U.S.-China trade war escalates to hegemonic struggle

The U.S. Trade Representative (USTR) on Tuesday (local time) announced a list of about 1,300 Chinese exports that will be subject to a new 25 percent tariff. The move came earlier than expected as U.S. retaliation against China’s slapping of high tariff on 128 U.S. exports including pork. After the U.S. action, China’s Ministry of Commerce said on Wednesday it “strongly condemns and firmly opposes” the proposed U.S. tariffs and “will soon take measure of equal intensity and scale against U.S. goods.”

The trade conflict, triggered off by the United States that is having an economic upturn, is different from past trade wars, which were caused by countries trying to protect their own industries and jobs at times of economic crises. It is also not a matter that should be downplayed as U.S. President Donald Trump’s attempt to rally support with November’s mid-term elections in mind.

Rather, it should be seen as a competition between the two great powers over global hegemony. Chinese President Xi Jinping declared at a party conference in October last year that China would surpass the United States economically by 2025 and militarily by 2050. If South Korea views the trade war as the two powers’ fight over economic gains, it would not be able to take appropriate measures.

The United States has already been feeling anxious about China’s fast rise in the information technology sector following its rapid growth in manufacturing. The USTR’s tariff proposal to Trump is part of Washington’s strategy to nip China’s growth in high-tech sectors such as semiconductors and electric cars under Beijing’s “Manufacturing 2025 initiative.”

If the United States steps up its trade offensive, China may also halt its imports of U.S. soybeans, automobiles and aircrafts. China imports one-third of the entire U.S. soybean production. Ironically, there are rooms for a compromise, as the two countries have strong weapons to wield against each other. The USTR’s proposed tariffs should go through public hearings in May before being actually implemented. As Washington remains concerned about Beijing’s technological rise, similar conflicts can occur any time.

South Korea, which depends heavily on the two powers for security and economy, is not in a position to take one side. Therefore, it should watch the situation closely while coordinating with the international community. China has already been implementing a policy to localize components and materials imported from South Korea and other countries while nurturing homegrown companies for domestic consumption. The days are numbered before South Korea loses its competitiveness as an export base for intermediate goods. South Korea should take the U.S.-China trade conflict as an opportunity to transform its industrial structure by securing competitiveness in high value-added technologies.