The New Conjectures On the China-US Trade Relations

    Since Trump fired the first shot of the trade war in 2017, China-US relations have deteriorated sharply in the past four years. Tariffs on billion-dollar trade, sanctions on tech companies, and diplomatic relations newly breakdown have highly cost both countries and the global economies.

    The Biden administration is about to take office, providing an opportunity to restart bilateral relations. At the very least, there is reason for us to expect less uncertainty that drives imbalances between businesses and investors.

    To simply predict the China-US trade relationship under the new pattern, there are two points of view:

1. The potential economic cost of China-US decoupling is unbearable for both countries, and the impact on different industries and technological fields may be significantly different. Financial decoupling is a lose-lose option, and the cold war on technology will cause China to face long-term pain. Also, the only viable way to low-carbon future is cooperate advantages from both countries.

2.In the context of the softening of the external environment, China's economic growth prospects are improving for a long time. On current trends, China's annual GDP growth rate will easily remain above 4% through 2030. And if challenges in the external environment intensify, with the barriers on trade and technological flows between China and the United States and other major economies, China's development prospects will likely be seriously hampered.