Discussing US China Relations: Beyond the Trade War

Since its commencement at the start of 2018, the US-China trade war has landed immense impact on the economy worldwide. Our first panel explores the evolution of US-China relations behind the shadow of the trade war, a year after its initial declaration.

Mr. George Magnus remarked that China has experienced tremendous change—from being simply a consumer of western goods to a formidable supplier of low and mid-priced goods today, in competition with the West. Having undergone structural innovations in its economy and governmental system, a rising China is no longer a “responsible stakeholder,” but rather a major player and growing challenger from a concerned US perspective. However, due to the highly integrated production chains of both countries in the global system, which are becoming increasingly impossible to separate, as well as close cooperation in finance, education, technology, and scientific research among other sectors, US-China relations will not evolve into the Cold War relationship like that of the US with the former Soviet Union. If China can resolve the various segments of controversy that the West holds against its rise—especially towards the re-establishment of trust in business cooperation—there will be much to gain for China. After all, the success of China's economy is intimately related to its implementation of the ‘reform and opening up’ policy, through which much rapport with the West was built.

Professor Hongcai Xu expressed that the Sino-US trade war is detrimental for bilateral interests. As the market works in two directions, any implemented policy will induce consequences on both sides. For example, the United States’ import restriction of sensitive technologies from Chinese firms is not only damaging for the Chinese tech sector—supply of electronic components to meet US demands would likely also suffer to a significant degree. Professor Xu argues that China and the United States should conduct in-depth negotiations, and together, seek a path of mutual benefit.

Professor Fan Cui pointed out that in the future, Sino-US relations will gradually move towards horizontal relations—with the market tending to horizontal trade and investment. This means that a bigger proportion of exported goods will meet demand from a wide range of industries rather than be traded vertically inside an industry. These developments would lower the risk of displacing domestic competition and inciting resentment. Nevertheless, trade within industries may still lead to more trade disputes and friction. Professor Cui proposes that countries should actively support the reform of the World Trade Organization and seek compliance with trade regulations. The professor further suggests China and the United States should actively engage in negotiations on bilateral investment agreements, enhance trade transparency, and strengthen cooperation in third-party markets.

mr George Magnus

George Magnus is an independent economist and commentator, Associate at the China Centre, Oxford University, and researcher at the School of Oriental and African Studies, University of London. He also holds advisory roles to several asset management companies.

Mr Magnus is a regular contributor to the Financial Times, Times and Nikkei Asian Review comment pages, and appears periodically on BBC TV and radio, Bloomberg TV and other outlets.

Earlier in his career, Mr. Magnus was senior economic advisor to UBS Investment Bank, and before that, Chief Economist at the firm. He also held positions as Chief Economist at S.G. Warburg, Chief International Economist at Chase Securities and Head of Economics for Europe, the Middle East and Africa at Bank of America. Within this period, he also served for several years as the Chair of the Investment Committee of the Trustee Board of UBS(UK) pension and life assurance fund.

Mr Magnus is widely acknowledged for having predicted a ‘Minsky Moment’ in 2007 in the onset of the global financial crisis—that the US-subprime mortgage crisis would trigger a global recession.

He is also the author of several books including, most recently, his 2018 publication ‘Red Flags: Xi’s China in Jeopardy’ which discusses Four Traps that face China (debt, currency, demography, and middle income) and the challenges of the Belt and Road Initiative.

professor Xu hongcai

Professor Xu Hongcai, a renowned economist and professor in finance, currently serves as the Deputy Chief Economist at the China Center for International Economic Exchanges (CCIEE), adjunct professor at China Capital University of Economics and Business and Independent Non-Executive Director of the China Everbright Bank Company Limited. Prof. Xu obtained his Master degree in Philosophy from the Renmin University of China in 1993, Ph.D in Economics from the Chinese Academy of Social Sciences in 1996.

Over the course of his career, he has published numerous books including China’s and Global economic governance in the time of change, China's Economy in the context of globalization, Futures and other Derivatives, China’s Financial Strategies, Chinese Multilayer Market, Investment Banking, and Encyclopedia of Investment Fund, etc.

professor cui fan

Professor in International Trade of the University of International Business and Economics (UIBE), Beijing, China; Director of Research, China Society for WTO Studies; Senior Counsel, Beijing office of Dentons law firm; Advisor, advisory committee on Global Value Chains, Ministry of Commerce, China. Dr. Cui holds a PhD in Economics and an LLM in International Commercial Law, both from the London School of Economics and Political Science (LSE) of the UK.