The ongoing trade war between the United States and China has continued to heat up, and there is still no clear answer to who will win. The tit-for-tat tariffs that both nations have imposed seem to be favoring the United States on the surface; however, time might be on China’s side.
Political analysts and trade experts are beginning to chime in, trying to make sense of the almost incomprehensible web of global trade that these two powerful nations are playing with. Vijay Eswaran, a well-known entrepreneur from Malaysia, weighed in on the trade dispute, offering a unique South East Asian perspective, and analysts are beginning to agree with his insights.
Mr. Eswaran analyzed President Trump’s position and summed up his administration’s strategy with the quote, “when you are down, you can’t lose!”
Who is Vijay Eswaran? Eswaran is the founder and Executive Chairman of the QI Group – a prominent Asian business conglomerates, with diverse interests spanning retail and direct sales, lifestyle and leisure, education, luxury and collectibles, property development, and logistics. In 1998, Mr. Eswaran founded a direct selling company that would eventually grow and expand into the QI Group over the next 20 years. The QI Group currently has offices in over 30 countries worldwide. Prior to launching his entrepreneurial career, Vijay Eswaran obtained a degree in socio-economics from UK and an MBA from the US, after which he went on to a sucessful corporate career in the United States which included a stint at IBM and one of the Big Five accounting firms. Today, Mr. Eswaran is a highly respected motivational speaker, who speaks in different forums across several nations on a variety of subjects. He has spoken, for example, at World Economic Forum events and Commonwealth Business Forums, sharing his insight on management, business, and leadership.
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Thank you Business Today for the honour. I truly enjoyed my conversation with Amanda Ariffin. It’s my privilege to share this with all of you just as we approach our 20th anniversary. If you are in Malaysia, you can pick up your copy of Business Today in the stands this week.
Vijay Eswaran is also a published author. He has been recognized for an array of accolades, including CEO of the Year, awarded by the ASEAN Business Advisory Council at the Malaysian Business Awards 2013, the ‘Special Award for Education Entrepreneurship and Leadership’ at the 18th Malaysian Education Summit 2014, the Outstanding Entrepreneur of the Year award at the Asia Pacific Entrepreneurship Award 2012, and the NGI Excellence Award for Business Leadership and Philanthropy by the Indian Diaspora. Vijay Eswaran’s education and experience provide him with a unique perspective on the trade war.
Many experts feel that Mr. Eswaran’s summary contains powerful strategic value in the trade war. In fact, because of the massive trade deficit, China doesn’t have much left to retaliate with. China only bought approximately $130 billion in US goods last year while the United States could still impose roughly $400 billion in additional tariffs. Because of the complicated and intertwined nature of US-China trade, especially in the technology industry, this doomsday scenario is unlikely to play out.
One of the issues at the heart of the dispute is China’s Made in China 2025 initiative. Parts of the plan include forced technology transfer and lack protection for intellectual rights. In regard to technology, President Trump’s threatening and unilateral approach is widely believed to weaken his position. Analysts across the board seem to agree that working together with traditional allies to solve these trade grievances is the more effective approach.
“Trump is confronting the issue as a solo nation. Although the international community seeks the same open and fair markets and protection of intellectual property that the United States desires, Trump is opting to challenge China independent of US allies. In the past, the US, European Union, and Japan had agreed to work together on this issue, but these historic alliances are also being challenged by the US administration. Moreover, Trump’s unilateral action may be challenged by or through the World Trade Organization.” – Vijay Eswaran
If Trump wants a chance at beating a more assertive China, he is going about things all wrong. It is in the United States’ best interest to strengthen traditional alliances and work with international partners to address their shared grievances. Trump needs to act quickly to avoid dragging the trade dispute out and allowing China to gain the upper hand. By waiting patiently, China can see if midterm elections change the political landscape in the United States and may be able to leverage that shift.
“If US voters become disfranchised, fed up, or nervous, they could vote Trump out of office in 2020, completely reversing US-China relations. Unlike the United States with its frequent election cycles, China’s policies don’t rely on any re-election, providing China an upper hand in terms of consistency during a trade war.” – Vijay Eswaran
Specialists are starting to fall in line with Mr. Eswaran’s views that China, as a one-party state, has full control over every institution, giving it the luxury of limiting the negative effects of the trade war. The longer the conflict drags on, the more likely China is to gain leverage. Using the stock market as an example, we can see how China is able to deflect the negative effects of the trade war far more easily than the United states can. The stock market dips every time the trade war escalates, and Western consumers need reassurance that there is a solution to the trade dispute on the horizon.
China, on the other hand, can craft the story it wants to be heard using its power over the media as a form of damage control. Even though right now the US stock market is up and the Chinese market is down, it is understandable how much more susceptible the United States is to small changes in the market that occur as a result of the trade war
The future of the trade war is clouded by its sheer complexity; however, it can be broken down into some key elements. At the heart of the dispute is the ability of global corporations to access China’s markets without fear of losing valuable intellectual property or trade secrets. Indeed, the United States would likely make huge concessions in trade if it was satisfied that China would work with the international community to protect intellectual property. China needs strong growth and wants its goods to continue to flow freely.
For now, it looks like China will wait patiently to see if the United states begins to elect more favorable politicians. Unfortunately, in the meantime it appears that the trade war will begin affecting both economies, and their middle classes are likely to suffer the most. Trump is not the man for the job; the international community and the WTO are best equipped to settle the dispute through dialogue, so once, again everyone loses.