The first-world economy, the United States, and the second economy, China (now first to some), by some metrics are at loggerheads. The trade war between the United States and China is currently in its third year, and its resolution is unclear. President Trump has charged that China engages in unfair trade practices, usually devalues its currency to improve its export position, and forces US firms to transfer proprietary technology to Chinese firms that are labeled by the Chinese government as national champions. Moreover, Chinese regulatory commercial practices within the country favor Chinese firms and allow the Chinese enterprises to steal US technology.
Some numbers convey the story. Most recently, starting in July 2008 and until July 2019, the United States has imposed tariffs estimated at $436 billion on Chinese imports. China, on the other hand, has imposed tariffs on an estimated $160 billion worth of imports, matching the US tariff schedule range of 10 to 25 percent.
The US-China trade war is significant and is likely to result in some economic dislocations to both economies. The United States and China are each other’s largest trading partners although Mexico and Canada have recently surpassed China. The US is currently running the largest trade deficit with China, a point that is always mentioned by President Trump. Moreover, the mix of imports and exports is likely to be different. US exports to China are commodity-based, such as soybeans, wood products, oil and gas. Specifically, soybeans are the main products that the United States exports to China, and US farmers are beginning to suffer some of the economic impact related to the restriction of their products to China.
The spillover effect of the US-China trade war is producing a ripple effect throughout the Asian economies, particularly Japan, the Asian Tigers, and India. Furthermore, this is beginning to produce new realignments in trade relations between Japan and its Asian trading partners, such as the Asian Tigers. The overall result is producing some economic benefits for the Japanese economy, and China and Japan are likely to get closer in terms of their trade and direct foreign investment links.
Japan, the third-largest global economy, has significant trade, economic, and investment links with both the US and China. These economic linkages are less fractious than the one that is currently exhibited by President Trump and China. Japanese firms, such as Toyota, Panasonic, and others have made inroads into the Chinese markets equally at the official level. The economic links between Japan and China have grown and are currently estimated to account for $180 billion in 2018. Japanese brands are popular with Chinese consumers, and business linkages between Japanese and Chinese enterprises will continue to grow for the foreseeable future.
Japanese advertising agencies and marketing firms are working hard to understand the nuances of the Chinese market and learn about local consumption tastes and habits. Regardless of the success of Chinese firms in Japan, there are challenges related to old, historical animosities. These animosities between China and Japan are deep and continue to manifest themselves, particularly regarding the claims by both countries as to the ownership of Senkaku Island. Japan must learn how to position itself to be able to deal with the American Eagle and the Chinese Dragon given its need for extensive economic links with China and geopolitical dependence on the United States.
India, a leading emerging economy of Asia, and equally as populous as China, faces economic challenges that are likely to be daunting. Weak domestic consumption is likely to slow down the GDP growth rate of India, which is forecast to come down from 5.8 percent to an estimated 4.9 percent. There is a decline in manufacturing output, which is among the largest to decline within the last two decades. Additionally, there is lower growth in the rural, agricultural sector, where wages are stagnant and consumer spending is weak. The government’s attempt to stimulate the domestic economy is, at best, tentative and will not by itself revive the GDP growth. In addition to the weakness of the rural, agricultural sector, other sectors, such as the auto production sector, are also weakening. India still suffers from significant bureaucratic hurdles, and job creation will continue to suffer.
India’s economic options relate to its two-track global economic linkages. In the high-tech, global service sector that relies on information technology, India prefers open global economic links, so it can continue to grow and provide employment for its highly-skilled engineers and high-tech-based enterprises. However, in the manufacturing and agricultural sectors, which are likely to suffer from global competition, India prefers a protected status to help the agricultural sector that is less sufficient, less entrepreneurial, and less competitive. Caught between these two options, India must also learn how to maneuver in its global trade linkages.
Currently, India has a trade deficit in its balance of trade with China approaching $60 billion. Although India and China are members of the ASEAN pact, they do not have a well-developed bilateral negotiating framework to resolve the Indian trade deficit. India and China have been in constant discussions about trade adjustments that could safeguard future economic relations between the two countries but allow India to reduce its deficit. Economic issues related to state-owned enterprises, labor laws, and environmental concerns are likely to continue to be at the center of Indian-Chinese economic trade, investments, and other links.
Our academic terms should, at the time of this publication, be close to Spring Break, a time traditionally associated with relaxation and renewal of our scholarly pursuits. Whether we choose to stay cloistered in our ivy-clad libraries or to bask on a beach in a tropical clime, we may take the opportunity to review current works in progress or to develop newer ideas. The Journal of Asia-Pacific Business is dedicated to supporting both of these endeavors. To that end, we offer the following four articles.
Our first article is “Unveiling Internationalization Decision-Making of Burmese Managers: A Strategic Cognition Perspective,” by Amonrat Thoumrungroje of Assumption University and Olimpia C. Racela of Mahidol University International College. The authors used cognitive mapping to examine decision-making bias in Myanmar’s international market entry strategy. Our second offering, “Employer Branding Aids in Enhancing Employee Attraction and Retention,” by Asad Ahmad of Jamia Hamdard, Mohammed Naved Khan of Aligarh Muslim University, and Asadul Haque of AMU Kishanganj Centre examines different social and professional factors affecting human resources.
The third article, “Building a Conceptual Framework of Corporate Social Responsibility: An Experience of Qualitative Approach in Vietnam,” by An Khoa Truong Nguyen and Khuong Mai Ngoc, examines different social and professional factors affecting human resources. Our final offering is, “'New Protectionism' in ASEAN,” by Evelyn S. Devadason of University of Malaya, which explores “hidden” procedural barriers in ASEAN non-tariff measures.
While it may seem repetitious that we thank our readers, reviewers, and submitters at the end of every editorial, our gratitude is most heartfelt. We appreciate your efforts in our scholarly endeavor and look forward to communicating with you. Thank you!
Correction Statement
This article has been republished with minor changes. These changes do not impact the academic content of the article.