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Travel Stories

July 5, 2018

Unfairly Fair Trade

    Noodle bowl effect, protectionism, complex agreement, trade war, and so on. Ah, it's really though when it comes to free trade. Many people argue that free trade today is not a fair trade. When it comes to its agreement, free trade is just like an instrument for developed countries to keep a distance with developing countries. That's why many people have said what the world really need is fair trade, not just free trade. But don't be rash, young kid. Even if an entity recognize its free trade as a fair trade, it could be a contradictory for other entity. Let's just call this phenomenon as: unfairly fair trade.

Trump's policies on protectionism in case of trade with China have brought China and US to the new trade war. Politically and economically, it's the real world cup: China vs US. It's a very interesting war between world rising power and world hegemon. Why must Trump implementing that kind of policy? Why must he started the trade war? By analogy, why must Chris Trucker become the opponent of Jackie Chan if they both are good partners? Well, free trade isn't as simple as Rush Hour 1 2 3  

The polemic has appeared when Trump puts 25% tariff on Chinese goods for a response to China's infringement of intellectual property rights. Alumunium steel is also another story of the trade war between US and China. Well it's not only China, some powerful entities such as Canada, EU, Mexico are also challenged by Trump and his trade war. But when it comes to China, it seems like China is really special case because China always dare to 'fight back'. The reasons why Trump sees china as a threat whether in politic or economy certainly not as simple just China's surplus and US' intellectual rights. It's more complex than that. There is Belt and Road initiative, right? Is trump afraid of that super ambitious geopolitic initiative? And, is it possible that today's china is the 90's Japan? Let's speculate, young kid.

One Belt One Road, One Step Closer to Become Hegemon

Belt and Road initiative or formerly named One Belt One Road is an initiative which was initiated by Xi Jinping to connect China with the world. It simply means China wants to build a connected road around half the world to simplify the trading process, to become the facilitator, to create some kind of dependence, strengthening its influence in the world whether politically or economically and that's how.. China could be the new hegemon regardless of whether the world is going to be unipolar or bipolar.

No one can beat US trade activities other than China. It's fair enough to recgonize some increased tariffs that given to China have a purpose to minimize China's influence economically. Minimize China's influence in economy is a good start to minimze China's dream on Belt and Road initiative. However, the best way to against China's low price  goods is with increase the price, right? Increasing the tariffs is the first step to increasing price of goods. It's quite amusing when Trump echoed trade war but china products in america are everywhere, including raw material.

Whether is Trump afraid of Belt and Road initiative or not, US will always 'interfere' China with all of the drama. Sure, Belt and Road initiative itslef is kind of nonsense expectation for some people. Build the connected world around half the world is like a fiction story for some people. But it's China, young kid. For humble example, Alibaba will never exist if one of its man didn't dare to dream. 

Future China, 90's Japan?

In 1970, by the GNP, Japan was the second largest economic power under the United States. A decade later in 1980, Japan  has defeated US and by GNP became the world largest economic power. But a decade later in 1990, there was a 'bubble economy'. Japan was hit by crisis, US back to the top of world largest economic power, and few years later Asian Financial Crisis. Some people called it as the lost decade of Japan. The 90's Japan however has represented the defeat of rising power on that time, when that rising power dare to challenge the hegemon. Even if they both in security issues are friend. Question is, whether China in the future will be Japan in the past or it's a different story? Regardless of there is George Soros or not, will there be another monetary crisis that happened because China and US trade war?

Belt and Road initiative could be the differentiator. However, Japan got no ambitious geopolitical initiative back then, but China does. The trade war between China and US however is an important issue for the world. At least, we can interpret the crises and its impact to our country. For example we can interpret the situation wisely when to buy dollar, when to buy RMB.

In a humble conclusion, free trade nowadays influenced by many things. Those things are just fair by agreement or regulation, but when it comes to competition between hegemon and powerful states, those things could be unfair in practice. Well it could be fair in regulation, but it's kind of dirty on its hidden agenda. Geopolitical and regional trade partnership just like Belt and Road initiative could be a good transportation for China to coupled with US as hegemon, but US however will always bother China and the trade war could be last longer. To answer the question of whether there will be a monetary crisis or not, no one knows. It's dizzying to interpret. I don't care.

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