Russian expert: Sino-US economic interdependence determines that a real trade war cannot take place

Russian State News Agency, Moscow, October 14 - Dmitry Suslov, vice director of the Center for European and International Integration at the Higher School of Economics and an expert at the Valdai Club, told RIA Novosti that both the US and China are trying to avoid a trade war on the eve of negotiations, as both sides are in a state of "economically assured mutual destruction."

The Chinese Ministry of Commerce announced on October 9 that it will implement export controls on a range of products related to medium and heavy rare earth metals starting from November 8. Trump said on October 10 that the US would impose an additional 100% tariff on Chinese goods at the current tariff level starting from November 1 or earlier, explaining that this was due to China's "aggressive stance" in trade. Vice President Vance later said that whether Beijing would launch a new round of trade war against Washington would become clear in the coming weeks.

The expert explained: "The possibility of the Sino-US relationship breaking down in a new trade war still exists, but it is not high. Both sides have already experienced a trade war this spring, and they have concluded that it is impossible to win a trade war. The two countries are in a state of assured mutual economic destruction."

Suslov said that when the trade relationship was tense last time, the US imposed tariffs of 145% on China, and China imposed tariffs of 125% on the US, showing their respective "ability to hurt each other," so both sides were forced to ease the situation, brake and start trade negotiations."

He pointed out: "Now, both sides believe that the meeting between the two sides on October 31 - November 1 during the Asia-Pacific Economic Cooperation (APEC) summit should become, and must become, the end of the trade negotiations, and both want to raise the stakes before that."

Suslov believes that China "decided to once again show its trump card before the negotiations," restricting rare earth exports, demonstrating "its actual monopoly position in the rare earth metal market."

The expert emphasized: "From China's perspective, this is a very important move, which must remind the US that China will not accept any unequal discriminatory agreements. This is really important, because the US, especially the Trump administration, is not used to signing equal trade treaties."

Suslov further pointed out that Beijing's position has broken Washington's usual routine. The US has been accustomed to imposing conditions from a position of strength, and now China is demanding equal transactions, which "makes the US uncomfortable, and this also explains why Trump reacted emotionally to China's actions."

This expert said that, at the same time, the actual positions of both sides are roughly equal, especially with China dominating the rare earth metal market, while the US controls many supply chains and technologies.

He said: "But I ultimately believe that both sides will try to ease the situation in the near future, not develop into a long-term trade war, and the announced restrictions will not take effect, pushing for continued negotiations, even facilitating the summit."

Suslov said that with the experience of the previous trade confrontation, both sides have already realized that they do not want such a situation to happen again.

Original: www.toutiao.com/article/1845927220625419/

Statement: This article represents the views of the author."