US won’t win trade war with China
23 August 2020
The biggest challenge facing the US Presidential candidates will be stable relations with China, as the second largest economy is more likely to win an all-out trade war if tensions rise, warned deVere Group CEO Nigel Green.
Green said: “Managing China and maintaining America’s fragile economic superiority over its major trade and commerce rival will be the defining foreign policy issue of this presidential election.
“Both the Democratic and the Republican candidates seemingly share a belief that ‘being tough’ on China – or whoever can knock China the most effectively- is going to do well with the electorate. Both Biden and Trump will up the China-bashing between now and November 3.”
While this bullish policy may find favour with voters, Green says the US should take this opportunity to secure “stable normalised relations.” He warned that China would have the upper hand if the two nations became embroiled in an all-out trade war.
“America’s trade deficit with China is frequently over-estimated and barely gives it the upper hand. China’s central bank– unlike the U.S. Federal Reserve – is not independent and can be made to cut interest rates to bolster domestic demand and devalue the currency to make Chinese exports even more competitive.
“In addition, China is better positioned than America – which has a record budget deficit – to help out industries hit hard by a trade war.”
Green says that whoever wins the election must “seize the momentum” of their win and seek better relations with China.
He added: “Cooperation will benefit both nations by helping to boost global economic growth, encourage investment, secure jobs, keep prices down for consumers, reduce unfair or illegal economic, commercial and technological practices, reduce poverty and environmental problems, and contribute to stopping human-rights abuses and military interventions.”
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