© 2018 by Robert Person.  The views expressed on this website are my own and do not represent the official policy of the U.S. Army, Department of Defense, or U.S. Government.

Dardrin Qin
Feb 12

The Sector Model and State-Centered Approach Reflected in the US-China Trade War

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https://www.cnbc.com/2019/02/11/cramer-earnings-revealed-brutal-truths-about-us-china-trade.html

 

The US-China trade war, like any trade war, is widely agreed to result in a net economic loss for all players involved. However, just because there is an overall loss in the global economy, it does that mean that there are no economic winners. Global companies with high brand value face little competition in the face of Chinese companies. Starbucks and Estee Lauder are two companies that claim this unrivaled market share in China. Losers, however, include technology manufacturers, such as Apple and Nvidia. These companies are being replaced in China by domestic companies such as Huawei and Xiaomi, who may see the trade war as an opportunity to bolster domestic sales.

In class, we talked about the sector model, and how competition between industries may lead to policy choices. In China, the choice is easy: lose a few jobs to Chinese Starbucks competitors, but gain many jobs filling the demand gap left by Apple. In the US, however, many technology and manufacturing jobs may be cut due to the sudden shortage in demand, most of which can not be recovered from name-brand companies. So, what is driving policy decision in the US? From the state-centered approach, it may be that the state perceives the in/outflow of technology to and from China may be detrimental to national security. Indeed, it is clear to see that the US and China have different motivations and goals when it comes to the trade war.

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