China’s trade goals increase Trump’s policies

April 18

13:56 2017

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Matthew Li | Staff Writer

President Donald Trump’s isolationist policies are advantageous for a China on the rise. By minimizing U.S. international influence, Trump is leaving open an economic power void that could easily be filled by any other country.

Ever since Trump took office, Chinese President Xi Jing Ping began to paint China as a globally oriented community. Chinese media is underlining China’s role in the global scene and portraying itself as a world power capable of spreading its influence to all corners of the world.

The way that things are happening now, China is antithetical to America. While Trump prepares to cut funds for the Environmental Protection Agency, President Xi vigorously defended the Paris Agreement on curbing greenhouse gas emissions. When Trump left the Trans-Pacific Partnership, China began to propose its own trade organization that would allow it to retain power in the Pacific.

Everything Trump does, China has an answer. This type of tit-for-tat game that China plays has allowed it to gradually spread its tendrils into the depths of the entire world. Even the 45 percent tariffs that Trump has proposed on Chinese imports would hurt U.S. consumers more than Chinese exporters.

Trump’s past accusations of China being a “currency manipulator” might have a grain of truth. For a country with a cheaply valued currency, it can subsidize its exports easily and therefore be able to get more bang for its buck when exporting to foreign countries. Since the Chinese government has complete control over its state-run banks, it can easily change the value of its currency. By limiting the amount of foreign investment, and by changing the amount of liquidity in state-run banks, the exchange rate of yuan can easily be manipulated.

By keeping exchange rates low, it can consistently collect money through its taxes on exports. This money is then used on military excursions in the Philippines that also allow it to pressure the U.S. into giving it more favorable terms. The U.S., in turn, has also held the threat of investigating China directly for being a “currency manipulator,” which would lead to possible sanctions by the international community in exchange for its cooperation in dealing with North Korea.

On April 15 the Treasury Department presented to Congress a report on its major trading partners, and informed them that China has not been deemed a “currency manipulator.”

Why would I call China a currency manipulator when they are working with us on the North Korean problem? We will see what happens!
— Donald J. Trump (@realDonaldTrump) April 16, 2017

Will Trump really go after China? He has stated that China’s currency manipulation is a huge problem to the U.S. economy, but now that the U.S. and China have to work together to babysit North Korea, his opinions seemed to have been muted. Trump is right that now is not the time to call out our allies, but he didn’t seem too eager to report them in the first place.

Most likely, China will let its yuan value fluctuate minutely to the ebbs and flows of the market without any outside influence, and Trump will not start too many fights with them. Until the North Korea stops launching missiles, there will likely be a peaceful tension between these two superpowers.

Featured Illustration: Samuel Wiggins