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  • Cornerstone Team

Tit...for tat

As the prospects for an all out US-China trade war loom I am reminded of an article written by economist Henry C.K. Liu in the Asia Times. It was published in 2005. Titled "Trade wars can lead to shooting  wars", his concluding section is best read sober...

"US geopolitical hostility toward China will manifest itself first in trade friction, which will lead to a mutually recriminatory trade war between the two major economies that will attract opportunistic trade realignments among the traditional allies of the US.  

"US multinational corporations, unable to steer US domestic politics, will increasingly trade with China through their foreign subsidiaries, leaving the US economy with even less jobs, and a condition that will further exacerbate anti-China popular sentiments that translate into more anti-free-trade policies generally and anti-China policies specifically.

"The resultant global economic depression from a trade war between the world’s two largest economies will in turn heighten further mutual recriminations. An external curb from the US of  Chinese export trade will accelerate a redirection of Chinese growth momentum inwards, increasing Chinese power, including military power, while further encouraging anti-US sentiment in Chinese policy circles.  

This in turn will validate US apprehension of a China threat, increasing the prospect for inevitable armed conflict.

"A war between the US and China can have no winners, particularly on the political front. Even if the US were to prevail militarily through its technological superiority, the political cost of military victory will be so severe that the US as it currently exists will not be recognizable after the conflict and the original geopolitical aim behind the conflict would remain elusive, as the Vietnam War and the Iraq War have demonstrated.  By comparison, the Vietnam and Iraq conflicts, destructive as they have been on US social fabric, are mere minor scrimmages compared to a war with China. 

"US policymakers have an option to make China a friend and partner in a peaceful world for the benefit of all nations. To do so, they must first recognize that the world can operate on the principle of plentitude and that prosperity is not something to be fought over by killing consumers in a world plagued with overcapacity."

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