S exports consist primarily of domestic value added

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s exports consist primarily of domestic value - added. These tend to be old industrial sectors. In textiles, for example, 75 percent of value added is really Made in China ’. If Washington wants to limit collateral damage on its own firms and third countries, then it makes sense to go after an old sector like textiles. 11 The 15 - year - old joint venture between General Motors (GM) and Shanghai Automotive Industrial Corporation has resulted in GM s selling more vehicles today in China than it does in America. This has been great for GM s bottom line. But, it has also increased the probability that China will soon have its own global auto that will compete head - to - head with GM inside and outside China. The American firms would: - Like to have unfettered access to the Chinese market. Prefer not to have to enter joint ventures with Chinese firms. Worry that tech transfer in China sometimes takes the form of intellec- tual property theft. 12 Some experts feel overall, tariffs are the wrong instrument to address the US - China trade issues. Tariffs will cause a lot of unnecessary pain for consumers and third countries, not to mention American firms caught in the crossfire. The issues are complex. The US is an advanced industrialised economy that relies on liberal, free market principles to spur innovation and grow the economy. In contrast, China seeks to occupy a similar position in global commerce, but through a managed economy led by national champions, often state owned en- 11. David Dollar and Zhi Wang, Why a Trade War with China Would Hurt the US and Its Allies, Too ”, April 4, 2018, available at: - from - chaos/2018/04/04/why - a - trade - war - with - china - would - hurt - the - u - s - and - its - allies - too/?utm_campaign =Brookingspercent20Brief&utm_source=hs_email&utm_medium=email&utm_content=61867197 12. Geoffrey Garrett, Why the US - China Trade War Is Really About the Future of Innovation ”, The Wharton, April 9, 2018 available at: article/u - s - china - trade - war - really - future - innovation/
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US - CHINA Trade War: Analyses of Deeper Nuances and Wider Implications 15 terprises and a top - down industrial policy. While there are missing nuances in this characterisation, this fundamental difference should be the starting point for any level - headed approach to addressing the dispute. ZTE In March 2017, Zhongxing Telecommunications Equipment Corporation (ZTE Corp.) pleaded guilty in a federal court to charges of conspiring to violate the US sanctions against shipping US - made goods to Iran, obstructing justice and making a materially false statement ’. In an agreement, the ZTE admitted it had intentionally disguised shipments using third parties and countries. The ZTE agreed to pay US $1.19 billion (7.5 billion yuan) in penalties, making it the costli- est export control fine ever. ZTE relies on US suppliers for an estimated 25 to 30 percent of the components in its networking equipment and smartphones.
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