The two largest economies, the US and China are flexing their muscles, which could result in a catastrophe, severely upsetting the traditional global trade. A critical relook by the Trump government into a liberalized trade climate of the US was not wholly unexpected. Trump sold ‘I’m for America,’ stronger than any of his recent predecessors and tightening of immigration laws and unsupportive to the US trade policies was to come anyway.
His bold initiatives in imposing tariffs on Chinese Imports and the Chinese retaliation in countermeasures is now a matter of record. The meeting of the two leaders at the G20 meeting in Buenos Aires last week, announcing a three months cap on the imposition of further tariffs, helped calm the nerves a bit. President Xi had even announced opening up of the Chinese market for more farm products imports from the US.
However, the joy is short-lived, in the wake of the arrest of Meng Wanzhou, a top executive of the Chinese Technological giant firm, Huawei at Vancouver airport, for extradition to the US on data theft charges. The move has removed the interim thaw and has precipitated the standoff between China and the US. China has condemned the arrest, calling the US a ‘despicable rogue state.’
Trump has tasted blood, by his bold attack on China, unthinkable any time before, and is unlikely to yield any space for a compromise right now. President Xi could be under pressure to take visible stronger steps against the US. I have personally seen many Chinese companies, manufacturing only for the US are in dire straits and many on the verge of collapse, which might lead to the Chinese striking a compromise to ward of protests back home. The arrest of Meng, it seems, is well timed to scuttle any quick solution at the talks, which Trump may stretch closer to his re-election campaign period to score political mileage.
India is watching closely, as are all other nervous countries around the world. With increased integration and globalization, any sudden upheaval in any part is bound to impact the entire trading system around the world. China is the largest trading partner with India with our $70 Bn. Imports and $16 Bn. exports. Our recent proposal to trade in Rupee- Renminbi was declined by China. In the wake of US pressure on China, we may get more favourable trading terms from China to balance the massive imbalance in our trade. However, India joining the trilateral Indo-Pacific Alliance, which our PM Modi has christened as JAI stands to irritate the Chinese.
We could be the fill-in alternative to the US, particularly in the labour-intensive industries like textile and leather, though our weak infrastructure and increasing wages could be impediments.
But it is now the case of Meng Wanzhou, which is of more significant interest!
Sampath Kumar
Intrépide voix
