A Growing Threat: Economies of Power

Although China has grown immensely over the past 20 years, countless other economies have seen much advanced growth. India, the UAE and Vietnam are among them to name only a few. Many of these countries have extensive business interactions with the USA and other advanced economies. While the US has quite a large trade deficit with China, it also has a huge 24 billion dollar trade deficit with India according 2018 statistics by the Office of the U.S. Trade Representative. As the 9th largest U.S. trading partner, India has grown immensely over the years.

While trade talks between the U.S. and China has seen some positive inflections, there still remains obvious points of departure. In October, the U.S. 116th Congress has passed the controversial H.R. 3289, Hong Kong Human Rights and Democracy Act which, “directs various departments to assess whether political developments in Hong Kong justify changing Hong Kong’s unique treatment under U.S. law.” The bill would also levy sanctions and export controls with stipulations involving Iran/China relations. Additionally, the idea of de-listing Chinese companies on the U.s. stock market arose as well.

And while these developments may impede China; the rest of the world must wonder whether they may face a similar fate. Specifically those whose GDP continues to grow and does rapid business with the West. One argue that the tariff wars are distributed evenly, by citing the recent U.S. tariff on the European Union, but that would be a poor comparison. The U.S. is launching 7 billion dollars in Tariffs on “specialty foods,” from the EU which is spread accross 29 countries. Such tariffs likely amount to a few million dollars per EU member state. Still, it appears the greatest threat lies in developing and middle income economies where the US perceives them to be a threat.

We must recall that China was once granted Most-Favored Nations tatus and lustily pursued by big brands and small scale companies throughout the West. Is it possible for other trade partners to suddenly become an enemy of the state? If the threat of war is mounting between two of the largest trading partners in the world, what makes this an impossible fate for others states? As in any situation where domination is achieved by force, is it possible that India, the UAE or some other growing economy might be next? What can other growing economies expect from the West should they fall out of favor? Is the West prepared to admit that it has perhaps slipped to number two or possibly three in dominance? And if not, what is the U.S. prepared to do to any one of its trade partners in the event that financial or geopolitical changes turn its gaze.

In business and trade, some entanglements are impossible. However, business is predicated on the concept that one can at the very least trust one’s business partner to fulfill his/her end of the bargain without reprisals for perceived losses.  How can such actions be contained to maintain the stability of the world economy? We are left wondering what a post U.S./China Trade-War/Brexit world will look like, when national growth or stagnation becomes the impetus for conflict.