US-China Trade War Threatens China's 10-Year Economic Plan

The escalating trade war between the United States and China is posing a significant threat to China's 10-year economic plan. The latest protectionist moves by the US, targeting Chinese steel and aluminum imports, have heightened tensions between the world's two largest economies.

Why this matters: The trade war's impact on China's 10-year plan has far-reaching implications for global economic development and recovery, as it could disrupt supply chains and affect economies beyond the US and China. A prolonged trade war could also lead to a shift in the global economic balance of power, with potential long-term consequences for international trade and relations.

China's Vice Foreign Minister Zhang Hanhui has accused the US of "naked economic terrorism" and "economic chauvinism" amid the trade clash. Zhang stated that China opposes the use of trade sanctions, tariffs, and protectionism, but is not afraid of a trade war. He warned that the dispute will have a serious negative effect on global economic development and recovery.

The trade war has already led to stunted economic growth in China, with a decline in agricultural and semiconductor shipments in 2023. A recent poll shows that 4 out of 5 people have an unfavorable opinion of mainland China, which could further impact its global economic standing. Mexico has also imposed new tariffs on most Chinese imports, a move attributed to pressure from the US.

China's 10-year plan, which aims to achieve "balanced growth" and address excess industrial capacity for electric vehicles, solar panels, and other clean energy goods, is now at risk. A Chinese scholar has suggested that China should offload more of its holdings in US Treasuries due to the risks posed by erratic geopolitical shifts.

Despite the challenges, China's textile industry has been transformed by technology, leading to a record surge in exports. The Canton Fair, China's largest trade exhibition, has also seen a return of foreign buyers drawn to the array of new energy vehicles and green products on offer.

US Secretary of State Antony Blinken has met with Chinese President Xi Jinping to discuss trade and other issues, including the pressure on China to urge its firms to stop supplying dual-use goods to Russia. Chinese Foreign Minister Wang Yi has stated that China-US ties are more stable but still at risk if "red lines" are crossed.

As the trade war continues, China faces significant challenges in achieving the goals outlined in its 10-year economic plan. The US Treasury Secretary's meetings with Chinese officials will include talks on the plan and how to address the country's dependencies and vulnerabilities. The outcome of these discussions could have far-reaching implications for the future of US-China economic relations and the global economy as a whole.

Key Takeaways

• US-China trade war threatens China's 10-year economic plan.
• Trade war could disrupt global supply chains and economies.
• China accuses US of "economic terrorism" and "economic chauvinism".
• Trade war already impacting China's economic growth and global standing.
• US-China talks to focus on China's 10-year plan and economic dependencies.