Just how bad are things between the United States and China? Over an evening beer in Beijing this week, a friend and I debated which prominent American company China would whack first. It’s a serious question—and the answer could be the next ugly step in the escalating economic dispute between the two powers.

The standard line from President Donald Trump and those who support his get-tough approach toward Beijing is that because China sells more to the U.S. than the other way around, Washington has the upper hand in its game of tariffs. “China buys MUCH less from us than we buy from them,” Trump recently tweeted, “so we are in a fantastic position.”

Statistically, that’s true: The U.S. exported only $120 billion worth of goods to China in 2018, compared with the $540 billion it imported. Beijing has a lot less stuff to tax, so the amount of damage it can inflict on the American economy and business through tariffs is much more limited. That view seemed confirmed when Beijing announced a surprisingly moderate package of new duties in retaliation for Trump’s latest broadside. While Washington hiked tariffs from 10 percent to 25 percent on $200 billion of Chinese products, and is threatening to slap on even more, Beijing responded by increasing tariffs on only about $60 billion of American goods.

[Read: The U.S.-China trade talks have already changed the world]

In practice, though, the fight is not as uneven as the trade—China has many weapons at its disposal beyond tariffs to make life miserable for American chief executives.

The intrusive Chinese state has all sorts of levers to control the economy and society, and in an environment that lacks rule of law, officials can pull them at their pleasure. They also have far more targets to aim at …read more

Source:: The Atlantic – Best of


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