Question

Question 3. Impact on China

   (a) Why is China under pressure to make a trade deal with the US?
In your answer Identify and explain two negative impacts the US tariffs have had on the Chinese economy.

(b) Do you believe China will make a trade deal or fight back / retaliate against the US, or is the US under pressure to make a deal?
Briefly explain 2 reasons for your answer.

Answer 1

3.

A.

China is under pressure to make a trade deal, because China is facing the negative impact due to the trade ban applied by the USA on Chinese goods. The first negative impact is decrease in exports and it is creating unrest in Chinese economy, because China is an exporting nation. It will create unemployment in China if its manufacturers do not find other nations to buy their goods. The second negative impact is the message given by the trade ban on Chinese goods that will other nations to do the same and ask China to renegotiate the trade deals. It means that other nations will take undue benefits of the position of China and China's manufacturing economy will come under real pressure.  Hence, it will make China to renegotiate the deal with USA and normalize the trade.

B.

In the given scenario, China will retaliate and it will apply the similar ban on the American goods. There are two reasons to do it. The first reason is that it gives a message that China has its own domestic market of more than 1 billion people and other exporting nations like USA also depends upon china for their export based income. Besides, China can absorb its production in its domestic market as well. The second reason is that China cannot be tamed by any other nations in the world in present time. China needs others and others equally need China too. So, USA should respect China and its past trade deals.

USA is not under pressure to do the deal under the Trump administration, as Donald Trump wants to make America great again and he is trying to renegotiate all the past deals to benefit the US economy.  It has started with a ban on Chinese products and now they cannot move back without renegotiation.