A war between countries, either a trade war or a militant war, affects all the infrastructure of the countries involved in it. The people living in those countries suffer a lot in the form of Poverty, illiteracy, bankruptcy and underdevelopment. The detrimental impacts of a militant war and a trade war can be seen in the countries that had fought earlier abominably, however some of them have developed themselves. Similarly, a trade war also leaves its equivalent effects on the economy of the country in tussle.
The main discussion is about what impact the US-China trade war has been emerging on both the countries themselves, as well as the global economy. Both the countries have a substantial rate of GDP as well as economic development.
China is the fastest growing major economy in the world right now, having GDP of $14.1 trillion and exports of $193.49 billion. It is the trade epicenter of Asia, having its overseas trade market in neighboring countries like Pakistan, Nepal, India, Myanmar and some countries in Middle East. These countries have trade agreements with China, 90% of the Chinese exports are accepted by these trade partners. So how actually a trade war of China and US affect the global economy, the answer lies in the trading allies and their monetary relations with China.
To understand the actual reason behind the trade war, we must figure out the ambition behind making such conflicts. The Oil supplies from Middle East are the main Interest of China and US equally. Every developed country holds some prodigious capabilities to create hurdle for their adversaries. These hurdles can be of any type, like economic sanctions, change in economic policies and foreign policies or a tiny thing like a hyrecar coupon code etc.
The foremost trade partner of China is Pakistan. Both the countries have strong relations in means of trade and finance. Pakistan seeks great opportunities having strong relations with China. Both the countries exchange a big number of exports and have favorable foreign policies for each other. CPEC (China-Pak Economic Corridor) is a 1677 miles long trade route allowing both the countries to have a more money-spinning exchange.
CPEC is a substitute route constructed by China in Pakistan. Due to hurdles created by US for China to obstruct its sea routes and reduce the Oil supplies, China planned for some safe trade routes for easy carriage and Pakistan was an advantageous option. CPEC has a major portion in Pakistan and a small portion in China. The transportation network of roads and railways connecting the city of Kashgar, located in the Xinjiang province of China, to the China-Pakistan Border is the part of CPEC in China.
Identically China has several trade and development agreements with its other neighbors, Exporting goods to its moneymaking regular overseas markets. Having such overriding bonding with countries in Asia and in fact, with countries in other continents, any big hurdle to China can cause harm to countries in relation with it.
United States have only few competitors against it and China is one of them. U.S has been imposing sanctions on Chinese exports for many years in order to reduce its economic growth. Although U.S tariff’s haven’t cause direct damage to China’s Economy, China is vulnerable to US controls on export of goods such as semi-conductors and fresh levies could more of an impact. In the U.S, there are warnings of a cyclical downturn and fears that Chinese retaliatory tariffs could squeeze some sectors.
American president Donald Trump had declared in his campaign to fix China’s “long time abuse of the broken international system and unfair practices.” Mr. Trump set into motion 25% tariffs on more than 800 Chinese imports including aircraft engines, industrial machinery and parts of electronics. Now, China hits back with tariffs of its own on more than 500 U.S made goods, some of which target areas of the country that voted heavily for Mr. Trump.
The U.S. trade deficit with China was $419 billion in 2018. The trade deficit exists because U.S. exports to China were only $120 billion while imports from China were $540 billion.
Possibly the U.S and China will change their fiscal and economic policies for their crediting countries and some other sanctions in order to gain revenue and get maximized interest. It is definite and many countries will face problems getting loans on higher interest rate than before. In addition, there will be reduction in US and China imports from other countries that will affect their economy directly as well as a number of projects signed by China and U.S with other countries will be affected. Certain changes will take place, which might be unfavorable for partner countries.
Therefore, keeping in mind these crucial trade relations of both the countries having influence over multiple continents, definitely the trade war will leave its impact on global economy and many countries will suffer.