Page 62 - 2018 White Paper on the Business Environment in China
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8 White Paper on the Business Environment in China
International Finance (IIF) in a report released in August concerning his work on U.S.-China relations shortly
2017. According to the report, America’s trade deficit is after the new president took office. What is in doubt
more of a political issue than an economic concern. IIF is whether the leaders of these two great powers can
saying the U.S. trade deficit has not deteriorated in the manage these confrontations without escalating them
past decade. From 2006 to 2016, the U.S. goods trade to uncontrollable levels.
decreased from $837 billion to $753 billion a year, or
from 6 percent to 4 percent of its GDP. Considering its Allison admits to a caveat that conflict between
surplus in service trade, America’s total trade deficit the two nations is not necessarily inevitable. Ilias
was only 2.7 percent of GDP in 2016, according to the Kouskouvelis, the Thucydides Hellenic National Defence
report by the Washington D.C.-based think tank. “The General Staff (HNDGS) Chair of Strategic Studies at the
manageable trade deficit and low unemployment University of Macedonia, retorts that this is true simply
rate (4.3 percent) do not support the protectionist because the content of the so-called “trap” attributed to
inclination of Washington policy,” said Gene Ma, Chief Thucydides is not correct. The real trap is different than
China Economist at IIF. Although China accounted for that described by Allison. Kouskouvelis claims Allison
about half of America’s trade deficit in 2016, the trade picked a phrase from Thucydides, separate it from the
picture looked quite different from China’s perspective. rest of the text, and build an argument, which projects
From 2007 to 2016, China’s current account surplus Allison’s ideas rather than the intent of Greek historian.
dropped from 10 percent to 1.9 percent of its GDP, and One needs to bear in mind that ancient Greek thinking
China’s trade surplus dropped from 8.7 percent to 2.2 is multi-causal and not uni-causal, as the thinking of
percent. “China’s goods surplus with the U.S., though Western modernity. Therefore, maintaining initially that
growing in an absolute level, has become smaller just the fear of a competitor’s growing power could lead
relative to its total surplus and GDP,” the report said. The to conflict may be seen as cherry picking. If Thucydides
United States has benefitted a lot from its economic were to be asked, he would say conflict might be avoided.
ties with China. From 2001 to 2016, U.S. imports from All our leaders have to do is avoid in their decision making
China increased 3.5 times while U.S. exports to China those human attitudes which may lead them to the real
increased by almost 6 times, according to the report. trap the great ancient thinker Thucydides warned us
“A trade war between U.S. and China will hurt not only about (Kouskouvelis).
Chinese manufacturers, but also upstream suppliers and
downstream distributors such as U.S. retailers,” warned Perhaps China and America’s greatest challenge over
the report. The IIF recommended that the two countries the next century will be managing their relationship
further explore their comparative advantages and new with each other. Rapid technological advancement
opportunities for trade and investment to solve their is contributing to global economic uncertainty, and
trade imbalances (Song, Trade War). international security is increasingly threatened. Global
influence is becoming increasingly multipolar. Some
Moving Forward degree of flexibility and willingness to adapt in the
face of changing norms should be mandatory for both
Graham Allison, Director of Harvard’s Belfer Center for countries (Stowell).
Science and International Affairs claims a pattern he refers
to as the “Thucydides Trap” occurs when a major nation’s The concept/metaphor of the Thucydides’s Trap is
rise has disrupted the position of a dominant state. problematic, but Allison’s book does illuminate the
Allison’s conclusion is that happy endings are rare when need for both countries to work together on many
a rising power threatens to displace a ruling power. More fronts. Both countries have enough nuclear weapons to
than 2500 years ago, Thucydides, the Athenian historian blow up the world. Given the cataclysmic significances
and general, wrote his history of the Peloponnesian War. of a competition or conflict between the United States
He concludes that it was the rise of Athens and the fear and China, an assessment of the relationship between
that this inspired in Sparta that made conflict inevitable. Washington and Beijing should not be limited to a
Allison claims this is the reason why China and the United security dilemma theory or one based primarily on fear
States are on a collision course for conflict and predicts alone. The United States must find ways of reconciling its
a succession of confrontations between China and the national interests with those of China in an environment
United States in the coming years. Allison reportedly not only fraught with peril, but also ripe with opportunity.
briefed Donald Trump’s National Security Council There is much to be gained by working together, and
62
International Finance (IIF) in a report released in August concerning his work on U.S.-China relations shortly
2017. According to the report, America’s trade deficit is after the new president took office. What is in doubt
more of a political issue than an economic concern. IIF is whether the leaders of these two great powers can
saying the U.S. trade deficit has not deteriorated in the manage these confrontations without escalating them
past decade. From 2006 to 2016, the U.S. goods trade to uncontrollable levels.
decreased from $837 billion to $753 billion a year, or
from 6 percent to 4 percent of its GDP. Considering its Allison admits to a caveat that conflict between
surplus in service trade, America’s total trade deficit the two nations is not necessarily inevitable. Ilias
was only 2.7 percent of GDP in 2016, according to the Kouskouvelis, the Thucydides Hellenic National Defence
report by the Washington D.C.-based think tank. “The General Staff (HNDGS) Chair of Strategic Studies at the
manageable trade deficit and low unemployment University of Macedonia, retorts that this is true simply
rate (4.3 percent) do not support the protectionist because the content of the so-called “trap” attributed to
inclination of Washington policy,” said Gene Ma, Chief Thucydides is not correct. The real trap is different than
China Economist at IIF. Although China accounted for that described by Allison. Kouskouvelis claims Allison
about half of America’s trade deficit in 2016, the trade picked a phrase from Thucydides, separate it from the
picture looked quite different from China’s perspective. rest of the text, and build an argument, which projects
From 2007 to 2016, China’s current account surplus Allison’s ideas rather than the intent of Greek historian.
dropped from 10 percent to 1.9 percent of its GDP, and One needs to bear in mind that ancient Greek thinking
China’s trade surplus dropped from 8.7 percent to 2.2 is multi-causal and not uni-causal, as the thinking of
percent. “China’s goods surplus with the U.S., though Western modernity. Therefore, maintaining initially that
growing in an absolute level, has become smaller just the fear of a competitor’s growing power could lead
relative to its total surplus and GDP,” the report said. The to conflict may be seen as cherry picking. If Thucydides
United States has benefitted a lot from its economic were to be asked, he would say conflict might be avoided.
ties with China. From 2001 to 2016, U.S. imports from All our leaders have to do is avoid in their decision making
China increased 3.5 times while U.S. exports to China those human attitudes which may lead them to the real
increased by almost 6 times, according to the report. trap the great ancient thinker Thucydides warned us
“A trade war between U.S. and China will hurt not only about (Kouskouvelis).
Chinese manufacturers, but also upstream suppliers and
downstream distributors such as U.S. retailers,” warned Perhaps China and America’s greatest challenge over
the report. The IIF recommended that the two countries the next century will be managing their relationship
further explore their comparative advantages and new with each other. Rapid technological advancement
opportunities for trade and investment to solve their is contributing to global economic uncertainty, and
trade imbalances (Song, Trade War). international security is increasingly threatened. Global
influence is becoming increasingly multipolar. Some
Moving Forward degree of flexibility and willingness to adapt in the
face of changing norms should be mandatory for both
Graham Allison, Director of Harvard’s Belfer Center for countries (Stowell).
Science and International Affairs claims a pattern he refers
to as the “Thucydides Trap” occurs when a major nation’s The concept/metaphor of the Thucydides’s Trap is
rise has disrupted the position of a dominant state. problematic, but Allison’s book does illuminate the
Allison’s conclusion is that happy endings are rare when need for both countries to work together on many
a rising power threatens to displace a ruling power. More fronts. Both countries have enough nuclear weapons to
than 2500 years ago, Thucydides, the Athenian historian blow up the world. Given the cataclysmic significances
and general, wrote his history of the Peloponnesian War. of a competition or conflict between the United States
He concludes that it was the rise of Athens and the fear and China, an assessment of the relationship between
that this inspired in Sparta that made conflict inevitable. Washington and Beijing should not be limited to a
Allison claims this is the reason why China and the United security dilemma theory or one based primarily on fear
States are on a collision course for conflict and predicts alone. The United States must find ways of reconciling its
a succession of confrontations between China and the national interests with those of China in an environment
United States in the coming years. Allison reportedly not only fraught with peril, but also ripe with opportunity.
briefed Donald Trump’s National Security Council There is much to be gained by working together, and
62
