To shield the public from job cuts or factory

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to shield the public from job cuts or factory closings by ordering banks to support industries suffering from American tariffs. It could spread the pain of a trade war while tolerating years of losses from state run companies that dominate major sectors of the economy. Economically, both the US and China would lose from a trade war. Punitive tariffs would push up import prices, dent exports, cost jobs and crimp economic growth. Both sides would do best to avoid an outbreak of hostilities. 54 After the end of Cold War USA remained the sole superpower. China is fast rising power. USA has the advantage of science and technology and its innovation. China has rightly identified the emerging technologies and put in lot 54. Steven Lee Myers, Why China Is Confident It Can Beat Trump in a Trade War ”, The New York Times, April 5, 2018, available at : world/asia/china - trade - war - trump - tariffs.html
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US - CHINA Trade War: Analyses of Deeper Nuances and Wider Implications 44 of emphasis on innovation and technologies like artificial intelligence, quantum computing, 5G etc. USA would not let its supremacy in financial sector go easily. Every time some power like Japan, Germany or the EU came up as rival economic power or its currencies became competitors to the dollars in global market place, they have been cut down to size. Though China has its own internal fault lines it is treading carefully in the financial market place. With globalisation, WTO and intertwined economies it would not be easy for USA to subjugate China. There would be plenty of blood bath in financial market place. We will have to wait and watch. There was a similar situation in 1985. The US trade deficit with Japan was substantial. Ronald Reagan, then US President pulled off a coup. He brought the US main trade partners to the negotiating table to work out a multilateral pact. The pact entailed coordinated interventions in currency markets in order to depre- ciate the dollar with regard to the Japanese yen and German deutsche mark. And so, the Plaza Accord was born. The adjustment prompted a sharp rise in the yen and consequently an economic downturn in Japan. The US, after short - term relief, allowed the parties involved to adjust their policies. Japan then lowered the inter- est rate. But, given the overheated economy during the 1980s, the ultra - low inter- est rate ultimately led to an economic bubble two years later. In 1985, the geopolitical climate was also very different from what it is today. Japan and West Germany were still heavily dependent on the US as part of the grand alliance against the Soviet Union. The US position as leader of the Western bloc in a bipolar world order was also undisputed. Therefore, the US proposition to coordinate currencies faced relatively weak opposition. Geopolitics is much more complex today. The world s major economies no longer have a common adversary to unite against, which makes the task of bringing them to the negotiating table far more onerous.
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