At the heart of global conflicts, economic underpinnings often play a key role. Recently, the focus has been firmly on the tariff duel between the United States, under President Donald Trump, and communist China. This has sparked intense attention, notably given China’s emerging financial hurdles. A question arises: could this situation echo the sentiment of Carl von Clausewitz, the renowned Prussian General, who opined ‘War is the continuation of policy by other means’?
Scott Bessent, the Treasury Secretary, pointedly referred to China as a rogue player, connecting the decision to amplify China’s tariffs specifically with their proclivity for aggravation. The consensus among many studying China closely is that the nation’s trade interactions with the U.S. are disproportionately skewed in Beijing’s favor. This imbalance is fanned by escalating frictions over the past decade, which have positioned China as an increasingly adversarial global powerhouse.
But it’s worth noting that while heightened trade barriers can generate friction, they are not a guarantee of an ensuing violent conflict. Nonetheless, resource-related issues such as the need for oil and important manufacturing materials are historically associated with instigation of wars. The attack by Japan on America in 1941 is a classic example of such interests precipitating conflict.
In fact, Japan’s aggressive expeditions to secure resources for their burgeoning industries began in the late 19th century. This led to the invasion of Manchuria in 1931, a strategic maneuver to ensure the availability of raw materials essential for the rapidly industrializing nation. Establishing a puppet regime named Manchukuo swiftly followed, and by 1937, Japan found itself embroiled in a full-scale war with China.
Japan’s conflict with China only exacerbated its military’s resource scarcity, which catalyzed the seizure of other territories throughout Asia. In response, the U.S. posed economic pressure via escalated tariffs, sanctions, and embargoes, posing a formidable threat to the vitality of Japan’s economy. Despite ongoing negotiations between Washington and Tokyo, resolution remained elusive as 1941 dawned.
To salvage its economically besieged nation, Japan chose a path of open conflict with the U.S., aiming to obliterate the American naval fleet situated at Pearl Harbor in Hawaii. With these resources, they hoped to freely access indispensable raw materials throughout the Pacific. Clearly, contemporary China isn’t an exact replication of pre-WWII Japan but it does offer insight into a nation grappling with economic pressures.
Present-day Beijing also contends with substantial economic obstacles that could potentially jeopardize the Communist Party’s control over the nation as well as its global influence. Facing a stagnant economy could incite domestic instability, which is a predicament that President Xi Jinping may need to confront. One counter-strategy could be to draw U.S. trade allies towards China to compensate for dwindling markets.
On the other hand, President Xi might choose to wield military strength – a tactic to distract from internal difficulties and as a potential economic game-changer. Reminiscent of past strategies, bold acts such as the annexation of Taiwan or other nearby territories could be possibilities. Despite divergent viewpoints on potential countermeasures, it is universally acknowledged that China’s economy experienced a slowdown in 2024, further exacerbating its position as the world’s second-largest economy.
Contributing factors to the stalling economy include a protracted real estate crisis, mushrooming local government debt, and high youth unemployment rates. Layering President Trump’s 145% tariff increase on top of these issues could result in China losing a staggering $525 billion in annual revenue. The resulting fallout could mean millions of discontented, unemployed Chinese citizens.
A decrease in business and consumer confidence, weakening of the Chinese yuan, and spurred civil unrest are foreseeable consequences. How will President Xi steer China through the loss of the American market? With China’s export-focused strategy resting at the heart of Xi’s economic blueprint, tackling this challenge could prove onerous.
Furthermore, domestic consumer spending in China has halved since the pre-pandemic era, rendering it incapable of soaking up excess production. Complicating this is an unpredictable geopolitical climate that deters foreign investment. In the face of these crises, President Xi may have to resort to bold reforms to reestablish China’s economic stability.
Alternatively, he may use the military as a red herring to divert attention from the stagnating economy. A stagnating Chinese economy could stir discontent and eventually endanger the regime. But Xi, a veteran survivor as demonstrated during the COVID era when millions of Chinese became unemployed, may have a few tricks up his sleeve.
There’s a small chance, incidentally, that Trump’s escalating trade feud with Beijing could escalate into real hostilities. Or maybe, Xi’s game plan could be simply to outlast Trump through a war of attrition.
The post Could US-China Trade War Echo Past Economic Conflicts? appeared first on Real News Now.
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