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Conference Paper: US - China Trade Review-Is China’s Tail on Fire?

Updated: Dec 29, 2023

By Shri M R Sivaraman IAS (Retd.), Former ED, IMF & Revenue Secretary, GoI


CSF-SICCSL RRU-NMF Two-Day Conference on

Xi Jinping’s Third Term: Implications for

Global Order & India

Shri M R Sivaraman IAS, (Retd) belongs to the 1962 batch of the IAS of the Madhya Pradesh Cadre. Mr. Sivaraman was the Revenue Secretary of India. He introduced the PAN in income tax and started the computerisation of the functioning of the Central Excise and Customs of India. Mr. Sivaraman served as ED IMF in Washington DC with the rank of Ambassador to the US during 1996-1999. Sivaraman pushed in the IMF the case of the emergent market economies to use PPP based GDP for determining Quotas and Voting strength which ultimately the IMF adopted. Sivaraman was also appointed by the UN to be one of the first Advisors to the newly formed UN Security Council Committee on counter-terrorism in which role he helped the UNSC to prepare the member countries to implement the UN resolution 1373 passed after the 9/11 attack.


Abstract


US China trade relations can be divided into four phases. The first phase started with Captain Greene sailing his ship Empress of China into Canton in 1784 with a cargo of lead, animal skins, camel cloth, cotton and even pepper. He traded it for Chinese tea, cotton, tableware, silk and spice. This smooth trade ran into rough weather when the British merchants who were also trading with China started carrying Opium into China leading to opium wars between 1840- 42 and trade treaties humiliating to China. China granted trading rights to the US in the Treaty of Wanghia. The second phase started with the beginning of the Korean war in 1950 and they broke off all relations. This was a blank period. In 1972 the US under President Nixon and Henry Kissinger as his advisor made desperate but successful attempts to meet with President Mao Se Tung. After protracted negotiations the treaty of Shanghai was signed, establishing trading relationships between the true countries. From 1972 till now it has two phases. The phase one is continuing with the two -way US China trade reaching 770 billion dollars in Dec 2022 with China ruling the way having continuously increasing trade surplus with the USA. In 2022 the Chinese had a trade surplus of 382 billion dollars. With the composition of US exports to China were agricultural products, other raw materials, while China exported everything the ordinary American wanted cheap besides electronic, mechanical and chemical products. Manufacturing activities in the US declined and they shifted to China. The US deindustrialised and shifted to being a services sector economy. The fourth phase or the second part of the current phase is the era described as decoupling with China by the US and Europe.The latter having realised that China is rising to be a superpower and rapidly finding paths to occupy spaces left by the US woke up to the fact that their economies are virtually inextricably dependent on China. This truth hit hard when the world was in the grip of the Covid pandemic with serious disruptions in the supply chains of components and parts, most of them arising due to problems internal to China from where the manufactures came in. Trump enthusiastically decided to impose tariffs on billions of dollars’ worth of goods being imported into the US. The Chinese trade surplus kept on increasing. The recent flurry of visits by US government, France, and the EU dignitaries to Beijing is an indication of their anxiety to please and assure Beijing that they are not decoupling from China and if at all any they are only safeguarding their national security. Mr. Biden has enforced sanctions on the export of hi-tech products and technology to China which no doubt has hurt. China has won a war with the US and the West without firing a shot using extraordinary trade supremacy over them.


Read the full Conference paper at this link:

US China Trade Review
.pdf
Download PDF • 613KB

(Shri M R Sivaraman IAS (Retd) is a Distinguished Member at C3S. The views expressed by the author do not reflect the views of C3S.)

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