Simone Gao: Besides the fight over intellectual property rights, other tensions surrounding the trade war are also emerging.
Narration: As soon as the U.S. trade war started, on July 7, the U.S. Navy sent two destroyers into the Taiwan Strait, the waterway separating mainland China from Taiwan. This is the first U.S. warship heading into the strait since 2017. And it might signal the start of a sustained drumbeat of similar transits, reassuring the United States’ commitment to Taiwan amid intensifying Chinese pressure on the island and a U.S.-China trade war.
Narration: A few days earlier, U.S. Secretary of State Mike Pompeo visited North Korea to further assure the denuclearization process, which yielded little result after Kim Jong Un’s enthusiastic meeting with Trump last month. It was widely suspected that Kim’s change in attitude was due to pressure from China.
Simone Gao: What do these new developments say about the trade war? Let’s hear from Wen Zhao.
Simone Gao: It is widely suspected that Kim’s shift in attitude was due to Xi Jinping. Moreover, on the second day of the trade war, U.S. warships sailed through the Taiwan Strait. Why have the tensions spilled over to other fields so quickly? What’s going to happen next?
Wen Zhao: Actually, the Chinese regime doesn’t have much at hand for what’s to come next because China imported only $130 billion of U.S. goods last year. North Korea and the South China Sea are what the Chinese regime can use to put pressure on the U.S. sectors such as overseas study services, tourism, and U.S. firms in China inevitably become the targets of the communist regime. But America is the No. 1 destination for Chinese students, who, in the eyes of the regime, will bring back tech to them to enhance their industries. If service trade is affected, China’s long-term loss will also be greater than that of America. After all, China has only temporary purchasing power in these sectors, while the U.S. has irreplaceable products; and the seller is stronger in a long-term view of the market. What Xi Jinping relies on is largely low system advantages, which are not supposed to arm him with decisive, long-term strengths. But he assumes that China is so huge and has so many tools for use, which makes it hard for him to cave in unless those tools are used up.