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Sino-US Trade Friction Could Also Bring Positive Outcomes

While it will undoubtedly bring harm, there could be beneficial effects of the trade friction, such as domestic high-tech development, says economist

By Zhang Qingchen Updated Aug.10

The current China-US trade friction could also bring constructive results, instead of only doing harm to international trade and investment, said Liu Zunyi, an economic professor at the Chinese University of Hong Kong, writing for opinion site China-US Focus.   

Liu said there will be no real winner in the trade friction, because the two nations have less feasible choices for international trade and investment, and exporters and importers in both countries will see their business decline. Consumers and producers who rely on imported goods and inputs in both countries will have to pay higher prices. Also, Liu said the trade friction, although currently short in duration, is disruptive as it introduces a great deal of uncertainty to future trade and investment decisions.  

Yet, Liu argued that one of main causes of the trade friction is actually not trade itself, but the competition between China and the US in economy and technology. This means this trade friction did not begin with US President Donald Trump and will not go away even after Trump leaves office.   

Despite the harm the friction will bring, the competition could potentially lead to constructive outcomes. For example, it could drive both countries to produce better and faster super-computers. The fastest super-computer, the IBM Summit, an American super-computer, is the current world champion, and China's computer, called Taihu Light, built with chips entirely designed in China, was the fastest in 2016 and 2017. However, this competition in technology, Liu said, might also stifle innovation through increasingly isolated markets.