US v China: trade war?

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Have we just witnessed the start of a US v China trade war?

Some analysts think so.

Investigation

The US has long suspected the Chinese of doing little, and perhaps even encouraging, the theft of intellectual property rights (IPR). And it’s estimated to cost the US economy £470bn a year.

But now Trump is acting.

He’s launched an investigation into Chinese trade practices, including IPR policies.

Reaction

China’s government has announced that it will increase IPR protection. However, it has “serious concerns” with the investigation, and they’ve already warned that if Trump decides to penalise them through tariffs, China will “not sit idle.

Make peace not war

One leading economist thinks that the investigation is really about entering a dialogue on trade practices, in order to create a fairer trading relationship. For instance, companies have to give authorities their technology in order to do business in China which can then be easily stolen.

There’s also North Korea to consider: America needs China if it has any hope of disarming the pariah state.

The crunch

We know IPR infractions will easily be found.

The real investigation for the US is deciding whether to risk a trade war, and if so, what measures to take.

But wait

China thinks there can be “no winner” in a trade war.

And maybe they’re right: for the past 15 years, whilst Chinese imports to the US have gone up a factor of 3.5, US exports to China have risen by 6.

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