Trump Negates the Chinese Growth Model
KAWATO Akio / Former Japanese Ambassador to Uzbekistan and Tajikistan
July 19, 2018
The trade conflict between China and the United States is now in full swing. The two nations are flinging major tariff hikes at one another, neither willing to give an inch in the standoff. Thinking back to the defensive posture taken by Japan during its own trade frictions with
America, I must admit to feeling somewhat jealous of China for its ability to stand its ground. Japan, as a nation under the US security umbrella, was unable to implement effective countermeasures for fear of the backlash they might trigger among domestic industries worried about the impact on their business. As a result, Japan’s decisions tended to fall along the line of how far to accept US demands in the trade disputes of the time.
The ongoing Sino-American dispute, meanwhile, seems to a certain extent to be just an act, with both sides firing their guns noisily, but harmlessly, toward the sky. These opponents may shake hands and call an end to the hostilities at some appropriate juncture. Global financial markets, perhaps perceiving the same thing, have been rebounding immediately after each trade-friction-triggered plunge.
How serious is the United States about this trade conflict? President Donald Trump is clearly seeking to create momentum and lay down a track record of results as he heads toward the midterm elections to be held this autumn and, looking farther ahead, toward the presidential election to take place in 2020. It will be particularly important for him to be able to claim that he created jobs once again for the “Midwest working class” that played such a key role in putting him in the White House.
However, it is unlikely that higher US tariffs on Chinese steel, aluminum, and other exports will do anything to bring jobs back to the factories of the American Midwest. China exported just 1.2 million tons of steel to the United States in 2017, placing it eleventh on the list of steel exporters serving the American market. Fully half of China’s exports are smartphones and similar products that are merely assembled in the country for Western companies. Slapping restrictions on imports like these will only cause trouble for US firms like Apple and GM while
raising prices for American consumers (therefore, such items are carefully omitted from the final list for tariff hike).
Rather than bring their assembly operations back to the United States, these US companies are likely to move them from China to other low-wage regions like Vietnam or India. For this reason, Washington is not likely to seek to crush China as a competitor; it will rather press China to greatly increase imports of American aircraft, automobiles, medical equipment, and pharmaceuticals, while ensuring that unfair fines are not levied on US companies active in China and creating an improved investment environment.
Beijing, for its part, insists that it will not give an inch in this struggle. It is likely uncertain about how best to proceed, though. If China does follow through with its threats by slapping hefty tariffs on American soybeans and aircraft parts, it will only be harming its own interests, as there are no other trading partners capable of providing such plentiful flows of this item. If the Chinese government sells off a considerable portion of the US treasury bonds it holds, it will again be the party to suffer, not the United States: Japan and other purchasers will snap up the bonds flooding onto the market, and China, meanwhile, will have trouble finding ways to put its massive new influx of greenbacks to use.
Many are calling China an economic giant, and the country itself has come to see itself as a superpower in this sense. In truth, however, it has been pushing its luck within the framework and systems of the postwar global economy that the United States first put together. The yuan is far from a readily convertible currency, leading China to conduct much of its trade on a dollar-denominated basis. It has established a yuan-denominated crude oil futures market in Shanghai to chip away at the global rule of the dollar, but this is unlikely to attract foreign participation so long as the yuan remains relatively unconvertible.
Therefore, the tariff war will not cause an Armageddon in US-China economic relations. Both countries will continue negotiating on trade. What is far more important, however, is the possibility that Trump’s fixation about trade deficit may have triggered a profound change. Namely, if the current event prompts the Western companies to reduce their investments in China, the Chinese sacrosanct export-driven growth model will become unsustainable.
Since the first decade of this century, China has made use of this surplus, which, along with foreign direct investment, has climbed to as much as a combined $400 billion in some years, converting it to yuan and spending it domestically on real estate and infrastructure investment, multiplying the capital by several hundred percent in returns. This has been the core of China’s stellar economic performance in recent years, but now the country stands to lose this momentum if a trade war escalates. The country is now running a considerable trade surplus vis-à-vis the United States, accounting for 49.0% of its total 2016 surplus of $510.7 billion. When the US surplus with Hong Kong is included as well, this ratio goes above the 50% mark.
If foreign companies, which are responsible for about 50% of Chinese exports, will curtail their production in China and exports therefrom, it will depress the Chinese economy and lower incomes of the Chinese. In 1985 Japan was made to face a similar situation, when the US forcibly devalued the dollar against yen almost twice. Japan, deprived of its export-driven growth model, eventually fell into stagnation. Since then the long-time ruling party LDP (Liberal Democratic Party) was voted out of power as many as two times.
China, where the Chinese Communist Party (CCP) is entitled as the only and permanent ruler, will step into a turbulent time, as there is no alternative for the CCP, which may lose people’s support, while the ever increasing tempo of the aging of the population will exacerbate
financial and economic woes.
The US may have knocked down China, a threat to its prominence, as it did to Japan in the past.
Akio Kawato is a former Japanese Ambassador to Uzbekistan and Tajikistan.
America, I must admit to feeling somewhat jealous of China for its ability to stand its ground. Japan, as a nation under the US security umbrella, was unable to implement effective countermeasures for fear of the backlash they might trigger among domestic industries worried about the impact on their business. As a result, Japan’s decisions tended to fall along the line of how far to accept US demands in the trade disputes of the time.
The ongoing Sino-American dispute, meanwhile, seems to a certain extent to be just an act, with both sides firing their guns noisily, but harmlessly, toward the sky. These opponents may shake hands and call an end to the hostilities at some appropriate juncture. Global financial markets, perhaps perceiving the same thing, have been rebounding immediately after each trade-friction-triggered plunge.
How serious is the United States about this trade conflict? President Donald Trump is clearly seeking to create momentum and lay down a track record of results as he heads toward the midterm elections to be held this autumn and, looking farther ahead, toward the presidential election to take place in 2020. It will be particularly important for him to be able to claim that he created jobs once again for the “Midwest working class” that played such a key role in putting him in the White House.
However, it is unlikely that higher US tariffs on Chinese steel, aluminum, and other exports will do anything to bring jobs back to the factories of the American Midwest. China exported just 1.2 million tons of steel to the United States in 2017, placing it eleventh on the list of steel exporters serving the American market. Fully half of China’s exports are smartphones and similar products that are merely assembled in the country for Western companies. Slapping restrictions on imports like these will only cause trouble for US firms like Apple and GM while
raising prices for American consumers (therefore, such items are carefully omitted from the final list for tariff hike).
Rather than bring their assembly operations back to the United States, these US companies are likely to move them from China to other low-wage regions like Vietnam or India. For this reason, Washington is not likely to seek to crush China as a competitor; it will rather press China to greatly increase imports of American aircraft, automobiles, medical equipment, and pharmaceuticals, while ensuring that unfair fines are not levied on US companies active in China and creating an improved investment environment.
Beijing, for its part, insists that it will not give an inch in this struggle. It is likely uncertain about how best to proceed, though. If China does follow through with its threats by slapping hefty tariffs on American soybeans and aircraft parts, it will only be harming its own interests, as there are no other trading partners capable of providing such plentiful flows of this item. If the Chinese government sells off a considerable portion of the US treasury bonds it holds, it will again be the party to suffer, not the United States: Japan and other purchasers will snap up the bonds flooding onto the market, and China, meanwhile, will have trouble finding ways to put its massive new influx of greenbacks to use.
Many are calling China an economic giant, and the country itself has come to see itself as a superpower in this sense. In truth, however, it has been pushing its luck within the framework and systems of the postwar global economy that the United States first put together. The yuan is far from a readily convertible currency, leading China to conduct much of its trade on a dollar-denominated basis. It has established a yuan-denominated crude oil futures market in Shanghai to chip away at the global rule of the dollar, but this is unlikely to attract foreign participation so long as the yuan remains relatively unconvertible.
Therefore, the tariff war will not cause an Armageddon in US-China economic relations. Both countries will continue negotiating on trade. What is far more important, however, is the possibility that Trump’s fixation about trade deficit may have triggered a profound change. Namely, if the current event prompts the Western companies to reduce their investments in China, the Chinese sacrosanct export-driven growth model will become unsustainable.
Since the first decade of this century, China has made use of this surplus, which, along with foreign direct investment, has climbed to as much as a combined $400 billion in some years, converting it to yuan and spending it domestically on real estate and infrastructure investment, multiplying the capital by several hundred percent in returns. This has been the core of China’s stellar economic performance in recent years, but now the country stands to lose this momentum if a trade war escalates. The country is now running a considerable trade surplus vis-à-vis the United States, accounting for 49.0% of its total 2016 surplus of $510.7 billion. When the US surplus with Hong Kong is included as well, this ratio goes above the 50% mark.
If foreign companies, which are responsible for about 50% of Chinese exports, will curtail their production in China and exports therefrom, it will depress the Chinese economy and lower incomes of the Chinese. In 1985 Japan was made to face a similar situation, when the US forcibly devalued the dollar against yen almost twice. Japan, deprived of its export-driven growth model, eventually fell into stagnation. Since then the long-time ruling party LDP (Liberal Democratic Party) was voted out of power as many as two times.
China, where the Chinese Communist Party (CCP) is entitled as the only and permanent ruler, will step into a turbulent time, as there is no alternative for the CCP, which may lose people’s support, while the ever increasing tempo of the aging of the population will exacerbate
financial and economic woes.
The US may have knocked down China, a threat to its prominence, as it did to Japan in the past.
Akio Kawato is a former Japanese Ambassador to Uzbekistan and Tajikistan.
The English-Speaking Union of Japan
トランプが破壊する、中国の成長モデル
河東哲夫 / 元駐ウズベキスタン大使兼タジキスタン大使
2018年 7月 19日
米中貿易戦争たけなわ。両方とも大幅の関税引き上げで脅しあい、一歩も引かじと見栄を切る。かつての日米貿易紛争での守勢一方の日本を思い出し、中国を羨ましく思う。日本は米国に安全保障を依存しているし、対抗措置を取ろうとしても、それで被害を受ける国内の業界の抵抗を恐れて結局、米国の要求をどこまで容れるかになってしまったのだ。
しかしこの米中紛争も、どこか芝居じみていて、双方空に向けて鉄砲を撃っている気配。適当なところで、両者は手を握ってしまうかもしれない。世界の株式市場もそれを察してか、下げてもすぐ上がっている。
米側はどれだけ本気か？ トランプ大統領にとって、秋の中間選挙、そして3年後の大統領選挙をめがけて話題作り、手柄作りができればいい。特に、彼が大統領になるのに決定的な役割を果たした「中西部の労働者達」に仕事を再び作ってやったと言えることが重要だ。
しかし中国製鉄鋼やアルミなどの関税を高くしたところで、中西部の工場は再開しないだろう。中国の対米鉄鋼輸出は2017年約120万トンの少量で、対米鉄鋼輸出国としては11位の低位にいる。中国の輸出の半分は、スマホなど、中国で組み立てられた西側企業の製品だから、この輸入を制限すれば、アップルやGMなど米国の企業が困るし、米国民の買うものの価格が上がってしまう(従って、そうした品目は関税引き上げの対象から外されている)。
米国企業はこれら製品の組み立てを、中国から米国に移すことはせず、ベトナムやインド等、別の低賃金地域に移すだけだろう。従って、米国が中国つぶしを本気で狙わず、中国が米国からの輸入（特に航空機、自動車、医療機器、薬品）を大幅に増やすとともに、中国国内での米国企業に不当な罰金を科さない等、投資環境を改善するあたりで手を打つことを考えているのだろう。
中国は、一歩も引かないと言いながら、実は対応に悩んでいることだろう。例えば、脅し言葉のとおり、米国産大豆、航空機に高関税をかけると、他にこれだけ大量の供給をしてくれる国はないので、中国は自分で自分の首を絞めることになる。米国の国債を大量に売却しても、損を被るのは中国の方だ。売り出された米国債は日本等が買いあさるから、米国は困らない。他方、中国の方は米国債を売却して得た大量のドルの行き場に困るのである。
中国は経済大国と言われて自分でもその気になっているが、実際には戦後米国が築いた国際経済の枠組み、仕組みに悪乗りしているだけだ。元は交換性を欠き、中国はその貿易の多くをドル建てでやっている。ドルの支配を崩すため、上海に原油の元建て先物市場を設立したが、元に交換性がないままでは外国人は寄り付かないだろう。
というわけで、米中の経済関係が崩壊するということはなく、両国は話し合いを続けていくだろう。しかし今回のトランプの貿易赤字へのこだわりは、もっと深い、新しいトレンドの引き金を引いた可能性がある。それは、今回の措置をきっかけに日米欧の外資が中国への投資を控えると、中国のこれまでの成長モデルが成り立たなくなるということだ。2000年代は年間４０００億ドルにも上った貿易黒字と外国からの直接投資を元に替え、それを不動産・インフラ投資に向けて何倍にも転がし膨らませて行ったのが中国の高度成長の基本なのだが、そのパン種が大きく失われてしまうのだ。中国の対米貿易黒字は、中国の全貿易黒字（2016年で約5107億ドル）の49.0％に上る 。香港の対米貿易黒字を加えると、それは50%をやや超える。
中国の輸出の50%を担う外資が中国での生産、中国からの輸出を縮小するならば、中国は不況になり、中国人の所得水準は下がるだろう。1985年プラザ合意後、日本は円高とバブル崩壊で不況となり、自民党が2度も下野したが、選挙のない中国では、共産党が社会の不満を一身に負う。これから人口老齢化が著しくなる中国は、難しい時代に入っていくことになろう。
米国は、日本に次いで中国という米国の地位を脅かす存在を再び叩きのめしたのかもしれない。
（筆者は元駐ウズベキスタン大使兼タジキスタン大使）
しかしこの米中紛争も、どこか芝居じみていて、双方空に向けて鉄砲を撃っている気配。適当なところで、両者は手を握ってしまうかもしれない。世界の株式市場もそれを察してか、下げてもすぐ上がっている。
米側はどれだけ本気か？ トランプ大統領にとって、秋の中間選挙、そして3年後の大統領選挙をめがけて話題作り、手柄作りができればいい。特に、彼が大統領になるのに決定的な役割を果たした「中西部の労働者達」に仕事を再び作ってやったと言えることが重要だ。
しかし中国製鉄鋼やアルミなどの関税を高くしたところで、中西部の工場は再開しないだろう。中国の対米鉄鋼輸出は2017年約120万トンの少量で、対米鉄鋼輸出国としては11位の低位にいる。中国の輸出の半分は、スマホなど、中国で組み立てられた西側企業の製品だから、この輸入を制限すれば、アップルやGMなど米国の企業が困るし、米国民の買うものの価格が上がってしまう(従って、そうした品目は関税引き上げの対象から外されている)。
米国企業はこれら製品の組み立てを、中国から米国に移すことはせず、ベトナムやインド等、別の低賃金地域に移すだけだろう。従って、米国が中国つぶしを本気で狙わず、中国が米国からの輸入（特に航空機、自動車、医療機器、薬品）を大幅に増やすとともに、中国国内での米国企業に不当な罰金を科さない等、投資環境を改善するあたりで手を打つことを考えているのだろう。
中国は、一歩も引かないと言いながら、実は対応に悩んでいることだろう。例えば、脅し言葉のとおり、米国産大豆、航空機に高関税をかけると、他にこれだけ大量の供給をしてくれる国はないので、中国は自分で自分の首を絞めることになる。米国の国債を大量に売却しても、損を被るのは中国の方だ。売り出された米国債は日本等が買いあさるから、米国は困らない。他方、中国の方は米国債を売却して得た大量のドルの行き場に困るのである。
中国は経済大国と言われて自分でもその気になっているが、実際には戦後米国が築いた国際経済の枠組み、仕組みに悪乗りしているだけだ。元は交換性を欠き、中国はその貿易の多くをドル建てでやっている。ドルの支配を崩すため、上海に原油の元建て先物市場を設立したが、元に交換性がないままでは外国人は寄り付かないだろう。
というわけで、米中の経済関係が崩壊するということはなく、両国は話し合いを続けていくだろう。しかし今回のトランプの貿易赤字へのこだわりは、もっと深い、新しいトレンドの引き金を引いた可能性がある。それは、今回の措置をきっかけに日米欧の外資が中国への投資を控えると、中国のこれまでの成長モデルが成り立たなくなるということだ。2000年代は年間４０００億ドルにも上った貿易黒字と外国からの直接投資を元に替え、それを不動産・インフラ投資に向けて何倍にも転がし膨らませて行ったのが中国の高度成長の基本なのだが、そのパン種が大きく失われてしまうのだ。中国の対米貿易黒字は、中国の全貿易黒字（2016年で約5107億ドル）の49.0％に上る 。香港の対米貿易黒字を加えると、それは50%をやや超える。
中国の輸出の50%を担う外資が中国での生産、中国からの輸出を縮小するならば、中国は不況になり、中国人の所得水準は下がるだろう。1985年プラザ合意後、日本は円高とバブル崩壊で不況となり、自民党が2度も下野したが、選挙のない中国では、共産党が社会の不満を一身に負う。これから人口老齢化が著しくなる中国は、難しい時代に入っていくことになろう。
米国は、日本に次いで中国という米国の地位を脅かす存在を再び叩きのめしたのかもしれない。
（筆者は元駐ウズベキスタン大使兼タジキスタン大使）
一般社団法人 日本英語交流連盟