increased tariffs.

He also believes that their demands cannot be met, however, because they are internally contradictory.

“China is facing some elemental problems,” he said. “I didn’t want to let the U.S. off the hook, but China faces some big problems.”

Barbera said that Deng Xiaoping’s initiative to put China on the road to capitalism allowed many people to accumulate wealth. According to Barbera, it was the greatest economic miracle in the history of data.

Concluding his talk, Barbera expressed that China needs to modify its production and trade practices, but he also acknowledged the difficulty in following through with this change.

Carrying this idea forward, the conversation shifted to Mertha explaining the general structure of Chinese politics and its structure.

Mertha expressed his opinion on the situation of trade between U.S. and China. He explained that even if the trade war were to be resolved, the outcome would be more problematic for both sides, but specifically for the U.S.

“There will be some modest increases in some manufacturing jobs and a loss at the cost of a loss of many more jobs,” he said. “There will be negative effects in export sectors like agriculture.”

He went on to address common misconceptions about the Chinese government, stating that the image people usually have is that of Beijing, of the popular leadership or of the national level government. He argued that there is a much more diverse viewpoint of how to government functions.

“China might have one capital, might have one national level, but it has three dozen provinces; it has several hundred prefectures; it has several thousand counties and county level units,” he said.

He identified several ways governing can become complicated because of this diverse landscape. Mertha noted that coordination is a huge problem for the functioning of the country.

A question and answer session and a reception followed the event. 

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