World Economy

There may be more at stake than just trade concessions in the US-China tariff battle

Key Points
  • The ongoing trade dispute between Washington and Beijing is as much about the South China Sea and Taiwan as it is about China's technological practices, according to the University of Arizona's Jeffrey Kucik.
  • A lasting resolution to the trade war could require multiple compromises on these areas, he argued.
  • Others warn that foreign policy matters could be affected as a result of President Donald Trump's trade policies.
Seven experts on the 90-day trade truce between US and China

Trade frictions between the world's two largest economies go well beyond the parameters of imports and exports.

Washington has been attempting to negotiate with Beijing about issues like forced tech transfers and intellectual property theft, but there's a growing sense among international analysts that talks may also be touching on other deep-rooted issues in their relationship, particularly on the national security and military front.

The ongoing spat is a reflection of great power rivalries, political scientist Joseph Nye wrote in a Project Syndicate editorial last month: "It is much more than a typical trade dispute like, say, America's recent clash with Canada over access to that country's dairy market."

Many economists have pointed out that the current dispute is more of a tech war than a tariff war as U.S. President Donald Trump's administration targets China's technology sector practices. Beijing's militarization of the South China Sea and the sovereignty of Taiwan could also be influencing negotiations.

More than just trade

"Clearly, there's some recognition that there's more at stake than trade," said Jeffrey Kucik, assistant professor of political science at the University of Arizona. "There are now so many issues at play, it's not clear how to alleviate tensions."

One of the issues, he argued, is U.S. interference in the South China Sea and Taiwan — which Beijing considers internal matters.

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Washington's arm sales to Taipei this year have angered Chinese officials who oppose countries pursuing relations with the East Asian island. According to the One China Policy, Taiwan and mainland China are considered part of the same territory. Xi's administration has also been angered by U.S. naval patrols in the South China Sea. The country claims nearly all of the international waterway despite competing claims from neighboring Asian countries.

The fact that China's statement on this past weekend's temporary tariff ceasefire highlighted Trump's promise to respect the One China Policy — something not mentioned in the White House's version — reveals the importance Beijing attaches to its national interests, Kucik said.

A lasting resolution to the trade war will require multiple compromises on such matters, the professor continued. For Xi's administration, "trade takes a back seat to territory," according to Kucik.

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Others, however, disagree with that argument.

It is certainly clear that the White House views Beijing as a strategic competitor beyond the realms of trade, said Patrick Lozada, director of Albright Stonebridge Group's China practices. But those matters don't have any bearing on the trade spat, he warned: "The current dynamic of tit for tat trade actions is not related to other non-trade issues."

Hong Kong economist Lawrence Lau from the Chinese University of Hong Kong echoed that view, arguing that the South China Sea and Taiwan weren't factors in the trade war.

Trade influencing foreign policy

Some experts warned that foreign policy matters will be affected as a result of Trump's hard-line trade policies.

Because of the president's "counterproductive approach" to resolving the bilateral trade deficit, the South China Sea and Taiwan issues could grow more problematic, said Jeffrey Kingston, director of Asian studies at Tokyo-based Temple University.

Trump has ensured that Xi will now also be less helpful on North Korea thanks to the U.S. leader's "usual grandstanding and misleading representations" of trade negotiations, Kingston warned.

When it comes to the trade spat, "there are many outstanding issues to deal with and one would hope they are not segregated or asserted as issues that must be resolved before anything else gets addressed," the academic continued.

The trade turmoil has already spilled into military relations as the two superpowers scale down high-level security engagements. The bilateral defense alliance could now remain at a deadlock until progress is made on the trade front.