Much of today’s political and economic debate is centered around China. In America, president Donald Trump babbles of China’s economic policies, and hopes to curb them through a trade war. On the other hand, Europe is rapidly opening up to Chinese investment: in 2016, China invested $40bn in the region— double that of 2015. Talk of China’s booming trade and investments is at a high point, as Western citizens come to regard the 21st century as the “Chinese century”.
Yet China has always, throughout history, been a world economic power. In the year 1500 A.D. it accounted for around 25% of the world economy, more than any country in the world; in the year 1900 this figure was 11%, second only to the USA, and today it’s at 17%—practically on par with America. But in past centuries China had few trading partners—meaning its economic influence was really only felt in those countries. Today, however, through the world’s globalized nature, China’s influence—permeated through its products—resounds in every corner of the world.
Globalization has allowed China to export its products to practically all world markets. Thanks to the economic development of today’s countries which results in overwhelming demand for new goods, Chinese products spread faster and in larger quantities than ever before. A French consumer nearly 5000 miles away from China will feel the impact of Chinese production cutbacks, as the price of everything from TV’s, toys and everyday utensils will skyrocket; in 1500 A.D. there were no such consequences: the majority of everyday products where furnished by local industries, protected by heavy state tariffs. Globalization has allowed China to access a wide range of markets around the world, contributing immensely to its economic prowess.
China’s usage of its powerful commercial capacities as a political tool is worrying. In their recent article concerning China, The Economist reports of Chinese meddling in European affairs: in 2017, Greece halted the European Union from criticizing China’s human rights record at a UN forum, perhaps due to the overwhelming amount of capital China invested in the country. Academics worry of similar consequences with other European countries, like Moldova and the Czech Republic, who both welcome large Chinese investment and host arrays of Chinese investors. The same can be said for Chinese investment in Central, South Asia and the Middle East: Chinese investors pay little attention to human rights records, meaning they are much more likely to invest their capital in those respective countries compared to their European or American counterparts. That same capital can be used to buy strategic political and military allies. Trade and economic co-operation between China, Europe and the rest of Asia can be a great boon to all, yet they must be careful not to aid China too much in its power struggles.
America must not, however, wage trade wars on China. Despite President Trump’s claims of bolstering American industry and creating more jobs, the figures simply don’t add up: according to some estimates by Trade Partnership Worldwide, an economics government consulting firm, tariffs on Chinese steel and aluminium will result in the gain of around 26,000 jobs but the loss of more than 400,000. The American steel industry might benefit from tariffs, but costs of steel and aluminium will rise exponentially, hurting other industries (e.g. car industry). To make matters worse, Trump has not only put tariffs on Chinese metal but also on European, Canadian and Mexican steel and aluminium. This means American companies will have no choice but to turn to American industry which, on its own, cannot provide the supply of metal needed (hence the job loss). If the trade war continues, China, the USA, Europe and the rest of the world will entangle themselves in a bloody tariff melee, resulting in overwhelming loses for everyone—America included.
The world must not provoke China through trade wars, nor shun it through protectionism. Instead, it must favor economic co-operation all while making sure it does not strengthen too much the world’s second largest economy’s interests.