Chinese competitors to western companies in its

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Chinese competitors to Western companies in its protected market, and then, once they were big enough, unleash them on the world as giants. Even when the US protested to the WTO — as in the case of how China unfairly kept the US credit card companies out, then lost the arbitration case at the WTO — China still dragged its feet before following through on promises made 17 years earlier to open up. By then, Chinese companies, like UnionPay, so dominated China s credit card market that the US companies, like Visa, were left with the crumbs. 41 Subsidies are within China s WTO rights. Economies adapt to new competition and Chinese subsidies can generate innovation that has global benefits. Chinese solar subsidies, for example, both were unfair (they artificially shifted the locus of the solar cell production toward China and drove a lot of the 39. James McBride, How Are Trade Disputes Resolved? March 13, 2018, available at: - are - trade - disputes - resolved? utm_medium=email&utm_source=dailybrief&utm_content=052418&sp_mid=56680848&sp_rid=bXVsbGljay5wa0ByZWRpZmZtYWlsLmNvbQS2 40. Andrew Walker, Are We on the Brink of a US - China Trade War? BBC News, April 13, 2018, available at: - 43715084 41. Thomas L. Friedman, The US and China Are Finally Having It Out ”, May 1, 2018, available at: - china - trump - trade.html
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US - CHINA Trade War: Analyses of Deeper Nuances and Wider Implications 35 competition out of business) and good for the planet (as Chinese scale and process innovation significantly lowered the cost of solar). Emmanuel Macron of France, Germany's Angela Merkel and EU Trade Commissioner Malmstrom have all said Europe would be more than happy to par- ticipate in trade related discussions with Washington that are conducted in good faith and in accordance with the WTO rules. But, the bloc would not do so — in the words of the French leader in Brussels — "with a gun pointed at our head." China s foreign currency reserves now stand at more than $3 trillion. In contrast, the US has foreign exchange reserves that hover at around $120 billion. Trump s tariffs would automatically trigger penalties against the US in the WTO and might even lead to the WTO s collapse. While it might take a while for that to happen, the turmoil would be catastrophic for American business and em- ployment. China, on the other hand, would emerge relatively unscathed. European Union The EU s response to the ongoing trade war between USA and China has been smart and measured. It shows that it will be difficult for the EU to maintain a middle course between the US, its primary market and second - largest supplier, and China, its primary supplier and second - largest market. One dimension that must be considered is security. It will be difficult to seriously undermine the trans- atlantic relationship without significant concerns about Europe s security guaran- tee.
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