China-US relations have come under the scrutiny of many with Donald Trump’s ascension to presidency. Since both countries seek to protect their trade relations above all else, it is not hard to see how both countries are tending towards protectionism. President Trump has even discussed plans of levying tariffs on Chinese merchandise during one of his several working lunch speeches. When asked if he had considered the possible reactions of Chinese government to his proposal, he responded terribly rudely, even by his standards. If his goal is to disintegrate China as Reagen did, perhaps he might want to learn from him first.
His ‘outstanding’ speeches make a lot of people come to me to ask for my opinion on him and his stances. I maintain my view that China-US relations will continue progressing in a way that seeks to find a “strategic balance,” and that both countries will continue to be engaged in a “tactical game”. “Strategic balance” refers to the power equilibrium between China and US at the macro-level. The scales are increasingly tilting to China’s side due to the decline of US influence abroad. Alongside the decline, disputes among relatively minor issues such as the South China Sea, Taiwan, Hong Kong, trade deficit, and the Renminbi reflect the shift of influence in the global arena. However, while this trend seems irreversible, the US, especially in this case, still has plenty of means to deploy to maintain its position. The confrontation resulting from the issues above has created a game theory scenario that does not leave much room for the president of the US to negotiate with realism and pragmatism. Although we cannot foresee the fierceness of the negotiation, one things is for sure; the negotiation between China and the US on these topics will definitely be more incendiary as it has been in the past.
Unlike President Obama’s diplomatic policies, the blunt and direct negotiation style of the Trump administration will deepen the dialogues between China and the US. Despite the fact that Obama was the president advocating the “Pivot to East Asia” initiative, his foreign policies during his second term suggest that China has not earned its place as the most important counterpart and rival to the US. The bilateral dialogues between the two countries during the Obama era can only be described as diplomatic and rhetorical, instead of constructive and meaningful.
However, the recovering domestic economy is part of president Obama’s remarkable legacy, and if Mr. Trump can maintain the growth and policies implemented by his predecessor, it will bode well for the US. By encouraging and stimulating the domestic manufacturing sector, the economic growth of US could be revitalized. Although a massive wave of job creation is unlikely to occur, at least the domestic job market will retain its size from international outsourcing. In the foreseeable future, the dollar will be able to maintain its strong position as long as Mr. Trump focuses on job creation in the US manufacturing sector.
According to the IMF, it is estimated that the US economic growth rate will be as high as 2.4 % this annum, the same as that of 2015, while the Council of Economic Advisers and the Congressional Budget Office have a slightly more optimistic approach and suggest that the economic growth rate of the US will be 2.7%. The poor performance of the US economy in the first quarter of 2016 has only experienced a 0.5% growth rate that was followed by a slightly better performance in the second quarter at a growth rate of 1.2 %. The third and fourth quarters had better growth rates and indicated a notable growth in the US economy, which again is contingent upon Donald Trump’s commitment to President Obama’s economic legacy.
However, notwithstanding the outstanding economic growth in the US even in the midst of the global economic downturn, it might still be too risky to invest in share markets in the US. Some economists managed to convince Bill Gates that the current share market is at the peak of the bubble dominated by innovation firms that absorb massive capital from the share market. Moreover, there has been a lot of news that incited the market and investors to invest in high return financial products with high risks, although there is no solid reason to believe that the benefits will be long lasting. As a result, the Federal Reserve will upwardly adjust the interest rate to calm the overheated market, and this might in turn cause financial problems for several public-listed companies. The newly elected president also has the habit of addressing the nation with astonishing comments or remarks which might negatively impact share prices and decrease confidence in the US economy.
In this discontented year of 2017, either a disastrous economic crisis or a reshuffle in the US share market will occur. Investors should remain vigilant and cautious in the coming turbulent times.
