The US-China trade war: dominance of trade or technology?

ABSTRACT

The primary goal of this paper is to provide insight into the causes that led to the current U.S. – China trade war. It discusses the importance of the ‘Belt and Road Initiative’ and the ‘Made in China 2025’ programs to Beijing’s realization of the ‘Chinese dream’, which refers to the avoidance of the middle-income trap and the accomplishment of the nation’s great rejuvenation. This paper points out the leading roles played by the state-owned enterprises in the above two programs and reviews their destabilizing effects on the Chinese society. This paper also describes the measures taken by the U.S. to counter China’s efforts to become the new superpower, thereby preserving its preeminent position in the world. In addition, the paper discusses the steps taken by Beijing to try to satisfy Washington’s demand. The authors posit that the trade war is not, in fact, about trade but about technological dominance, and that both sides might fall into ‘Thucydides’s Trap,’ the pattern of large-scale conflict when a rising power challenges a dominant one. According to the events that have transpired thus far, it appears our current trajectory is towards conflict and a cold war

KEYWORDS:

• Belt and road initiative
• Chinese dream
• competitive neutrality
• made in China 2025
• middle-income trap
• state-owned enterprise
• Thucydides’s trap

JEL CLASSIFICATION:

• F18
• N40

Disclosure statement

No potential conflict of interest was reported by the authors.